Comments on: Do Diligence on Us

By: Mark MacLeod

Mark MacLeod — Tue, 11 Dec 2012 17:31:00 +0000

It only speaks to most VCs egos that they would offer up sub par references not really knowing what the entrepreneur thinks.

I always encourage entrepreneurs to call any and all of the CEOs I have backed. Not every company has turned out as planned. But that’s to be expected. But I do hope I am building long term relationships with every founder. be real for the long term and you won’t get crap references.

By: ALBsharah

ALBsharah — Tue, 11 Dec 2012 07:19:00 +0000

One of the most concise posts on the topic I’ve seen, nice work. I think it’s hard for most entrepreneurs to say “no” when it comes to the wrong investor… $$$ are shiny and hard to ignore.

It’s important that while it may be more work up front to find the right investors (when they just want to close the deal and get to work), it’ll pay dividends in time and stress down the road…

Nice bumping into you at the GeekWire gig the other night!
Cheers…

By: Rand Fishkin

Rand Fishkin — Tue, 11 Dec 2012 04:16:00 +0000

One of the things that surprised me most in the VC process I ran in 2011 and 2012 was how, when a VC offered to have me chat with some of their CEOs, they’d often damn with faint praise, or even give some critical feedback. I loved that the loyalty was to other entrepreneurs rather than their investor – and it made the praise Brad (Feld) was given by the folks he’d funded additional weight.

This is good advice Greg!

By: Javier Sandoval

Javier Sandoval — Tue, 11 Dec 2012 03:01:00 +0000

I would add however to ask the VC to connect you with a startup they backed that flopped or struggled. It’s important to know how a VC behaves in tough times. They’ll respect that you’re professional about who you work with.

By: Javier Sandoval

Javier Sandoval — Tue, 11 Dec 2012 02:58:00 +0000

Dan Shapiro ^ explains the tough questions. Those questions will prevent you from wasting time with a “walking dead” VC.

By: Scott Porad

Scott Porad — Tue, 11 Dec 2012 00:28:00 +0000

I would enjoy an entire post on #2. What are the tough questions that an entrepreneur should be asking? And, what are the right and wrong answers?

By: Greg Gottesman

Greg Gottesman — Mon, 10 Dec 2012 22:58:00 +0000

Good point, Dan!

By: Dan Shapiro

Dan Shapiro — Mon, 10 Dec 2012 22:30:00 +0000

Great article, Greg. I suggest one thing more: ask the investor directly about the sensitive details of their fund: how big is the fund, how much is still available, how far in to the fund life are they, how much do they typically reserve for follow-on investments. If it’s a seed round, ask what percentage of seed investments they participate in the series A, and what percentage they lead.

Entrepreneurs are sometimes worried about looking pushy or alienating the prospective investor, but asking hard questions like this in a constructive, positive way makes you look like a better investment, not a worse one. And investors do tend to prefer entrepreneurs who are choosy, not desperate.

By: Jerome Gentolia

Jerome Gentolia — Mon, 10 Dec 2012 20:53:00 +0000

I assume Rand showed you a screen shot already? Or do you still need me to send you a screen shot?

By: Rand Fishkin

Rand Fishkin — Mon, 10 Dec 2012 18:45:00 +0000

Christopher – here’s an upload of the problem – I’m seeing a few overlapping text blocks: http://min.us/lOwHpgtTASsef