Startup Funding Espresso -- How to Diligence a VC Firm

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In raising funding, the startup should be doing as much diligence on the investor as the investor is doing on the startup.

Start by checking out the portfolio of the investor and making contact with CEOs who have been funded by the investor.

Ask the CEO about their experience with the firm. 

Most VCs tout their entrepreneur-friendly mantra and how much they can help the startup. 

In addition to funding, VCs provide strategy, recruiting, business development, and future funding. 

Ask the CEO about their experience with the VC in these areas.  

Also, check their experience in negotiating the term sheet with the investor.

Look for examples of non-standard behavior such as lock-up terms, and a last-minute change of terms in the negotiations.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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