Roger Sippl is a veteran Silicon Valley entrepreneur and executive, well known as a founder of CRM software company Vantive and database pioneer Informix. But that was then; now venture capitalists want to know the prospects of Sippl’s latest startup, a Web services company called Above All Software. To find out, VC group J.P. Morgan Partners turned to its Technology Council, a group of 20-plus CIOs and CTOs who gathered in Las Vegas last November.

What started as a product pitch turned into a reality check. The Technology Council members weren’t shy about letting Sippl know he is ahead of their Web services adoption curve. "We’re still dipping our toes in the water," says Enzo Micali, CTO of 1-800-Flowers.com, who was one of the few IT execs present who agreed to give the technology a try.

Tough love, perhaps, but this is the kind of insight from IT leaders that startup companies and their venture capitalist backers crave. Stung by the failure of so many startups after the technology bubble burst, these days VC firms like J.P. Morgan

Partners are relying on CIO advisory groups. The Technology Council guides J.P. Morgan Partners (JPMP) on technology and provides straight talk on whether a portfolio company is selling goods that IT execs want to buy.

In exchange for their wisdom, CIOs get a first peek at new technologies and, if they choose, a chance to work with a startup and shape the future features of its product. "It’s almost like having your own R&D arm," says Lars Rabbe, CIO of Yahoo. "You get all these startup companies so you don’t have to do it yourself."

Besides the insight into new technologies, CIOs who participate in VC-sponsored councils say the chance to connect with their peers is a huge benefit. A CIO thinking of participating in such groups must be careful to avoid conflicts of interest, however, and should make sure that the VC firm knows the CIO’s needs well enough so that it doesn’t waste his time on irrelevant technologies.

How CIO Councils Work

The specifics of VC-CIO relationships vary quite a bit. There are about 700 venture capital outfits in the United States, ranging from firms that seed-fund new ventures to later-stage investors willing to gamble a lot of money on a company with a product. Though the National Venture Capital Association and other organizations that track the industry can’t pinpoint the number of VC-organized CIO councils, dozens of firms are quietly using the groups as a crucial part of their investment strategy.