We hear all the time about the amount of money that?s available to fund start-ups. For example, that private equity funds invested over $3.3 billion in just the first 3 months of the current calendar year; that venture capitals are always looking out for good deals as most of the plans they see merit little or no attention; that they invest in about 5-10 a year of the 500-1000 business plans they get. And so on?. But the truth is that a majority of deals that get funded are those that come through a referral or because the VC knows (of) the entrepreneurs.

It?s natural because VCs don?t have the time to look at all the plans that they get to pick out the Rediff, Naukri, or Tejas Networks. Deals that come through some trusted source or through a trusted filtering process are, therefore, valued higher and rise to the top of the pile of business plans.

So, it is easy to see how many plans don?t get funded. And also how competitive the race to secure funding really is.

Given this situation, what then makes a VC fund an unknown company started by an unheralded first-time entrepreneur?

Imagine this situation: A first-time entrepreneur in say, Bengaluru with degrees from Tier 2 educational institutions, average work experience in a regular job in a reasonably well-known company, but with no experience in building a business, no references you know or care for, and with no experience in building products or delivering productised services, sends you an email describing his vision on how software will be used in the future.

Now ask yourself: Will you take that entrepreneur seriously? Will you invite the entrepreneur for discussions? Will you then fund the business to the tune of say, a couple of million dollars with absolutely no business plan? Answer honestly.

What then makes VCs fund companies started by such entrepreneurs? Sure, there is passion in the eyes of the entrepreneurs; sure, they have conviction and confidence; sure, they have researched the market and the business model; sure, they have a powerful business idea; sure, they know what they were talking about; But then so do many other entrepreneurs.

Is it the element of chance? Is it that elusive thing called luck? Is divine intervention? What would have happened to such a start-up if the founder had not had a chance meeting with the VC in a conference? After all, it was only because the founder met the VC at the conference was he able to talk about his plan, a plan that made the VC resonate with his business idea, right? Surely that meeting was due to luck, right? Especially, when other VCs had rejected the idea?

Well, in our haste to qualify it as luck, we overlook the fact that the business idea and model had emerged out of research and market validation. Not from a pipe dream. We overlook the fact that the entrepreneurs at the start-ups were superbly prepared. And yes, they were in the right place at the right time. Luck is what happens when opportunity meets with preparation. Without preparation, opportunities cannot be recognised and capitalised upon. Without opportunities, preparations can go begging. So the next time somebody ascribes something to luck or chance, ask them if they were adequately prepared to exploit the opportunity. It seems that ?lucky? people constantly encounter such opportunities whereas the unlucky don?t.

A 10-year research project that led to the 2003 book called The Luck Factor by psychologist Richard Wiseman has revealed that ?lucky? people generate their own ?good fortune? through four basic principles that every entrepreneur will do good to internalise: they are skilled at creating and noticing chance opportunities; they make ?lucky? decisions by listening to their intuition; create self-fulfilling prophesies via positive expectations and adopt a resilient attitude that transforms ?bad luck? into good.

?The author is an advocate of entrepreneurship in India. He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member and adviser.

He?s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net.

The views expressed are personal