Diligencing Investors

Do you even like these guys?

You should read Fundraising Etiquette and Approaching Equity before this. I want to start off with how to prep, question, and follow up with investors.

Before the Meeting

You have to catch the worm first before it catches you. That means that you should be approaching investors before they approach you. And every meeting has to be as action-oriented as possible. This is why we Track meetings.

There are resources on this. The entire VC industry makes it very difficult to better understand investors. There are some resources like this one and this one on ways to generally check them.

Databases. If you have access to it, companies like Crunchbase have lists of active investments an investor can have. (Mostly traditional, individual companies.) There, sadly, is not a Crunchbase for early-stage holding companies.

Current Portfolio. Most funds have “Portfolios” that show what they’ve invested in before. Look up which companies they’ve invested in, what the founders are like and, most relevant, what their online persona looks like.

During the Meeting

Meetings with investors is just as much for the founder to explore the investor and the investor to the founder. Here are some of the things a VC will start off in their pitch.

• Fund Size. Total amount of money they have.
• Check Size. Average dollar amount they usually give per investment.
• Ownership expectation. When they make an investment, what % of the company to they usually aim for.
• Number of Partners. How many decision-makers there on within the fund.
• % Deployed. The portion of the current fund that they have given to founders so far.

As a Creator, there are some questions that might help better understand 1) the investors interest in Creator investing 2) their intentions as investors.

This isn’t to say that investors particularly hav anything to hide at all. These questions also apply to Management looking to invest in you.

Note: Keep tabs of what metrics they ask for during the meeting and especially the one’s they ask for you to elaborate on. That gives you insight on where they’re concerned OR which metrics their Partners care for. You’ll throw this into your email after the meeting.

Take Notes.

Questions During Meeting:

1. How do you structure muti-asset/Creator/Pre-Founder deals?
1. What they know. You’re asking them this to see if they’ve done their research on the difference between traditional VC investments and what you’re looking for.
2. Being Flexible. If they don’t really know, that’s fine. Starting to do multi-asset investments in individuals is a big decision for a fund! VCs can be transparent about their realistic ability to make investments with this structure.
2. What is your stance on creator equity versus revenue-sharing models?
1. Applicable for talent managers and investors.
3. Are you directive?
1. “Directive” is usually in reference to an investor (or whoever has equity’s) shares having “voting rights.” More on that here.
4. What does your investment timeline look like?
1. Investors usually have an understanding of end-to-end how long is takes from first meeting to wiring money. This can be days or weeks. They will at least tell you the steps typical for them. This can sound like:
1. First meeting → Partner meeting → Multi-Partner meeting → Wire.
5. What do you need from me?
1. You’re going to be prepped for whatever they’re about to say. They can say:
1. A deck…
2. A Data room… or Financials…
3. References… etc.
6. Are there any founders you work with that you think I’d get along with?
1. A soft way for asking them for a reference.

After the Meeting

Add to the tracker.

Follow up on question #6.

Take a minute to reflect.

As always, if you have any particular questions, feel feel to reach out to em@pre-founder.com.

On this page

• Diligencing Investors
• Before the Meeting
• During the Meeting
• Questions During Meeting:
• After the Meeting