Seeing Green

Now that the level of investing has stabilized, how should entrepreneurs approach venture capitalists? With sleeves rolled up and potential customers in hand. According to the "MoneyTree Survey" from PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association (NVCA), total VC investment in 2003 was $18.2 billion, reflecting a steady pattern of investing of $4.2 billion to $4.9 billion every quarter. A special analysis prepared exclusively for Entrepreneur shows that of a total of 2,200 companies getting VC funding, 515 startup and early stage companies got their first round of funding in 2003-a marginal decline from 2002. On average, these companies received $4.3 million each.

These figures are reason enough for first-time entrepreneurs to be optimistic, but only if they're serious. Tom Siegel, general partner of Shepherd Ventures, a San Diego firm with $50 million under management, lays out the ideal criteria for first-time financing: "What we look for is a completed product, customers or revenue, or the imminence of them." Those are high hurdles, but at the same time, the field has widened.