[Editor’s note: This is an op-ed by Perry Wu, chief executive of BitGravity, a content distribution company, a long-time entrepreneur and former venture capitalist.]

I was up in the mountains this past weekend, watching the kids run around with big smiles, savoring the s’mores they had just made over the campfire. Those white, fluffy things we loved as kids reminded me of a study a good friend of mine once mentioned – the Marshmallow Test, which was done back in the early 1960s by Walter Mischel with 400 four-year olds at Stanford University.

Children were put in a room by themselves with a two-way mirror and filmed. On the table in the room was a marshmallow. The researcher then told each child that, “I’ve got to leave for about 10 minutes. You can eat this marshmallow now if you want. Or if you wait till I get back, you can have two marshmallows when I get back.” Some of the kids were pretty determined to wait; one child actual licked the table all round the marshmallow but avoided the marshmallow itself. Some could wait a few minutes only. Others gobbled it down immediately. The researchers continued to track these children throughout their school careers and into early adult life.

The results were dramatic. Those who had deferred eating the marshmallow for 15-20 minutes in order to get the bigger prize just a few minutes later were more socially competent, personally effective, self-assertive and better able to cope with the frustrations of life. They were less likely to go to pieces, freeze, regress under stress or become rattled and disorganized when pressured. They embraced challenges, and pursued them instead of giving up even in the face of difficulties; they were more self-reliant and confident, trustworthy and dependable; they took initiative and plunged into projects. This group even scored on average 210 points higher on their SAT.

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As entrepreneurs, the decision to defer eating the marshmallow is a challenge we continually face. Let’s face it; thinking long-term is often an oversight when getting past the next month is the major focus. One question I think many entrepreneurs will face going forward in today’s new world is should you take early institutional funding or wait until the business is more mature? This is a question I have pondered with my most recent startup, www.BitGravity.com, and likely a question most entrepreneurs are asking themselves.

Having been a venture capitalist and an entrepreneur over the last twenty years, one observation that is evident today is the environment for entrepreneurs is more favorable than ever. Think of all the elements of today’s market that didn’t exist ten years ago – cheap computing, low-cost storage, open source software, inexpensive bandwidth, immediate access to customers through the Internet, advertising, etc. For the first time in history, it is possible for a couple of entrepreneurs to build a services business on the web, launch it, and get profitable in a short period.

On the negative, it is more competitive than ever before. Today’s entrepreneurial environment is efficient, and great ideas do not go unnoticed. Chances are any entrepreneur will be challenged with waking up and finding five companies or more just like theirs. Eating the marshmallow from day one and raising capital to accelerate and increase your chance of success seems like a no-brainer.

Having experienced the ups and downs of lots of startups, I’m not sure institutional capital in the very early days makes a huge difference. Don’t get me wrong, capital is a good thing to help get a companies going, but you should make sure that your investors are flexible and aligned with your objectives at the early stages. Case in point, some of best companies figured out their business first prior to raising institutional funding – Dell, Paypal, eBay, Google. At the earliest stages of a company, excess capital can mask the team’s capabilities, people’s conviction, and the company’s business proposition. For some, institutional VC might be the right answer. Raising capital from angels or friends and family may be an added step but it preserves options for the entrepreneur that may not align with the objectives of VCs firms and mean all the difference between success and failure.

Consider venture economics. Many funds are large, driven by management fees instead of carried interest. Large ownerships in large wins make the difference in fund returns, and VCs are swinging for the fence as a result. While outcomes are unpredictable for startup companies, the motivation for all VC firms are the same – put more money to work, own large percentages remains, and push fast growth. This could be a good thing, but statistically, the odds are that you will become one of the companies that do not meet the venture firm’s success criteria. What happens if the company does not have home run potential? Is your board going to be engaged? Should you have raised less money and gotten to profitability sooner? What’s better? Owning 10% of a $400 million company with lots of preferences or 80% of a $50 million company throwing off cash?

So, should you eat the marshmallow? The answer is different for each person and at each stage of the company’s life. Just keep in mind; raising capital shouldn’t be equated with putting money in your pocket. There are lots of entrepreneurs who have raised capital, built companies, sold them, who came up empty because their ownerships are small at the end of the day. There are also plenty of companies on the Internet that are throwing off cash that you never heard of whose entrepreneurs are doing just fine having not eaten the marshmallow.