A first-time search for venture capital can be awfully confusing. Some entrepreneurs, unfamiliar with the jargon and uncertain about which steps to take and when, turn to money-finders -- people who help write business plans and peddle them to venture firms. Trouble is, with many venture firms the presence of a money-finder can jeopardize your chances of making a deal.
"Money-finders are a distraction," says C. Richard Kramlich, of New Enterprise Associates, in California. "We're not bidding on the money-finder, we're bidding on the people who want to start a business. When I see finders, it's a negative."
Other venture financiers echo Kramlich. All agree that general networking within the finance community is a better way to connect with venture sources. They note that the best tips leading them to new companies often come from bankers or lawyers whose recommendations aren't made for a price. Still intent on hiring someone's help? Then at least be sure you never pay a fee up front, say the venture folks. Pay only upon completion of a deal.