To many startups, a venture capitalists is a legend. He/She can be your company’s savior – providing lots of money and lots and lots of value added. In fact, in many cases, the success of your company may be directly proportional to the level of the venture fund that invests in it. The better the fund – the better the chances are that you will succeed.

In spite of this crucial fact, most startups really do not know all that much about the venture firms they approach. They check their web sites and maybe a little bit more. There are a lot of misconceptions – or as a friend of mine says – urban legends about venture capitalists.

Today’s Enable will try to demystify the venture capitalist by providing you with 5 myths about venture capitalists. Following that, we provide a few links dealing with the best and the worst venture capitalists around. The results of the worst will really surprise you.

Myths About Venture Capitalists

Myth Number 1 – A Venture Capitalist (VC) is Vulture Capitalist: This is really untrue. A really good VC (the one you want) understands the valuation game and will not try to take more of your company then makes sense in the long run. True VCs know that founders must remain motivated and will try to value the company based on this and other factors. The amateur VC will try to squeeze as much as he/she can out of your valuation-wise, without thinking long term. These are the ones to stay away from. In fact, a warning light should go off if one of the first things asked by the VC is the valuation.

Myth Number 2 – Venture Capitalists Will Only Invest Near Their Offices: This is not the case for most. Many Silicon Valley VCs have invested in other geographical regions in the U.S. and in foreign countries. If the deal is good, they will find a way to invest, even if it means flying overseas to board meetings.

Myth Number 3 – Venture Capitalists will give you five minutes to make your pitch: A VC that is interested will question you on ad nauseum. You need an elevator speech to get in the door, but once you are in, be prepard to be grilled and then grilled some more.

Myth Number 4 – Venture Capitalists are currently not investing in startups: The ones not investing are the ones who either have run out of money or who are very busy cleaning up their dotcom portfolio. VCs are eager to invest – as long as you are a highly attractive candidate.

Myth Number 5 – Venture Capitalists are intimidating: Most VCs are regular people who have a job to do. They are polite, professional and curteous. They want to learn as much about you as possible. They will treat you with respect. The obnoxious ones that are rude during meetings and try to intimidate you are the ones you should avoid – at all costs.

The Leading VCs

Business 2.0 and ecompany have prepared a Silicon Valley Venture Capital Cheat Sheet with a guide to the hottest VC firms, legal eagles, hangouts, and more on Sand Hill Road.

The RedHerring has compiled a listing of the top 25 VC funds based on certain criteria.

The Worst VCs

Who is the worst VC of all? Which firms were in the running to be called the worst VC? Business 2.0 set out to find the worst VC – from among the so called leading and well known firms. Check out a really fun to read article and learn who is the worst VC at Business2.com. If you follow the VC industry at all, or if you read the hype surrounding certain VC funds, the results will surprise you.

Published by Israel's Business Arena on July 24, 2001.