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.


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