Who is the best-fit VC for my business?
I am often asked this question by entrepreneur friends when they have a choice amongst competing VC funds ready to fund their business, all other commercial terms being more or less equal. First, a universal truth – every VC becomes your friend and advocate if your business tracks well, and value creation continues to happen at a fast pace, post investment. They encourage, talk very well about you at every forum & go out of their way to help you by leveraging their knowledge and networks. However, this is something you don’t know a priori when you have to choose from amongst two or a few interested funds. At the point of deciding which VC fund to invite into your business, the key parameters to diligence out and evaluate are as follows: Brand / pedigree of the fund as an institution Fund’s past investments in your business sector / segment, and the implicit industry focus & insights it foretells Fund’s ability to write or syndicate the next larger cheque if you needed additional capital for the next level of scaling up Profile of the Partner from the fund who is going to take the lead on the investment in your business – past experience, years at the fund, personal chemistry et al Fund’s & Partner’s post-investment behavior with other portfolio companies – this would require speaking with the entrepreneurs of a few portfolio companies of theirs; choose to speak with a set of entrepreneurs … those whose businesses are doing well & also those whose businesses are not doing so great. Discussions with the latter is essential Naturally, if you are not facing the problem of plenty, the question about best-fit VC doesn’t arise – Beggars can’t be choosers!