There's a lot of venture capital money out there. In 1999 venture capital companies provided over $48 billion dollars worth of funding to 3,649 firms, according to a survey by the National Venture Capital Association. Quite a few venture capital firms are willing to take risks with new or start-up companies. The 1999 Money Tree Survey by PriceWaterhouseCoopers shows that start-up companies as well as those in the earlier stages of development grabbed up almost 42 percent of venture capital funds awarded by the companies surveyed. Each start-up received an average of $7.5 million.

If you plan to open a small restaurant in your hometown, chances are you won't get funding from a venture capitalist. But if you've got a terrific idea for a new dot-com, your chances improve significantly. Internet-connected companies, particularly those involved in e-commerce, took in almost $31.9 billion of the $48 billion given out last year, again per the NVCA survey. That's not to say that no real-world companies are receiving venture capital; it just means that you might want to consider giving your real-world company a dot-com sidekick.

More important to most venture capital firms than where you do business is how you do business. Venture backers want to invest in people and companies they believe in, and businesses that they believe will succeed. If you can show a venture capitalist that you've got a well-conceived business plan and a management team that's focused and cohesive, you've taken a giant step in the right direction.

If your company is public or could go public and offer stock, you could have a better chance of securing venture capital. Potential backers view IP’s as sure-fire ways to recoup their investment. Venture capital firms also aren't in the business of investing small sums of money; most investments are in excess of $1 million dollars.

Another consideration is how much control you're willing to give up. Some venture capitalists are notoriously impatient; some may want seats on the board; some may even want to bring in their handpicked choices to manage the company. Sometimes, venture capital firms even replace company founders.

Venture capital isn’t the only available source of funding, but it can be the best source if you've already got a product but no track record. Other sources of funding for start-ups, noted by Greene, are still family, friends, and credit cards. Not bank loans, he points out; they aren't usually an option for start-ups because they want to see at least a year's worth of profitability before they'll put up any money. If you don't have a year's worth of profitability, banks will usually expect you to secure the loan with your house or other assets. However, bank loans may be a realistic source of funding for equipment or capital purchases. A disadvantage to choosing banks over venture capitalists is that banks require you to start making payments on the interest and capital immediately, which can take money away from your business.

Money doesn't grow on trees and finding the right venture capitalist can be difficult. Investigate potential partners carefully, making sure that their goals and expectations match up with your goals and expectations for your company.

Here are some ways to locate these potential partners:

• Ask friends and business associates for recommendations. The old adage, "It's not what you know, but who you know," definitely applies to obtaining venture capital. Personal recommendations are often the best way to find a venture capital firm willing to invest in you and your company.
• Read the paper. Keep an eye on the local and national news to see which companies are getting funded by which venture capitalists.
• Surf the Web. The Web is making it easier than ever to find funding, because it allows you to search outside your geographic boundaries for investors interested in companies like yours. Money Zone, according to Greene, has over 250 verified investors looking for new projects. You can search for these companies according to geographic area, industry, and company size. Other companies offering lists of venture capitalists include Bottom Up, Venture Capital Online, The Finance Hub, America's Business Funding Directory, and The Venture Directory.

Once you've identified potential investors, take some time to find out what other companies they've funded, what their management style is, and what they're looking for. Since each company has its own unique style and investment preferences, the better you match what they're looking for, the better your chances of being funded.

If no one in your management team, including yourself, knows the venture capital firm you’re considering, it’s a good idea to make the first contact through an intermediary, such as MoneyZone. Another option is to call the company and ask how to apply for funding or visit their Web site and see if it details their funding process. Some investors may want to see a business plan, but others will prefer a letter of inquiry detailing your company and project. If they like your concept, they'll ask for more details.

Although there's more funding available than ever before, many more companies are trying to get a piece of the venture capital pie. There are no guarantees that you'll receive funding from a venture capitalist, but taking the following steps can improve your chances:

• Be willing to take advice. Nothing kills a deal quicker than an upshot entrepreneur who's unwilling to listen to the voice of experience. When you meet with potential venture capitalists, listen to any suggestions that they have. Although you don't have to accept every suggestion given, being willing to listen can go a long way toward convincing a venture capitalist to sign on the dotted line.

Securing venture capital can be a long and arduous process and, while it's important to put your best foot forward, it's also important to be honest with potential investors. Make sure you disclose any significant problems and be honest about your financial situation.

Don't expect instant results when you ask for venture capital. As Greene notes, "Venture capitalists have more deals than they can look at." He estimates that only one out of every ten proposals gets funded. If a venture capital firm has reviewed your business plan and is interested, they'll call you. If you get the call, expect the venture capital firm to go over your financial records with a fine-tooth comb to see how you're spending your money and how much money you've got invested in your company. They may also spend time interviewing your top managers or inspecting your computers and finding out how tech savvy your company is.

When the happy day arrives and a venture capitalist offers you funding, don't just smile and sign the check. Instead, take some time to have your attorneys look over your deal, and make sure that you thoroughly understand what you'll be giving up in terms of ownership and control.

Greene points out that if you accept venture capital, "life is never the same." He notes that increased accountability will be expected of you, and that you might find yourself with a "new partner who doesn't see things exactly as you do."

Rejection is never easy to deal with, especially when it comes from someone telling you that you can't have millions of dollars. However, even rejection can be a good thing if you're willing to learn from it. If you were lucky enough to have a venture capitalist review your business plan in depth, ask why the company rejected your application and whether they'll reconsider if you take steps to correct any deficiencies or problems which they've identified. Even if they won't reconsider, look at their suggestions and apply the ones that will make your business or business plan stronger. Then you’ll be ahead of the game the next time you apply for funding.