Jackpot!
Why bet the farm on an unknown VC when you can find a source with the funds and know-how you need to take your business to the big-money table?
Do you see the glass as half empty or half full? If you're
in the former camp, you may view the tech wreck as the death knell
for early-stage funding. If you're in the latter camp, you
probably see a much different picture. Despite the tumult, cash is
still available. But you need to give investors a reason to
invest.
Sunil Dhaliwal, a senior associate with Battery Ventures, a
Wellesley, Massachusetts, venture capital firm with $1.8 billion
under management, looks at a half-full glass.
"If you believe early-stage funding can't be found,
that's tantamount to saying there's no more innovation left
to be funded," says Dhaliwal. "It's highly unlikely
that 2001 is the year that innovation will cease to
exist."
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Of course, there are caveats. Investors want more experienced
management teams, so first-time entrepreneurs will have a hard go.
Also, investors are looking to capitalize on less crowded niches
and are avoiding me-too companies. "The [best] candidates are
those focusing on problems or opportunities that will crop up in
[the next] 18 to 24 months," says Dhaliwal.
Tighter screening means fewer deals, but an optimist sees the
silver lining. If the number of firms raising early-stage venture
capital goes back to levels seen in 1996, '97 and '98, then
2001 could be the year when things finally return to normal.
That's welcome news for businesses hoping to thrive in the
post-New Economy.
The "PricewaterhouseCoopers MoneyTree Survey in Partnership
With VentureOne," prepared exclusively for Entrepreneur, is
proof that funding is still out there. By culling the firms with
the most early-stage deals in 2000, we offer insight into the VC
firms most likely to infuse your business with the cash it needs.
(See "Top 100 Venture Capital Firms
for Entrepreneurs")
Picking a VC firm, however, takes more than simply pointing at a
name on a list. The most important thing is to find a firm
that's a perfect fit with you and your business. The following
three entrepreneurs did the legwork, and the following three
investors liked what they saw--companies that complemented the
investment strategies of their respective firms. When the two sides
came together, they made very successful businesses--and that means
everybody benefited.
--David R. Evanson
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