Diane Mulcahy provides valuable questions to help discern the compatibility of an investor before accepting funds for your next project.
In the race to get the check in hand, most entrepreneurs don’t do in-depth due diligence — or any due diligence — on the venture capital (VC) firms they pitch. Founding teams eager to raise capital to grow their companies enter into long-term partnerships with VC firms they don’t know well. It’s a risky strategy that can leave startup CEOs in mis-aligned partnerships with unrealistic expectations.
The four questions covered in depth are:
- What is the VC’s track record?
- How much money is the VC personally investing?
- How big is the VC fund?
- Do you have a list of portfolio company CEOs?
Read the full article, Don’t Take Money from VCs Until You’ve Asked 4 Questions, on the Harvard Business Review.