Last summer, Ajay Shah and three of his friends went about shopping their idea for an Internet company to various venture capitalists. Shah was confident of the efficacy of the idea, but being 23 years old, he didn’t know what kind of response he would get.

“We expected that the first 100 firms would slam the door in our face,” he said. “The actual experience was quite different.”

To say the least. Of the first seven venture firms the four young entrepreneurs saw, five offered them term sheets detailing how much they would be willing to invest for a certain percentage of the company.

In August, the young entrepreneurs decided to go with Pasadena’s Idealab Capital Partners, and within a month they had $4 million in financing for their company, Handshake.com.

Recently, the Marina del Rey-based company, which links consumers with service businesses, closed its second round of funding, garnering an additional $25 million.

Very few companies get off the ground so fast with so much cash in the bank, and most business plans are rejected by venture firms outright. But the speed at which Handshake.com has taken off isn’t particularly surprising these days. The rise of the Internet and strength of the public markets has dramatically changed the relationship between venture capitalists and entrepreneurs over the past few years.

Deals need to get done in weeks, not months, and the competition to get in on the ground floor of a new company makes it a sellers’ market for many Internet startups.

“It really has been the venture capitalists who went from being the buyer to the seller,” said Idealab Capital Partners’ Jim Armstrong, who sits on Handshake.com’s board. “We’re letting (entrepreneurs) know what ICP brings to the table.”

“The entrepreneurs are more confident than ever,” agreed Brad Jones, managing partner of Redpoint Ventures and Brentwood Venture Capital. “They come into meetings confident they’re going to succeed, and never even think of failure.”

Of course, the vast majority of business plans still get rejected by venture capitalists. But those compelling enough to warrant a meeting with VCs are often drawing bigger investments than ever.

Relinquishing the reins

Besides gaining more clout in their relationships with venture capitalists, entrepreneurs are also becoming more willing to cede control of their creations. Handshake.com, for example, is already looking for professionals to bring on as senior management.

More and more, entrepreneurs who do get funding realize they may not be the best ones to take the company past a certain stage of growth. Venture firms tell their partners up-front that new blood is often necessary to take a company public. And an increasing number of the entrepreneurs are agreeing.

“In the ’80s, when you were working with an entrepreneur, the hardest thing was getting them to move away from running the business,” said Frank Kline, managing partner of Kline Hawkes & Co. “They would say, ‘I started it, it’s my company.’ They would fight you tooth and nail. Today, it’s not even an issue anymore.”

That’s because entrepreneurs realize that with the potential to go public 18 months after incorporating, and raise hundreds of millions if not billions of dollars in an initial public offering the stakes are too high to let sentiment get in the way.

Letting someone else run the company may take some getting used to, as does giving up equity to bring someone on board. But the potential payout goes a long way toward assuaging any reservations.

“That’s the most difficult part for me personally,” said Chip Meyers, founder of Fandom Inc., which operates a Web site for fans of the science fiction, fantasy and horror genres. “It’s difficult to let someone come in and delegate the responsibility for the company. (But) having 10 percent of a billion-dollar company is better than having 100 percent of a million-dollar company.”

That speaks to the ongoing myth that every Internet company is run by people not long out of their teens, who have gone from geek to greatness in less time than it takes to log on these days.

Seasoned managers

In fact, most successful companies are run by professionals with years of business experience who have been brought on by venture capitalists to make things work. These managers may be 30 or they may be 50, but the important thing is that they’re professionals.

“It’s a misnomer that companies are being started and run by 20-somethings,” Redpoint’s Jones said. “Jerry Yang is identified with Yahoo!, but he’s not running it (Timothy) Koogle is. It’s great if the founders are on the board. But the notion that all the entrepreneurs the VC community backs are 20 is wrong. One of the values we provide is finding the right people to work for these companies.”

John Payne was brought in to run Stamps.com soon after the Santa Monica startup had completed its first round of financing. Jones and other investors in the online postal company felt it was time to bring in someone with experience, and none of the three founders objected. Payne had served four years as president and CEO of a wireless communications software and services provider, and had started several of his own companies before that.

“The time to market is the biggest thing; that ability to move quickly,” Payne said. “(Some entrepreneurs) may think nobody can grow their baby better than they can. Experience helps.”

Not every entrepreneur selling an idea gets funding, of course. Venture firms throw out the majority of the business proposals they see. But a hot idea can generate a lot of interest, and venture capitalists have to convince an entrepreneur with multiple suitors that they’re the ones to go to. Past experience, contacts for business partnerships and a name value all play a part in the recruitment.

‘Emotional intelligence’

“It’s a certain skill set,” Kline said. “You don’t want there to be too many people on the board; five to seven is best. You want an odd number of people on the board, so you can break a tie. It’s having emotional intelligence, knowing when to step in and when not to. It’s knowing the investment bankers.”

The success of many venture funds over the past few years, where many of them have annual returns of 100 percent or more, acts as cachet for entrepreneurs in opening up doors. The name value of the hot venture capital firms can’t be underestimated in luring additional capital and business tie-ups.

“The single biggest (advantage) is, we can walk through any door and get instant credibility,” said Shah of his association with ICP. “That’s very important because we are young.”

Venture firms swear that they’re more interested in investing in companies with long-term business plans than those merely interested in going public quickly, but everyone knows that the IPO is a primary goal. And there can be disagreement over the timing of the grand event.

“With one of my companies, every meeting it’s IPO, IPO, IPO, and we’re just not ready,” said ICP’s Armstrong.

The other thing that bothers some VCs (but few entrepreneurs) is that deals have to be made so quickly that they don’t have as much time to perform due diligence on the companies they invest in. With time to market being what it is, getting in on the ground floor means a decision needs to be made in a month, sometimes less. So venture investors are relying more on gut instinct these days.

Of course, given how much money is being made, venture capitalists are a little more disposed toward taking risks than before. That no doubt suits entrepreneurs, who as visionaries often feel their idea will work regardless of objections that are raised.

Giving up some control to see that vision realized “is part of the game,” Handshake.com’s Shah said. “Having said that, we’re very careful about who invests in us. We think it’s really a privilege to join our company.”