VC or VC?

Entrepreneur, Jan, 2002 by Jennifer Pellet

In the hunt for funding, entrepreneurs often head straight for the big leagues and bet on prestigious venture capital firms. Yet the souring of the IPO market has the mega-fund players licking their wounds.

Fortunately, smaller VCs are filling the gap. "A lot of the larger funds are going through triage periods right now and devoting all their time, effort and funds to their existing portfolios," says Joe Heller, managing director of NextLevel Venture Partners, a VC firm based in Plainview, New York, that typically invests up to $5 million in new ventures.

"What's nice about small funds is they have the ability to deploy less capital and still have a high degree of interest," says Joel Magerman, president and CEO of New York City-based Bryant Park Capital, an investment bank that works with small to midsized companies.

If you decide to go with a smaller VC, look for one that has possible connections to you. "Have they made investments in the same space you're in?" asks Heller. "Can those companies become customers, vendors, partners, or form a relationship with you? It's important that there be synergies."