If you have ever raised venture capital, you know how important the post-funding relationship is with your venture capital investors. Your pre-money valuation and financing terms are all important needless to say, but to be candid, the post-funding relationship you have (or are likely to have based on a VC’s previous track record) is probably the most important issue for you to consider as an entrepreneur.
An experienced entrepreneur posted a great article on the subject on TheFunded.com, and here is an excerpt of the article…
There are a lot of postings here about getting the initial term sheet and getting the VC on board. However, just like marriages, many of these courting periods can be quite different from the month to month evolving operations and business that we face a year or two down the road. Remember that often these VCs will sit on your board, and direct your business in different ways and depending on your dilution can dictate how operational decisions should be made. Thus, it is important to get an early feel from your VC dialogue, especially how they would respond if the actual business is less than the wonderful picture we sometimes paint in our pitches.
If I can give you piece of advice that you need to follow religiously in your quest for venture capital, it is that you MUST speak to the entrepreneurs and CEOs that have previously taken money from and worked with the VC firm and the VC partner that you are considering. Do not limit your discussions to the entrepreneurs and CEOs of the successful deals, but rather, you should talk to the entrepreneurs and CEOs of the unsuccessful deals as well. In my experience, the VCs play a critical role in both outcomes, and you need to make sure you get the full, unedited scoop before you take money from a VC. This is absolutely critical to your success or failure as a startup.
Speaking of which, I am always happy to share my insights on this subject with folks that are interested, so don’t hesitate to email me with your questions.
You can read more of the original article here >> TheFunded.com: The post funding experience