What the greatest technology investors say about Fundraising

How to Select a Venture Capitalist

Jeffrey Bussgang venture capitalist and General Partner Flybridge Capital Partners and former entrepreneur 

Entrepreneurs should consider the following when selecting a VC: “[] [industry knowledge], [] geographic presence and strategy], [] [the stage the VC specializes in],[fund size], [where the firm is in its fund life cycle] and [] willing[ness] to continue [] support [] in a follow-on round and [] [criteria for same].” 

The VC should provide entrepreneurs value in: “[] 1. strategy  2. recruiting  3. business development [ [] including introductions to prospective partners, customers and acquirers]; and  4. future financing.” 

Future financing issues include “[] whether the follow-on round should be an “inside round” [all current investors], or an “outside round” [] led by an outside investor [].”  An inside round might be easier to raise but an outside round provides another financing source and can validate a new valuation.  “[][Entrepreneurs should discuss with the VC the next round the day after closing the first round] including  “[] [if milestones are met, will VC support continue and if so, at what price (valuation) increase]; [if milestones are exceeded or missed by say 20%, respectively, then the impact thereof.]”  “[Normal tension exists around price]”, so entrepreneurs might check outside the investor group to substantiate market price and terms.

Chemistry with a VC is essential.  “[] the real emphasis on chemistry concerns the thinking styles, ways of working, enthusiasm for the business and a shared view of the future.  You want [] someone [] you can work with and [] trust.”   Jeffrey Bussgang, Jeffrey Bussgang’s book Mastering the VC Game –A VC Insider Reveals How to get from Start-up to IPO on your Terms. copyright 2010,   pg 111,113,118, 120, 122, 123