Raj Kapoor gives entreprenuers advice on how to pitch VCs. Kapoor knows both sides of the equation. For the past five years, he’s been a VC at the Mayfield Fund. Before that he founded the photo site Snapfish, which he sold to Hewlett-Packard.

Roger Ehrenberg attempts to answer a fundamental question for entrepreneurs: whether or not to take venture money, and if so, from whom?

TechCrunch gives an overview of and link to a new basic term sheet for use by investors and founders, authored by Adeo Ressi, founder of The Funded, a site where people rate venture capitalists .

VCs are good at asking questions. They are unimplicated in your dumb decisions, unmoved by your original sense of mission and far less concerned than you that a blunder could bankrupt you. They re-imagine your business in terms of all the other businesses they’ve seen, pulling the arms off one doll and the head off another to create a perfect money-making Frankenstein. And since the stakes are high, the whole philosophical exercise tends to result in action. Here are the questions VCs asked Redfin that changed how we think about our business.

VCs have an unfair advantage when it comes to financings. They simply have more experience doing deals.

One area that has always struck me where this asymmetrical relationship comes into sharp focus is when there's a discussion around the price of the deal. Entrepreneurs often mistakenly focus solely on the pre-money valuation while VCs look at multiple knobs in the negotiation to drive to a set of terms that, in total, they find acceptable. And if they don't focus on the pre-money, they focus on their ownership position after the financing, irrespecive of the amount of capital that was raised.

In my partnership, we've come up with a new term (I think it's new - I don't see it written or talked about much) called the "promote" to help communicate with entrepreneurs the real value behind a particular deal so get them to step back from concentrating only on the pre-money valuation or post-money ownership.

Some entrepreneurs may not be familiar with raising institutional capital to grow their businesses. Expansion plans beyond common organic growth are typically dependent on personal investments from company founders, friends, family, and occasionally from banks or the government.

Even in regions where it was once scarce, venture capital (VC) is becoming a more important option to raise new money – especially in high growth sectors such as technology. Unfortunately, many entrepreneurs do not know how to present an investment opportunity to institutional investors or what to expect from them aside from their financial investment.

Intel Capital, Intel's global investment organization, is one of the largest corporate venture programs investing in the technology segment. Its experience has shown that during the analysis and negotiation phases, entrepreneurs often have questions regarding the practices of Intel Capital and other potential co-investors.

In an effort to help explain this way of doing business, Intel Capital has put together a partial checklist as well as some explanatory discussion. While incomplete, this may help offer some guidance on the decisions and preparation prior to approaching investors with a proposal.

Mark Suster of GRP Partners in LA offers a useful article on getting access to venture capitalists.

This 
paper looks 
at 
the 
small 
group 
of 
investors 
that 
nurture 
the 
entrepreneurial
 elite
 by 
taking 
big 
risks
 and 
writing 
big 
checks. 
More 
specifically 
it 
focuses
 on 
just
 who
 these 
VCs 
are
 and 
how 
they 
earned
 their 
stripes. 
It 
attempts 
to 
identify
 attributes
 that 
successful
 VCs 
share
 and 
provide 
some 
insight 
that 
you 
can 
share with 
your 
son 
or 
daughter 
if 
they 
tell 
you 
they 
want 
to 
be 
a
 VC 
when
 they 
grow 
up.

Endless articles, books, and blogs have been written on the topic of business plan presentations and pitching to investors. In spite of this wealth of advice, almost every entrepreneur gets it wrong. Why? Because most guides to pitching your company miss the central point: The purpose of your pitch is to sell, not to teach. Your job is to excite, not to educate.

To win over the hearts and minds of investors, your pitch has to accomplish three things:
* Tell a good, clear, easy-to-repeat story—the story of an exciting new startup.
* Position your company as a perfect fit with other investments the investors have made and their firm is chartered to make.
* Beat out the other new investments the firm is currently considering.

These latter two issues are beyond the scope of this modest guide. So for now, let’s just concentrate on telling a good story.

Sim Simeonov from Polaris Venture Partners shares some of his thoughts on how VC’s engage with executive summaries. [Hat tip to Brad Feld]

The executive summary is often your initial face to a potential investor, so it is critically important that you create the right first impression. Contrary to the advice in articles on the topic, you do not need to explain the entire business plan in 250 words. You need to convey its essence, and its energy. You have about 30 seconds to grab an investor’s interest. You want to be clear and compelling.

Forget what everyone else has been telling you. Here are the key components that should be part of your executive summary.

A great pitch deck is concise (15 slides) and highly focused. And in the deck, VC Ed Sim likes to see the following points covered.

Jeff Bussgang at Flybridge Capital Partners explains the three stages to the VC due diligence process and how it works.

Paul Graham, who runs Y Combinator and has been involved in numerous early stage financings, offers this lengthy analysis of the intricacies involved with raising money for your startup. A good read for any entrepreneur.

Here’s Guy Kawasaki's advice to all the Biffs, Sebastians, Brooks, and Tiffanys who want to be kingmakers: "Venture capital is something to do at the end of your career, not the beginning. It should be your last job, not your first." He's also concocted the venture Capital Aptitude Test (VCAT) to help people decide whether they are right for the venture capital business.

Basil Peters offers a one-page term sheet for angel investors based on exchangeable shares. [Hat Tip to Ask the VC]

Fred Wilson follows up his original venture economic post with this look at venture returns, specifically the impact on returns of management fees and carry.

Fred Wilson explains the basics of venture fund economics. It appears to be the first of several posts he's planning to write on this topic. [Hat Tip to Brad Feld]

It's critical for entrepreneurs, when targeting venture capital firms, to narrow their search based on key criteria.

Private equity firms manage some $1 trillion of global capital, yet because they are highly secretive, much remains unknown about their internal economics. How do PE firms organize themselves, for example, and how do they capitalize on their success? Some answers emerge from a paper by Wharton finance professor Ayako Yasuda and Yale School of Management finance professor Andrew Metrick presented at a recent Wharton conference sponsored by the Weiss Center for International Financial Research.

Is it better to choose the horse or the jockey?

When the time comes to negotiate a round of funding, entrepreneurs often find themselves at a disadvantage. Much of it has to do with language. There is an array of terms and issues that investors and lawyers work with regularly and understand, but that entrepreneurs deal with only once in a while. It would take many posts to cover all of them, but here is a Crib Sheet of 10 Key Terms that clients most often ask Jay Parkhill to explain when they receive term sheets from prospective investors.

Todd Vernon, the CEO of Lijit , gives his thoughts on angel financing, including the types of angel investors, the size of investments, valuation, investment mechanism and liquidity. [Hat tip to Ask the VC]

In the wake of World War II, Georges Doriot helped found the world's first public venture capital firm, American Research and Development. Doriot (1899–1987) was also a professor at Harvard Business School for 40 years. This book excerpt from Creative Capital: Georges Doriot and the Birth of Venture Capital (HBS Press) describes how ARD first came to "marry" investors and innovators.

Sophisticated VCs are used to having angel investors as early investors in your company. Your life will be made easier if you treat the angel investment as a real investment and document it legally as such.