The spate of letters in response to your August 1984 article on venture capital ("Why Smart Companies Are Saying No to Venture Capital") certainly suggest that opinion is highly divided on the issue of whether to say yes or no to venture capital (Letters, November 1984). Articles have also appeared in INC. and other publications debating the pros and cons of such alternative sources of capital for the new company as early initial public offerings, corporate relationships, Small Business Investment Companies, etc. Any suggestion that there is one universal right answer is obviously misguided.

All too frequently, young companies choose to pursue one avenue of financing without thoroughly assessing the full costs and benefits of alternative sources. Often this avenue is chosen simply because a friend knows a friend somewhere or because young companies go to venture capital firms for financing. Each individual company or entrepreneur has a set of unique characteristics, strengths, and weaknesses that may be used to assess its options. These characteristics may be matched with the range of services and attributes of the various potential sources to develop an optimal financing strategy.

In response to the specific critique of venture capital that seems so popular today, our experience suggests that venture capitalists should not be lumped together as one homogeneous institution. Neither should they be considered as either saviors or pariahs simply because they do or do not have experience with, or intentions of, building companies.

Venture capital firms can be differentiated in many ways. It is easy to learn from published sources what size investment, what type of technology, or which geographic region a venture firm will consider. It is far more difficult to learn now much prestige, management support, industry contacts, or other services will be provided with the capital.It is also difficult to determine what the costs of these value-added services will be in terms of control and required rate of return. The young company must weigh the benefits of these services against their attendant costs. The answer will differ in each individual circumstance. It is this fit between the investor's strengths and the company's needs that provide the synergy necessary to make the venture a success.

I applaud your efforts to educate companies about their financing options. However, readers should understand that there are no simple answers or rules that apply universally. Each situation must be evaluated individually and comprehensively to determine the right answer for each young company.