What partner from the venture capital firm or angel investor is going to be your primary contact or on your Board potentially?
Once you know who your primary liaison and relationship will be with at the venture capital firm or the angel investment group, it’s time to ask a few questions:
Am I interacting with someone from the firm who is a senior professional or is it someone junior?
This is important potentially for a few reasons. Of course, you’ll have to use your judgment to understand if the person you’ll be liaising with is:
- Going to be valuable – Does the person have domain expertise, a brand, connections
- A reflection on how important your company is to them – If they’ve put a junior person who doesn’t understand your space on your Board or as a Board Observer, does that mean anything? You don’t want to read into things unnecessarily but these are important considerations. If raising venture capital or angel investment goes beyond just money, you want the best person from the firm or group on your team?
Will this person be good to work with when the proverbial excrement hits the fan?
- Things will not always go well. You’ll run into some bumps and so is the person you’ll be interacting with going to be someone you can work with when that happens? This doesn’t mean that they’ll blindly agree with you, but will they be fair, objective and solutions-oriented?
- You are getting married when taking on an investor, and divorce, if it happens, will likely be unpleasant for both of you. However, you don’t have the benefit of diversification that a venture capitalist or an angel investor has. All your eggs are in one basket and so you want to ensure the person(s) you’ll be dealing with are folks that you want in the trenches when things don’t go to plan and who will look out for their best interests and yours as possible as well.
Does the person get what you are doing?
- If your investor liaison (Board member, Board Observer) doesn’t get what you are doing, this means they may (1) not add value, (2) may waste your time trying to get up-to-speed so they sound smart when with their colleagues and (3) may come up with ideas or ask you to do things that distract you from what you are doing.
To determine the above, you’ll obviously have to rely on your own interactions with people at the venture capital firm or the angel group. You will also want to talk to other people who have received investment from the firm and who specifically dealt with the individuals you will be dealing with. Based on your knowledge of their portfolio, you should be able to use your network to identify some portfolio company CEOs who you can chat with over coffee to delve a bit deeper.
Stay positive about and show excitement about the prospect of working with the investor and try to understand what the portfolio company founder or CEO likes about them, what they wish they did more of, their best experience and their worst experience with the investor.