Bond & Pecaro/Cybervaluation

'VTeam' Helps Start-ups Get Early Funding

By Jennifer Jones
Washington Business Journal, 7/23/99

A typical day for PricewaterhouseCoopers' venture capital champion Carl Grant usually includes a meeting with an entourage of technology entrepreneurs who've quit their day jobs to launch the next big Internet start-up—and are looking for Grant and his "VTeam" to open the right doors.

"At this point, all of these entrepreneurs are just showing up at my office. There will be three management consultants who have just left their jobs and now they want millions in venture capital," said Grant who anchors a new group that coaches start-ups on how to get their first VC breaks.

However, not every group who shows up on Grant's Tysons Corner stoop is a shoo-in for venture capital—nor do they automatically qualify for the team's help.

"We maintain a pipeline of 100 companies seeking private equity investment, and we've had about 30 successes that we can stake a claim to," Grant said.

Along the way, the PwC team weeds out many business plans. "We have a complex screening assessment that we do of each company," said Erik Ayers, who derived the formula for rating business plans. Megan McNelia rounds out the team by providing marketing advice.

Grant counts Columbia-based Paratek Microwave as one of its success stories. Paratek garnered $2 million from Novak Biddle Venture Partners and is gearing up for another round.

Their role was to act as a good facilitator. They provided us with some dos and don'ts, which amounted to some beneficial advice on how to deal with the venture capital process," said Somnath Sengupta, vice president of sales and marketing.

Because of the firm's desire to draw in start-ups who could become major clients in the future, PwC allows the VTeam to provide its services for free. Paratek, for example, was not charged for the VC coaching, but the company is a client of PwC's accounting services.

"We think we have shaken up the whole industry," Grant said. "This initiative could change the way in which Big Five accounting firms are perceived by entrepreneurs. No longer are we just approaching them after they are in a position of needing an audit. We are coming to them beforehand and showing them how to work through the whole financial process."

Brad Schwarz, who heads KPMG International's communications practice, said his firm has a staff catering to start-ups, but those new companies are then pulled into the firm's information, communications and entertainment practice.

Wooing start-ups is likely to become more popular, said Jeff Anderson, a principal at Bond & Pecaro, a D.C.-based consulting firm. "It's a great marketing tool for these large firms," he said.