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.