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Step 4: I’ve figured out which investors to pitch, and I’ve got multiple term sheets. How do I figure out which investor to go with?

We are going to start this section with a few assumptions, some crazier than others:

  • You have multiple term sheets from investors. We have faith you’ll get this given the preparation you’re doing as you prepare to pitch investors. But this is rare oftentimes so just fyi. Getting even one termsheet that is palatable to you is a great accomplishment that you have convinced someone of your vision.
  • Each term sheet is identical in the terms, valuation, etc it offers. This is our crazy assumption. Term sheets will be different and those will likely drive your decision. This portion of reverse due diligence on investors is not about the term sheet.
  • You are indifferent amongst the investors who’ve given you a term sheet. Again, this is a crazy assumption. You probably have a preference or gut feel on who you will go with, but our reverse due diligence guide will assume you are really torn and have no idea.

So with those assumptions in place, you are at a crossroads. Who do you go with?

As mentioned at the beginning of this guide, the reverse due diligence process for investors becomes less fact-based as you get further. Step 4, the last part of the reverse due diligence process, really comes down to the people given our assumptions above.