The moment at which you decide to go fundraising from the venture capital community would not be the time to be fretting about your work/life balance, advises Stuart Evans, chief executive of Plastic Logic.

The Cambridge-based company, which is developing a plastic electronics technology, secured £6.3m of first-round financing in April from a syndicate of venture capitalists led by Polytechnos, a Munich-based firm. Mr Evans began the process last September and says he spent two-thirds of his long working days on getting the funding.

Meanwhile, Charlie Muirhead, founder of network management software group Orchestream, recently hauled in £10.3m for telecommunications networking company Nexagent from venture capitalists Atlas Venture and Benchmark. In that case the process took about a year but it represents another funding for a company that is not yet making sales.

Do these two deals at least indicate that the venture capital market is stirring again - even if the process is highly time-consuming?

Both cases are, in different ways, unusual. But their experiences nevertheless offer useful lessons to others trying to raise venture money.

Overall, the funding picture is still grim. In the first quarter of 2002, early-stage venture funding across Europe fell by about a third compared with the final quarter of 2001, according to figures compiled by Ernst & Young and Venture One, the venture capital research company. The UK held up comparatively well within those figures but the scale of the contraction of venture funding in the UK is clear, representing a 68 per cent fall from the first quarter of 2000.

To compound matters, most of the investment activity has been follow-on rather than first-stage financings, as venture firms scramble to shore up sections of their existing portfolios. What is more, if they are investing in so-called series A financings - the first institutional round - they are opting for companies with customers.

However, Nexagent does not plan to launch a commercial service until the third quarter of this year; and Plastic Logic's funding is designed to take it to the point where it signs its first licensing agreements with customers at the end of 2003.

So what are the tricks?

First, the idea. A few venture capitalists are still prepared to take a risk for something that could be really big. "[Plastic Logic] is a truly disruptive technology," says Simon Waddington, partner at Polytechnos, which says it is building a balanced portfolio to include one or two ventures that, while risky, are potentially huge hits. Nexagent is also a grand vision - aiming to link data networks across multiple telecoms carriers with the simplicity and reliability of the phone network.

Both deals are unusual - but then a large part of the process was convincing the venture capitalists of that potential to be a big idea .

"You need to think about fundraising as a professional relationship sales campaign. If you make more calls you will make more sales," says Mr Evans.

You also have to be "properly introduced" to potential investors. This was one of the areas where Plastic Logic was well placed. Amadeus Capital Partners, the venture capital firm, was a seed investor; and on Plastic Logic's board is Hermann Hauser, co-founder of Amadeus and a well known figure in the European high-tech community. So the company was at least likely to get the right sort of introduction.

This in itself is a lesson, says Michael Ledzion, chief executive of data storage company Polight Technologies, in Cambridge. "Later fundraisings are made easier or harder depending on who your initial investors are. To the extent you have the luxury of choosing between investors, you should ask yourself if they are going to be able to get you contacts at the next level," Mr Ledzion says.

An experienced management team with previous experience in early-stage companies is more than ever a necessity in the minds of venture capitalists today.

"I don't want to sound smug," says 52-year-old Mr Evans, "but the reason we did well is that it is a wonderful idea, it is really deep science - and we have done it before."

Mr Evans founded and ran Cotag International, an early pioneer of electronic tagging in the mid-1980s. Plastic Logic's chief scientist, Richard Friend, Cavendish professor of physics at the University of Cambridge, co-founded Cambridge Display Technology, which uses light-emitting polymer technology for computer displays.

Mr Muirhead is also a serial entrepreneur but the fact that he is still only in his mid 20s probably counted as a slight negative, when it would have been the opposite just two years ago.

"It did help having done it before - but it only helped a bit," says Mr Muirhead. "It meant the VCs were very happy to have the first meeting."

But it was Gerry Montanus of Atlas who took the lead in the end. Mr Montanus had been an investor in Orchestream, which at one time had a market capitalisation of nearly £900m before crashing back to earth in the telecommunications collapse.

Mr Muirhead's particular achievement at Nexagent - in addition to the grand vision - had been to assemble a team of seasoned executives from Cable & Wireless and Cisco. The company is already looking for a chief executive "with grey hair", Mr Muirhead says.

Responsiveness is another essential quality for success in the process, says Andrea Bonafe, who worked on the Nexagent fundraising and is now chief operating officer of the newly merged Venture Capital Report/Pi Capital angel network. "You have to keep adjusting to what the venture capitalists want - more focus, more proof of customer interest."

Flexibility in accepting some of the terms venture capitalists are now imposing is also necessary, although there can still be scope for negotiation.

Milestones, for instance, have made a comeback: Nexagent has tranched funding in which £4m of the £10.3 total is dependent on achieving certain milestones.

"The VCs are trying to mitigate risk," says Jason Purcell, chief executive of First Stage Capital, which helps companies raise venture money. "The devil is in the detail. You need to make sure these milestones are measurable, achievable and consistent with the direction in which the company is going."

Other terms of the deal are also important and advisers say companies should balance the valuation they achieve against other aspects of the agreement.

Entrepreneurs will need to become rapidly acquainted with unfamiliar provisions such as "liquidation preferences". A "three-times liquidation preference", for instance, would stipulate that an investor who puts ý5m into a company receives ý15m back from any sale of the business before others receive a cent. A lower valuation and less onerous liquidation preferences might be considered preferable, advisers say.

One feature of the current market is that there is still plenty of competition for the deals that are considered "hot". Plastic Logic, for instance, had half a dozen firms doing due diligence on it.

But, in the end, there are few hot deals and the whole system is in danger of getting out of balance, says Richard Ord, chief executive of Vulcan Machines. Vulcan, a Cambridge-based microprocessor company with exciting applications for Java-based technology in mobiles and set-top boxes, is looking to raise a further £3m-£4m after winning funding from 3i in a competition in 2000.

Mr Ord has attracted interest from smaller venture capitalists but has not made headway with the larger groups. "At some point the larger venture capitalists are going to need to support a decent number of really early-stage companies - if not directly, then through relationships with seed investors. Otherwise their own deal flow will simply not be there in two years' time."