In all probability, you will pick the first VC firm investment which comes your way and that too, irrespective of how you feel about the VC firm. But, it is advisable that you get to know it well, perhaps not so much to decide whether you want funding from it or not, as that you should know the people who will influence your start-up the most. It won’t harm if you ask it to reply to these questions in an email either:
What is its investment strategy with respect to start-ups?
What are its views on your industry and category?
Whether it has a portfolio company close to your industry and domain and how it feels about that company.
Which is the ideal start-up in its portfolio?
In its opinion, what can make your start-up better?
What is the average time that it starts looking for an exit?
What is its method of working in a company after the funding is done?
To what level of decision-making would the VC firm want to be involved in? Ask for some examples.
What are its thoughts on compensation for entrepreneurs?
Ask for a brief background of all your board members and what they think would be their greatest strength in helping your start-up.
What are the most common mistakes it thinks start-ups make and which are some of the start-ups whom it knows have made?
To tell the truth, everything else which comes to your mind and which is important for you. You and your VC firm should give importance to forming a good working relationship. One thought which every entrepreneur should register in his mind, post-funding, is that it has not given him a loan to fund his start-up or done him a favor thereby. Though it is your responsibility to ensure that your investors get returns, it is not yours alone.
The VC firm has made the investment as a part of its job, after due diligence and after evaluating all the risks. It has also received shares in return for its investment. This is important because the entrepreneur should not feel pressurized by the investment and agree to everything that a VC firm says or does. He needs to be able to make the right decisions for the start-up, even if it means disagreeing with the VC firm. Learn more VC firms only at the University Canada West.