As the costs of building a technology company have steadily declined I have found that there is increasing debate in the web-o-sphere about whether or not companies should seek to grow their companies organically or pursue outside investment.  While I believe that there will be a need for outside investment for the foreseeable future (I took a stab at making this point in my post, The Longtail Of Venture: Why Some Companies Will Continue To Need VC And Others Won't), some companies are well positioned to grow organically.

There are always lots of considerations surrounding financing strategies.  However, if we assume that management intends to grow their company and table questions about a company's access and sources of capital, we can isolate the decision of whether to seek outside investment or to grow organically down to two key variables:  cash and competition.

Cash:  If the company can generate positive operating cash flows from operations during growth than management may not need to take outside capital.  In contrast, if they can't generate operating cash while growing outside investment may be necessary to grow. 

Potential For Competition:  If the company is positioned in a space where new entrants are unlikely due to barriers or other factors, their growth rate will likely be less of a determinant of future success enabling them to grow at a slower organic rate.  However, if rapid growth is required in order create barriers from scale outside investment may be critical to success.