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An Entrepreneur’s Advice on Picking Your VC

April 7, 2009


I just read a fantastic post by Redfin’s Glen Kelman sharing his own experience and thoughts working with VCs.

Of course, I am totally biased, so consider the source; but I found Kelman’s post really refreshing. He is honest about his earlier disdain for VCs; does a good job being cynical enough to want to discern those VCs who are BS artists; and recognizes that while different VCs have varying abilities to “add value,” being able to develop a good partnership with your investors and board members makes the job of being a startup CEO much less lonely.

I particularly liked the questions he suggests you ask a VC when you are considering taking his/her capital:

  1. How do you see our market changing over the next few years? Your investor has to develop her own ideas about your business sooner or later. At this early stage, this question is mostly an IQ test.
  2. When times have gotten tough for your portfolio companies, how have you helped them out? Anybody can get lucky with an investment that takes off like a rocket; all you have to do is hang on for dear life. A VC’s true measure is how she gets all her other companies pointed in the right direction.
  3. Who are your favorite entrepreneurs? Some people genuinely like entrepreneurs, notwithstanding their volatility and constant intellectual jousting. Most people fake it. If the investors’ fave five is composed of people she hasn’t worked with, she’s faking it.

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