We hear a lot of talk about what VCs look for in entrepreneurs. But let’s turn the table for a moment. What should a founder look for in a VC partner? There are a lot of obvious traits – domain knowledge, sense of partnership, history of success…but what else should you look for and how? Well, speaking from the dark side, if I were seeking a VC partner, here are a few things I would do:
Reference potential VCs at least as hard as they reference you. Talk to their current and former CEOs. Ask about the good times and bad, and how they behaved. Call their co-investors, and get their opinions. Ask your potential VC partner what their investment thesis is for your business. How much money are they looking to make? Does that align with your goals? This may seem premature for a young company, but it’s worth trying to understand what they are looking to achieve. Understand where your investment falls in their overall fund…are they at the end or beginning of investing the fund? How is the fund doing? When will they be fundraising again? See if they help you before they “should” be helping you. Do you get the sense their questions are trying to help them find reasons to fund you or not to fund you? Ask about their mistakes, where they lost money and why.
And see if they like donuts. I would not trust anyone who doesn’t appreciate a good donut.