When you’re out saving the world, it sometimes helps to imagine that you’re a superhero. The startup world is bright and exciting — full of “Pow!” and “Wham!” — but you can’t do everything on your own.
In this bright and crazy comic-strip world, your investors are part of your dream team, popping up at just the right moment and kicking butt on your behalf.
Finding the right venture capital fund to support your startup is like holding auditions for a loyal sidekick. You need to find a balance between brains and brawn, size and skill. You need investors who offer what your startup lacks and understand how to help you succeed.
Here are five questions you should ask as you put together your dream team:
1. What’s the VC firm’s average cheque size?
This is important to help you determine if the firm can lead your round, co-invest, or if it’s not going to be a fit at all. It’s also important to pay attention to the cheque size that the firm is writing you, relative to the rest of the investments. This seems like a no-brainer, but if you’re receiving a cheque from the venture firm that’s larger than its usual size, you can expect the venture fund to be more involved and vice versa.
Some firms will have this information on their website, along with other details to help you make your choice. Public databases like CrunchBase and AngelList can also tell you plenty about VCs, their habits, and how they’ve invested in the past.
2. What kind of support can it offer?
Look at the firm’s background to gain some insight into its areas of expertise. Will the firm’s expertise help supplement your startup’s shortcomings? For instance, if you need help in the tech department, look for a VC firm that has experience scaling tech teams.
You can find a lot of this information online, but talking to VC’s portfolio companies can also be incredibly illuminating. These companies will have firsthand experience and can tell you what type of support you can expect.
3. Which of its partners would you be working with?
Your experience working with a venture capital fund will vary greatly depending on which partner is assigned to your business. If you hit it off with that partner and he or she understands what you’re trying to do, you’re more likely to have a good working relationship with the firm as a whole.
As a first step, explore blog posts and social media posts written by different partners to uncover their different styles, tastes, and areas of expertise. LinkedIn is another tool for helping you understand your potential partner’s network.
4. What is its working style?
If you know you prefer a hands-on investor — one who is willing to check in with you on a weekly, or even daily, basis — don’t waste your time looking at VC firms with an approach to monitoring and motivating their investments.
The firm’s working style should be an important deciding factor when choosing your dream team. One of our portfolio companies was overwhelmed with interest from investors during its seed round. We weren’t very well known at the time, but when we encouraged the company to speak to our existing portfolio companies about our working style, the founders realised we would be a much better fit for them than other better-known VC firms.
5. Will it help you secure follow-up funding?
Whichever venture capital fund you choose and whatever it may be offering during this round of funding, it’s unlikely to support you forever. Choose a firm that has credibility among later-stage investors so your partnership will help you gain additional funding down the road.
To get an idea of the credibility the firm can give you for future rounds, check out the VC firm’s current co-investors and later-stage investors who have subsequently funded their deals.
By asking plenty of questions and doing a bit of detective work up front, it’s possible to build a team of investors who will not only offer monetary support, but also motivation and future opportunities for your startup. These are superpowers your dream team shouldn’t be without.