When you raise money by selling equity, your investors don't get a return on their investment till you sell the company, in most cases. So your goal changes from selling product profitably, to selling the company. And in may cases the terms of the deal mean you are working for the investors, even if they don't own a majority.
Here's a post from Chris Dixon
, an entrepreneur, now a VC who lays out some situations when raising money makes sense. In all other cases, he says . If they raise VC, a wide range of outcomes that would otherwise be good become bad.
The example of eBay is a special case. Their business model is such that it only makes sense to have one general auction platform. If there's only one that's where all the buyers go and that's where all the sellers go. If there's more than one they don't just split the pie - it actually makes the pie smaller. So with the number of other auctions sites at the time, only the one that grew the biggest fastest would survive. It was a zero sum game. So they needed outside money to grow fast, and yes it's a multi-billion dollar market.