O.C. BUSINESS PLUS : HEARD ON THE BEAT / SMALL BUSINESS : The Science of Venture Funding

Fledgling entrepreneurs have long wondered what it takes to coax venture capitalists to open their wallets. Thanks to a new study, they might have a better idea.

When considering whether to invest in a company, venture capitalists place the most emphasis on the quality of a firm’s executive team, according to the 1999 Venture Capital Survey, a study conducted by Profit Dynamics Inc., a Fountain Hills, Ariz.-based management consulting firm. Other important factors, in descending order: potential return on investment, market size, the uniqueness of the service or product, and possibilities for growth.

Even with those insights, entrepreneurs could have a hard time snagging venture money. The 100 firms surveyed receive about 1,000 business plans a year but invest in roughly seven companies, or less than 1%. “The odds are better of going to Vegas and winning at roulette than of getting venture capital funding,” said Dee Power, vice president of Profit Dynamics.