Securing venture capital: today's realities.

• Author: Jensen, Mark
• Position: Financing for Growth: Special Section

Garnering the attention of VCs and securing capital is far different from its heyday, but those entrepreneurs that survive the winnowing process will enjoy unprecedented levels of attention and support from VC partners.

Executives at start-up companies wistfully reminisce about the dot-com heyday, when venture-funding deals were scrawled on cocktail napkins or closed on a handshake. Nowadays, they lament that equity financing -- if done at all -- is done with painstaking due diligence.

But don't let the hazy shroud of memory obscure the truth: This reversion to funding fundamentals is a positive development, a sign that sanity and sound business principles have been restored to their proper priority. The fact that venture capitalists now require a detailed business plan -- including a thorough analysis of the market opportunity and the competitive landscape -- may mean more work up front for the entrepreneur, but will likely result in vastly enhanced prospects for building and growing a company, along with long-term, sustainable success, as opposed to success measured in "Internet time."

If VCs are being more selective, what does that mean for your company? More effort certainly, but also more access. Venture partners who were doing nine or 10 deals a year in the late 1990s are now doing one or two. As a result, those entrepreneurs that survive the winnowing process will enjoy unprecedented levels of attention and support from their VC partners.

Without an unwieldy portfolio to juggle, venture capitalists can deliver their full array of business resources, including the accumulated wisdom and expertise of the partner within the VC firm and contained in that most valuable of assets -- the VC's Rolodex file.

But before you can reap the benefits, you've got to pass muster. A rigorous checklist of items must be adhered to, and any uncovered areas in your plan will be quickly exposed.

What can you do to avoid getting burned? For one thing, the conventional wisdom that says you must present a perfect, blemish-free proposal to potential funders is mere hyperbole. The reality is that you'll have strengths in certain areas and weaknesses in others. VCs expect as much and -- if they sign you on -- will help you firm up the soft spots. But note that while some checklist items can be deferred, others are immediate and non-negotiable concerns. Indeed, some components are so essential that without them, you won't get a foot in the door.

How do you determine what's important? Here are several myths and mantras to consider:

Myth #1: You Must Create a "Killer App"

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