This week, the U.S. Department of Commerce and the European Commission released a report (opens a PDF file) on venture capital (VC) investing that makes an eternally valid point: Innovation and entrepreneurialism are critical for economic growth. And in the spirit of helping to ensure that today's tiny operations can flourish and grow into tomorrow's Microsoft (NASDAQ:MSFT), Starbucks (NASDAQ:SBUX), or Google (NASDAQ:GOOG), the report makes a variety of recommendations. One of them is to provide policymakers handbooks that explain the venture-capital process and the rethinking of regulations already on the books.

These are no-brainers. But at least one recommendation tosses out a novel idea: calling for public-sector support to infuse capital into early-stage companies. Despite the huge amounts of venture capital in the world, much of it is focused on more mature companies. Basically, investors want to mitigate risk and get faster returns on their money. This is extremely difficult to do with early-stage investments, one of the riskiest asset classes.

But is lack of capital a bad thing for early-stage companies? And is public funding the answer?

Look at Google. In the mid-1990s, Larry Page and Sergey Brin were graduate students at Stanford University experimenting with search technology. According to Google's website: "Afflicted by the perennial shortage of cash common to graduate students everywhere, the pair took to haunting the department's loading docks in hopes of tracking down newly arrived computers that they could borrow for their network."

For several years, Page and Brin financed their operation on credit cards, which were maxed out. Eventually, they put together a business plan and got a $100,000 from an angel investor and a faculty member, Andy Bechtolsheim, a co-founder of Sun Microsystems (NASDAQ:SUNW).

True, Page and Brin probably would have succeeded if they'd had more money from the government. But with fewer resources, they had to be much more efficient and innovative. The result was a solid foundation for a world-class business.

Early-stage businesses are bootstrapped constantly, but they do find ways to work around the challenges. Consider Embedio, which develops embedded software for devices such as mobile phones, appliances, automobile infotainment systems, and so on. The founder, Rajiv Desai, has built the company with very little capital. But he believes that the costs of startups have dropped dramatically. For example, a company can easily rent out its on-demand services, such as customer relationship management, payroll services, and human resources, from companies like Salesforce.com (NYSE:CRM), NetSuite, and Intuit (NASDAQ:INTU). Desai says that almost every startup he's talked to outsources so much of its work to places like China, Singapore, and the Philippines that often the only person left in the U.S. is the founder. A company can buy a team of engineers in India for $15,000 a month, he notes.

By outsourcing, start-ups are not only getting to market faster, but they're also gaining exposure to foreign markets that may be growing faster than the U.S.

With lots of passion and resourcefulness, entrepreneurs seem to find ways to make their ventures work without the blessing (or curse) of government intervention. It's the nature of entrepreneurialism -- which, it's interesting to note-- is nowhere to be found in the U.S./European report.

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Fool contributor Tom Taulli does not own shares of companies mentioned in this article.