As is the case with a lot of small companies, my partner and I reached the point, in 1998, at which we needed to consider outside financing for Beacon Research Group, the business we had launched in 1992. Back in the beginning, we had pooled our resources – some $30,000 – to start Business Consumer Guide, a Consumer-Reports like subscription-based newsletter for small businesses (like our own), and we had actually turned the corner to profitability.

During the height of the Internet boom, however, we decided to refocus the business as an online request for quote service for the same small-business market. To do so, we knew we needed an amount of money that wouldn’t come from savings accounts or bank loans. We knew we needed to go to outsiders, and we immediately targeted venture capitalists, or “VCs,” rather than so-called “angels,” who are wealthy individuals who invest privately.

Our commitment to this path boiled down to the fact that we needed a lot of money, an amount that VCs are more likely to provide than any other outside investor. And we knew that our timing was on target. By the time we got our first round – $6.5 million in May 1999 – the Internet mania was in full swing, and the VCs were receptive. Our second round – $15 million in June 2000 – came just after the NASDAQ collapse the previous April, but prior to the bloom fading from the funding rose.

Not surprisingly, funding of that magnitude has enabled our company to build our business much more quickly. We were able to hire, for example, bringing our staff to 85 people at its height from just a handful. And we were able to test products and marketing campaigns more aggressively than we would be able to without such funding. Being able to hone in how we can most efficiently generate revenue has meant that we are now on surer footing toward our goal of reaching profitability this year.

Finding Funding

Venture capital, in short, makes a difference.Growth-minded entrepreneurs who do want such funding can take steps to increase their likelihood of landing a meeting, which is the first critical step in getting funded.

What are the rules of the road? Assuming the usual solid business plan and management team, one of the most important unwritten rules, I believe, is that founders need to exploit what makes them special and use it to build connections with prospective investors. I’ve heard a lot of female company owners say they didn’t want to be labeled a woman-owned business, for example, but my retort is, why not? In our case, I am a woman. I am also Asian. And I am a fan of the Boston Red Sox. If any of those facts about who I am will help me secure funding, I am more than happy to use them toward that end.

As it turned out, BuyerZone.com got the bulk of its funding – about 95 percent – from three mainstream venture-capital groups. But the participant providing the other 5 percent in both rounds was Women’s Growth Capital Fund, a Washington, D.C.-based group that invests only in companies owned or managed by women.

Affinity Advantages

While we could have opted not to include Women’s Growth Capital as an investor, we wanted to include them because we felt that there were specific advantages that they could offer as an “affinity” investor focused on women that the others could not.

First, they have deep connections to other women-oriented organizations. Although all VCs should provide fledgling companies with introductions to necessary partners or customers, we discovered that Women’s Growth introduced us to a world we would not be able to tap.

Women’s Growth Capital is also frequently on the short list of firms that journalists contact for articles regarding women in business. As a result, when these writers need names of actual female company owners, Woman’s Growth has passed along our name. That has meant that we have gotten a lot of exposure in the media that we otherwise wouldn’t have received. I have even been introduced to and won awards from women’s organizations as a result of such contacts.

And finally, there is the common bond that exists by virtue of the fact that we are women. Our contact at Women’s Capital, Wendee Kanerek, is someone with whom I have considerable respect and rapport. Undoubtedly, the reason goes back to the idea of this common affinity itself. I have found her insights to come from a perspective that has enriched our private and board conversations.

As a business that was able to land $22 million, we got our funding from VCs who didn’t care whether we were women, men, Black, White or purple. They just cared about whether or not we had a business plan that could make money and the management skill to turn an idea into a thriving enterprise. With Women’s Growth, we were lucky enough to qualify for funding consideration.

Beyond Affinity

When seeking VC funding, of course, affinity isn’t the whole of it – entrepreneurs need to be prepared with a business plan that addresses most of the questions that investors will ask. At the heart of those queries will be the bottom line: How do you plan to make money with your business? Who will be driving your company to success? What is your exit strategy? In this regard, it is important to be clear about what your business model is and how it will produce revenue; a fuzzy idea will not play well at all with these tough-minded numbers-oriented people.

Clarity means just that; that your idea be as clear as it is solid. That means that you should work to perfect your pitch, condensing it into simple language and playing it like a violin – rehearsing before your spouse, best friend, favorite dog – until you have it right. VCs, you’ll find, aren’t good listeners; the less they have to listen to, the better for you. And speaking of listeners, they demand that you be what they aren’t: a good listener who processes their ideas and works them into a plan that they will eventually consider acceptable for funding.

It isn’t a one-way street, though. As an entrepreneur seeking money, you have the right – and the need – to query the investors who will not only be funding your company but essentially pushing you partly aside in order to assume the role of part owner. What is important is that you feel comfortable with such a VC, both personally and as an investor. The toughest thing to do is turn away money, especially when you need it so badly you can taste it, but often that is the right thing to do.

VCs with what we entrepreneurs call the “good money” are those you like personally; those you trust to be available when your company needs additional money; those who will help you get over the rough spots when they occur, as they always will, rather than throw up their hands and flip or close the company you founded.

It’s tough, this business of securing money from investors as hard-nosed as venture capitalists. It’s also necessary, if you want to build your company beyond a certain point. What’s key is finding the right fit – finding VCs who both relate to and support you.