Welcome back to Baby Breakerdom! This week's quest to uncover budding Rule Breakers finds illegal downloading going legit and everyone wanting to be a venture capitalist.

First up this week is Skyrider, which aims to transform peer-to-peer searches in the same way that Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) transformed traditional searches with contextual ads.

It's an interesting idea. Peer-to-peer networks and software allow downloaders to scan the files of millions of computers and make off with whatever they like -- usually copyrighted music. That's been a sore spot for artists and recording industry executives, who have sued teens and networks alike. One, Grokster, is now defunct as a result.

But Skyrider senses that the chaos offers opportunity. So, too, do venture investors. On Tuesday, the firm announced $12 million in third-round funding led by ComVentures in partnership with existing investors Sequoia Capital and Charles River Venture Partners.

What do they see in the deal? Numbers, it seems. Roughly 9 million people were logged into P2P services at any given time during September. That's up from 6.8 million two years ago, reports file-sharing industry tracker Big Champagne.

What's more, The Wall Street Journal reports that Coca-Cola (NYSE:KO) recently teamed with hip-hop entertainer Jay-Z to release a clip of a June concert over file-sharing networks. So far, Coke says the clip has been downloaded 2.5 million times, which makes it arguably as effective as any TV ad in terms of brand building, but for a much cheaper price.

Add this one to the IPO watch list, Fools. But don't be surprised if Google, Yahoo!, Microsoft (NASDAQ:MSFT), or even Ask.com parent IAC/Interactive (NASDAQ:IACI) makes a bid for the site first. I won't be.

Next up is ... everyone. Everyone appears to want to be a venture capitalist. For example, VentureWire recently reported that the state of Ohio is eyeing start-up investing. The Ohio Capital Fund has $150 million to create a fund comprised of investments in other private equity and VC funds.

Others getting into the game include Bertelsmann, which VentureWire says has launched a $63 million digital media fund. No wonder venture capital investing, at $6.3 billion in the second quarter, is at its highest level since 2002.

Pardon me for saying so, folks, but there simply aren't enough good private equity opportunities for this many investors. Bad business ideas get funded when too much money is available. Witness this $220 million deal. Or this $1.7 billion private equity buyout.

How does this affect you? When VCs invest to "put money to work," as they seem to be doing more and more of lately, an easy exit through the public markets becomes more attractive. That's when IPOs become the financial equivalent of a secondhand store that sells damaged goods, with the only difference being that the outside gets dressed up to look like Nordstrom. Don't buy it, Fool. You can do better.

That's all for now. See you back here next week, when we continue the quest to find the next ultimate growth stock.

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Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this story at the time of publication. Get the skinny on all the stocks he owns by checking Tim's Fool profile . Coca-Cola and Microsoft are Motley Fool Inside Value selections. Yahoo! is a Motley Fool Stock Advisor pick. CNET is a Motley Fool Rule Breakers recommendation. The Motley Fool'sdisclosure policyis a rebel with a cause.