Choosing the right venture capital (VC) partner is crucial for entrepreneurs building a successful startup. While VCs spend time on due diligence, entrepreneurs should also conduct their own due diligence on potential investment partners. Here are five non-monetary value-adds that a successful VC-startup partnership should provide:
1. Domain Expertise: Look for a VC that focuses on your industry and technology area, as they will understand your market and challenges better. Their expertise can make a significant difference in the partnership.
2. Business Connections: Seek a VC that has connections and can facilitate introductions to potential customers, partners, and market opportunities. Check if their portfolio aligns with your target market and if they can provide connections before signing a term sheet.
3. Access to Top Talent: Access to skilled professionals is essential for startups. Inquire about how the VC assists in hiring top talent by speaking with CEOs and CTOs of their portfolio companies.
4. Scaling: Ensure that the VC has experience scaling tech products and can act as an ambassador when approaching customers and late-stage investors. They should be willing to spend time on product sessions and provide valuable guidance.
5. Support: A good VC partner should be founder-oriented, offering guidance and support during both smooth and challenging times. The relationship should go beyond capital investment, with the VC going the extra mile for their entrepreneurs.
Additional tips include asking existing portfolio entrepreneurs about their experience with the VC, such as the volume of business generated, the introduction process, and the level of communication and availability.
Considering these factors and asking the right questions can help entrepreneurs select the right VC partner, providing more than just financial support as they navigate their startup journey.