Key Questions to Ask Venture Capitalists

The 8 Part Test Before Taking a VC Term Sheet: #1. Talk to as many founders they’ve invested in as you can. Do reference checks. You may hear 1 or 2 rough stories, bear that in mind. In fact, expect that. Don’t expect 100% support, at least not for folks at big funds that write big checks and serve on boards. But talk to as many as you can, at least a few. And listen. And ask how supportive they were vs. the others. You will hear advice from a lot of folks to talk to founders that failed, to see how the VCs supported them. I think that’s fine. But the flaw in that advice is that failures are messy. You get more value IMHO talking to founders that built something that got to some scale at least. #2. Ask how many investments they write second and third checks into. VCs that don’t write second checks are less valuable. Their financial contributions will be mostly over after the initial check. At least know the answer here. All things being equal, it’s better to take money from a VC that often writes second and third checks. You probably will need one. #3. See how pushy they are around control. If they insist on a board seat for < 10% ownership, that’s a flag. If they want control disproportionate to the cap table, that’s a flag. #4. Ask if they’ll still be there in 10 years, at the same fund. Just ask.  If you don’t get a clear answer, they may not be. It’s definitely a bummer if a VC doesn’t stay at the firm that invested in you. Ask. And realize that if they don’t run the place, and/or aren’t a “managing general partner” or something similar — there’s a decent chance they aren’t at the firm as long as you’re at the helm as CEO. #5. Ask what’s the toughest founder-VC experience they’ve been through, and what they learned from it. They are always frictions. See what they’ve learned from it. #6. Ask about some of their stories of bringing in outside CEOs to run their startups. See how it happened, and why, and how they think about it. Bringing in an outside CEO at the growth stage is a complex topic, with complex answers. Good to know how they think about it. Personally, I’ve never done it. I’m Team Founder or bust. #7. Ask what their worst investment was, and why. They know. Let them talk about it for a while. Don’t interrupt or stop them :). You’ll learn a lot. #8. Ask what CEO they’ve invested in that they respect the most. This is what they’ll be looking for from you.  If you don’t like what you hear, it may not be a great fit. If you have options.

Founders: before you pitch a VC, make them pitch you. The best founders I’ve worked with never just take the meeting. They ask sharp questions — because they expect capital. They’re deciding who earns a spot on the cap table. Here are 5 questions I’d ask before pitching any fund — and what their answers actually mean: 1️⃣ “What’s your value add — beyond capital?” This flips the script. Great founders want more than a check — they want leverage. Ask for specifics: → What intros have they made this month? → Who actually supports the portfolio — and how often? → Can they name a founder they actually helped post-investment? 2️⃣ “What does your diligence process look like?” Founders waste weeks chasing ghost processes. Don’t. Make them lay it out: → How many calls? → What docs do they expect? → Who gives final sign-off? Once they commit to a process — hold them to it. 3️⃣ “How many new deals are you targeting this quarter?” This tells you if they’re actually investing or just “taking meetings.” If the number is 1 or 2, and your round isn’t urgent for them… That’s a signal. (Especially if you're early and they’re deploying late in the fund.) 4️⃣ “How do you usually work with founders post-check?” You want alignment — not surprises. → Do they do monthly calls? → Are they active on hiring, GTM, or board management? → Or are they just a name in the investor update? Neither is wrong. But you deserve to know. 5️⃣ “How do decisions get made at your fund?” You’re mapping power — not just enthusiasm. If they say “I love this” but can’t bring it through IC without another partner on board, that’s key context. Bottom line: Fundraising isn’t just about pitching well. It’s about qualifying your partners. Ask better questions. Get better investors. #VentureCapital #VC #Startups

When you pitch to a VC we ask lots of questions, but this is the game that two can play. Here is what you can ask to learn more about your potential partner: 1. What is their source of capital? 2. How do they work with their portfolio companies? Do they practice a hands-on approach or prefer not to participate in day-to-day activities? 3. What is their long-term strategy (Basically, why do they invest? Dividends, exit, or strategic interest and potential acquisition down the road?) 4. What are their check size, preferred stage, and genres? Do they lead or not? Do they participate in follow on rounds? 5. What is the stage of the fund? If the fund is at the beginning of its lifecycle, it could invest more aggressively and make longer shots as they have more time. The closer they are to the end of their fund, the more cautious they will be. And it also would affect their expectation for the exit timeline. 6. Gaming VC specific: Do they play games? What kind of games? What do they do and do not like in games? 7. What do they think about future trends and challenges? 8. What will they do if a crisis in or startup happens? 9. What are they looking for and value in companies and in founders? What are their red flags? 10. What does their decision-making process look like? How much time does it take? How much time the whole deal usually takes? 11. Who will you be dealing with after the deal closing? 12. What is their best investment so far?

Is there a trend of founders doing more DD on investors than ever before? Several founders raising A reached out this week asking me what I think about the folks who gave them termsheets. And all decided to take more time to asses the partners inspite of being harassed to take money. No VC can give you the full picture, the best people to help you assess the fit are the founders in that VC’s portfolio and asking the VC questions back. Here are some questions you could ask: 1) How do you handle bad news? 2) How many deals do you make in a year? 3) What percentage of those deals do you invest in subsequent rounds? 4) How many boards do you sit on? 5) If I were to ask one of your founders what your strengths and weaknesses are, what would they say? 6) What are the metrics you're looking for in a company to invest in their Series A? 7) Talk to founders they funded that had to shut down or sold early, ask how they behaved - tip look at Insights, the employee hiring graph on LI, typically good enough proxy for company health 8) What companies in the portfolio do you think we could partner with? Also talk with those related in the portfolio. 9) How much money do you usually allocate to invest in future rounds?(per company) 10) What is his/her mode of communication? There are a lot more questions. Key is that you set a list of criteria for partner evaluation, together with your cofounder. That will make it easier to ask the relevant DD questions and pick the right partner to work with against your most important criteria. The partner matters more than the firm IMHO. This person will be there when you miss the quarter, when you are going through a rough patch with your cofounder, when everyone else needs to see “proof”/revdollars to even listen to you, yet alone to invest when the runway is running short. Are they a person who thinks for themselves or do they need to know what everyone else will do for them to decide if they help you?