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Rules - 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?
