Seeing Green

Now that the level of investing has stabilized, how shouldentrepreneurs approach venture capitalists? With sleeves rolled upand potential customers in hand. According to the "MoneyTreeSurvey" from PricewaterhouseCoopers, Thomson Venture Economicsand the National Venture Capital Association (NVCA), total VCinvestment in 2003 was $18.2 billion, reflecting a steady patternof investing of $4.2 billion to $4.9 billion every quarter. Aspecial analysis prepared exclusively for Entrepreneur showsthat of a total of 2,200 companies getting VC funding, 515 startupand early stage companies got their first round of funding in2003-a marginal decline from 2002. On average, these companiesreceived $4.3 million each.

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