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Venture Capital Survey

The Internet Is Becoming An Important Way To Contact Investors

We asked the venture Capitalists "How would you prefer the initial contact by the entrepreneur (or their representative) be made to you?"

E-mail is now by far the most popular way to make the contact, with 42% of respondents choosing that method. Postal mail followed next with 29%, the telephone was the choice of 17% of respondents, 8% suggested a fax contact, and 4% saying they wished to be contacted through a referral.

Several VCs were adamant that they only considered companies referred to them by a respected source.

The significant number of venture capitalists who prefer phone contact is interesting. Entrepreneurs might ask, "If I cold call a VC firm, will I really be able to get a decision maker on the phone?"

Intuitively it could be expected that making the initial contact through e-mail rather than postal mail might speed up the process. According to the respondents, this was the case: 29% of those who prefer e-mail for an initial contact reported that they closed deals within 60 days on average, compared to 19% of respondents as a whole. Contact by telephone also appears to expedite the evaluation process as well, with 71% of those respondents who preferred to be contacted by phone saying they closed deals within 90 days of contact, on average, compared to 64% for the Venture Capitalists as a group.

Among those who reported that they had been able to close a deal within 30 days of contact, 50% preferred to be contacted by e-mail, 29% by phone, 18% by postal mail, and 3% by referral. The percentage who preferred e-mail and phone was higher, and postal mail lower, than for the group as a whole. This "fast closing" group preferred to read a short executive summary or have the company described on the phone initially, to a greater extent than the group as a whole, and they had a lower preference for receiving a full business plan as an initial contact.

In the past two years or so, many VC firms have launched well-designed and complete web sites describing the funding process, the partners in the fund, previous investments, and current investment preferences. It is easier than ever for entrepreneurs to "do their homework" before contacting investors. And, it is easier for them to be certain they contact VCs that make a good fit with their company. The second most common reason VCs decline to invest is -- the entrepreneur's company does not match the Venture Capitalists investment parameters

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