Making Connections
Philadelphia Business Journal (10/06/00) Vol. 28, No. 20 p.1; Gotlieb, Andy
Accounting firms are playing an increasingly important
role in bringing venture capital (VC) firms and startup companies
together. While startups can go straight to venture capital
companies and ask for money, local accounting executives believe
that it is usually better to talk to them first. According to
Brian Hughes, manager of the Emerging Growth Companies Practice
for Arthur Andersen's Philadelphia office, companies that are
screened first by accountants do better than those that are not.
This is because the accounting firms will examine a startup
company's business plan and see if it is worth working with, says
Hughes. In addition, if the business plan works, accountants
will know which venture capital firm should be approached.
According to Hughes, different venture capital firms have varying
interests, with some targeting communications and others
targeting technology. Moreover, the venture capital firms that
provide seed money are often not the same ones that provide more
mature companies with funding. Additionally, when startup
companies are ready to approach VC firms, accounting companies
also serve as editors, making sure the startups get their facts
straight and do not ramble excessively, according to Bob Steen, a
partner in KPMG's information, communications, and entertainment
practice.