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How VC's Find Entrepreneurs

We asked venture capitalitsts "What's the most common way you have found the companies you have actually invested in?

34% of the VCs said referral by another VC. Not surprising, since Venture Capitalists like to invest with other Venture Capitalists. Additionally the majority, over 70% in 2000 according to PriceWaterhouseCooper's venture capital survey, goes to second round and beyond financings.

Direct contact by the entrepreneur was cited by 30% of the VCs and ahead of referrals by intermediaries (17%) and referrals by accountants and attorneys (13%). Only 7% of the VCs said events, like venture capital conferences, were the most common way they had found the companies.

The results don't add exactly to 100%, since even though the question was phrased as "the most common way" several respondents designated more than one way..

The great majority of entrepreneurs 64% think the most common way venture capitalists are introduced to the companies that they eventually invest in, is through paid intermediaries or finders. It seems the intermediary community has done a good job of convincing entrepreneurs it's their way or no way. Remember VCs rank intermediaries in third place ( 17%), significantly below direct contact by the entrepreneurs.

Interesting results. There are a number of ways to contact the Venture Capitalist that are effective. One of the most common generalities entrepreneurs are sometimes told is that the only way to get through to the Venture Capitalist is by using a referral. This does not seem to be the case. Direct contact is fine, according to a significant number of VCs.

So if you have can get a referral, great, but don't think you have to have one, to be taken seriously by a venture capitalists.

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