What the right VC brings to the table - besides funding
Any startup that’s raised venture funding knows it can be a gruelling process. It can take hundreds of meetings, calls, and pitches to land the capital you need to grow. However, VCs provide more than just capital and this can be a huge enabler for startups as they grow and scale. It’s therefore vital to look beyond the cash and ensure any VC you’re looking to work with is able to offer you more than just money.
Does this investor have expertise in the right fields?
Working with a VC that brings with them sector experience, contacts, and industry intelligence is essential. If you’re looking to enter a complex field, such as healthcare or fintech, having backers who can help you navigate the sector and its nuances can be what makes the difference between scaling and failure.
These investors can provide vital introductions and advice, but they’ll also be able to help you shape a realistic roadmap to commercial viability. For example, anyone who understands the healthcare industry at a granular level will know that commercial success isn’t linear; it takes time and requires a roadmap that reflects that. The last thing you want is a VC who doesn’t know the space pushing for scale that is unrealistic. Instead, you want one who can strengthen your product and business plan before you push ahead to the next phase of growth, priming you for success instead of piling on the pressure at the wrong time.
A fund or individual investor who knows your target market can be worth their weight in gold.
Can they listen as well as advise?
As well as dispensing advice and opinions, good VCs know how to listen. The ups and downs of startup life mean the value of a listening ear and having a source of trusted counsel cannot be overstated.
Being able to trust your investors, and receive a non-judgemental ear in return, means you can tap up their wisdom when it comes to company issues, staffing troubles or, in some cases, personal challenges. Having VCs you can turn to for advice when you’re struggling can play a hugely important role as a company grows.
Whilst your investor might have a lot to say that’s of value, take note of when (or if) they’re also able to stop and listen.
Do they have faith in you, not just the product?
Investor relationships aren’t between a fund and an idea - they’re between people. You need to make sure that the VC has faith in you, not just the product or software you’ve created.
Be sure to assess how interested the VC is in your background, your motivations for launching, and the culture you’re looking to build as a company. Have they taken time to get to know you as a person? Just as you need to trust your investors, they also need to trust you. If they don’t have faith in you as an individual, you’ll struggle to make the partnership work.
So before you sign those term sheets, make sure you’re thinking about the long-term implications of what taking investment means. Because VCs should be bringing more to the table than just cash.