Entrepreneurs who are the most successful at raising venture capital financing understand this fundamental point and strategically market their deals based on this knowledge. In any given year, a partner or associate in a venture capital firm receives as many as 750 business plans - that's 62.5 plans per month or 15.6 plans per week. In addition to working on due diligence for new deals, the venture investor is often actively participating in the firm's existing portfolio companies - attending board meetings, recruiting and working with management. Given these other obligations, the venture investor is left with little time to thoroughly review business plans for new deals. However, a new deal that is accompanied by a referral from someone who has a relationship with the venture investor, such as a CEO or senior executive of an existing portfolio company, an attorney or even another venture capitalist, will get attention and will rise to the top.
Management is to startups as location is to real estate.
If you don't have the right management team, you'll never maximize the opportunity. An entrepreneur has to figure out the partners' philosophy in this regard and determine if the deal is the right fit for the firm. The same analysis should apply to the type of deals a firm does. For example, don't send a biotech deal to a firm that only does information technology investments. Getting approval from one partner may or may not make the deal happen.