According the National Venture Capital Association (NVCA), there are 798 venture capital firms managing more than $235B in the United States. These are long-term, professional investors who specialize in funding and building new, innovative companies.

So how do you figure out who to approach for funding? This is the area where I find entrepreneurs make the biggest mistakes. Most of us approach investors we know. Perhaps you have a friend who knows a VC or you have a friend who is a VC. How do you know if your friend or the person you get introduced to is the right investor for you? Most likely they’re not. Not all VCs are alike. Some are geared for early stage and some are not. Some are suited for late stage investments while others just say they are.

You can’t always trust what an investor says their appetite is either. I’ve pitched to investors who say, “yeah we do Series A” only to be barraged by questions like, “how many paying customers do you have that we can talk to.” On the other hand, I’ve presented to wanna be later stage investors that were only prepared to pay an early stage price.

Last week I was in NYC for Interop 2007. Interop in NY is a significantly smaller conference than the big brother Interop in Vegas. I’d say there were 7,500 to 8,000 people at Interop NYC this year, compared to 18,500 in Vegas back in May. Somehow though I always find the New York show more interesting. Perhaps it’s the lack of constant firefighting in the NOC that gives us all more time to have meaningful conversations about the latest networking technologies. Plus somehow New York just seems to have more substance than Vegas. Call me crazy but…

This was also the first Interop where we had a chance to apply the magic of Splunk genre 3.0. We had a record number of searches in the NOC (despite the smaller show). I’m not surprised. 3.0 is so cool the way it automatically extracts fields out of data streams from all kinds of networking gear.

Now there are lots of people who know more about networking and security than I do, but here’s a simple investigation I did with Splunk.

1. I started with a simple search for “failed password.” This picks up firewall and router hacking attempts (typically ssh) sent to Splunk using syslog forwarding.