When Congress passed the 1986 Tax Reform Act -- which, among other things, abolished preferential treatment for capital gains -- more than a few observers wondered if American's venture capital well would dry up. So far, it's as full as ever. "Right now the industry is pretty stable, investing about $3 billion a year," says Jane K. Morris, vice-president of Venture Economics Inc., a research firm. "That's likely to continue."

Only a fraction of growing companies -- something over a thousand a year -- ever avail themselves of organized venture capital sources; many more rely on individual investors, often from their own communities (see box below). But when there's about $3 billion per year to be divvied up, don't automatically assume that your company is out of the running.

For one thing, formal venture investing isn't limited to the couple of dozen bigname firms clustered around California's Silicon Valley and Massachusetts's Route 128. St. Louis and Atlanta each have half a dozen venture investment companies, the Philadelphia area more than a dozen. In any such regional group, some firms are likely to specialize in high tech, others in service businesses; some in start-up money, others in later-stage financing.

Nor do you need the hottest new product in microelectronics or biotech to qualify for venture funding. A recent issue of Venture Capital Journal, for example, reported the formation of a new partnership, Consumer Venture Partners, based in Connecticut. Its areas of interest: "health/fitness products, specialty foods and beverages, consumer electronics, restaurants, and specialty retailing." Another Connecticut firm, MarketCorp Venture Associates L.P., includes a hair-products manufacturer and a dessert company in its portfolio.

A start-up, a spinoff, a new push for growth -- any such endeavor can lead you to the venture industry. But how to identify the most promising sources of funds? What to expect when you contact them? Plenty of guidebooks offer help. Unfortunately, most are like low-call meals, nourishing as far as they go but leaving you hungry for more. A sampling:

Big Eight accounting firms provide much the same fare on venture capital as on other subjects: dry pamphlets filled with introductory-level information. If you're a novice, start -- but don't expect to stop -- with one of these. Just watch out for inaccuracies due to dated material. Coopers & Lybrand's Three Keys to Obtaining Venture Capital, for instance, declares that "venture investments made on a tax-advantaged basis are increasing." That was true in 1984, when the booklet was published; it isn't true today.

Pratt's Guide to Venture Capital Sources (Venture Economics Inc., 11th edition, 1987) is the industry bible, and it's well worth reading. Most of this hefty book is an exhaustive listing of 700-plus venture firms, cross-referenced by areas of investment interest. You're in the transportation business? Pratt's lists 154 firms that fund transportation-related companies. You're looking for a lender rather than a partner? Pratt's identifies the small business investment companies (SBICs), which prefer debt-based financing to pure equity investments.

Before you get to the listings, you'll page through a couple of dozen articles on topics such as "How to Choose and Approach a Venture Capitalist" and "The Legal Process of Venture Capital Investment." Reading these can't hurt, but do so in a comfortable place in case you fall asleep. Like much how-to literature, they're largely devoid of real-world examples, and the going gets tedious.

Venture Capital Handbook, by David J. Gladstone (Reston Publishing Co., 1983) was born when the author, president of Allied Capital Corp., decided he had seen too many funding proposals that were "incomplete, inconsistent, and inane." The book is his attempt -- largely successful -- to tell entrepreneurs "what venture capitalists really want."

Gladstone's general advice is obvious enough (your business plan should project large profits). Where he's most informative is in the details. Don't bring your lawyer to the meeting with a venture capitalist. Don't tell the VC how much he or she stands to make on the deal. Specify in your business plan exactly how much money you're looking for; if you say "$200,000 to $400,000" you sound as if you don't trust your projections. The book is organized like a textbook and reads like one. But Gladstone has rejected a lot of proposals in his day, and his manual on how to avoid such a response is instructive.

The New Venturers: Inside the High-Stakes World of Venture Capital, by John W. Wilson (Addison-Wesley Publishing Co., paperback, 1986) is a breathless account of venture capital's high-tech glamour world. If you want to know who Arthur Rock, Don Valentine, and Ben Rosen are -- or if you're really interested in who originally funded the likes of Genentech Inc. and Apple Computer Inc. -- buy and read. Otherwise save your money.

What's missing from this list? A book -- editors and publishers, please note -- that tells stories of venture deals from the entrepreneur's point of view. Getting the money is always hard, and it would be nice to know how other company owners steered through (or crashed into) the obstacles. But that's only the beginning of what can turn out to be a roller-coaster ride. Venture capitalists have the annoying habit of wanting to know how their money is faring, and if they think it's not faring well they may take drastic action. Ask Jon Birck, for example. Birck, founder of Northwest Instrument Systems Inc., got more than $5 million in venture capital, only to be squeezed out by his backers (see "Dear Jon," INC., February 1985). Unusual? Not very. A survey of venture capitalists found that each one, on average, had initiated the fring of three CEOs.

A really good guidebook -- the one that doesn't exist, alas -- would mix the how-to material with plenty of real-world tales, inspirational and cautionary alike. Advice, after all, comes cheap. But the wisdom of other people's experience would be worth a lot.