Rule 14: Your Venture Capitalist is your partner

A lot of people can write checks. Be smart about who your investor base is. Bringing in the right investors is like getting free labor. If you've got a choice, choose investors you want to work with, just as you do with employees. After all, that's one of the criteria VCs will consider when choosing you and your team. At the end of the day, they are investing in people. The quality of your investors will say something about your company forever when you seek alliances, when you recruit top talent, when you seek another round of funds, and when you go public. Don't waste time talking to a venture firm that's not right for your business.

 

Each has its favored areas; some avoid Internet-service firms, for instance, and focus on broadband technology. Before approaching any firm find out if it invests in your type of company? Does it prefer to make seed-stage investments or those closer to the IPO (initial public offering?) How much cash, typically, does the firm put into a company? Does it spend close to its home base or elsewhere?