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Advice Entrepreneurship Startups Venture Capital

Founders Doing Due Diligence On Investors

Doing due diligence on investors is something that should be discussed more frequently. It’s important for founders to take the time to understand who the investors are, how do they help and support the companies they invest in, how do they react when things aren’t going as well as hoped for.

Spending some time doing due diligence on potential investors can save you lots of grief in the long run. I’ve talked about this often and it’s great in theory but it’s not as easy to do in person. Now that I’m back on the operating side of a startup, here are some tips on how to diligence possible investors:

  • Start with making a list of the investors you think would be interested in your startup keeping a few broad things in mind (use a spreadsheet or a CRM)
    • Vertical the company is in and is the VC firm + partner interested in the space
    • Stage of the company and does the firm invest at this stage
    • Check size that you’re looking for and what the firm writes
    • Any existing competing investments that the firm has made
  • Find people you know that may be connected to these individuals
    • Have a prepared email that you can send to the people you know who can possibly connect you to these investors. The email should be a very short email that explains why you would like to connect to the investor, a summary of your startup and have a teaser deck attached. Some people like to use DocSend but I prefer a PDF.

Once you’ve exhausted your personal network, find 5-10 founders that the firm and the partner have invested in (ideally should include failed startups).

  • Reach out to them on social media, via common contact or a cold email to see if they will chat with you about your startup and provide some advice on your round as well as share some info about the investor(s). If they say yes to a meeting, do some research on them, e.g. understand what their startup does, maybe check out the product, use Crunchbase to get an idea of some of their investors, how many rounds they’ve raised, you can use tools like Workomo (shameless plug) to get some background about them and common interests you might have.
  • Founders can be very open with other founders. Do what you have to in order to maintain that trust. Use the meeting to do your due diligence on the investor. Ask the founder about the firm on your list and how they were to work with through the ups and downs. Make sure you are clear that this is confidential and DO NOT repeat it to anyone, even in conversation. Don’t be shy about getting into details as long as the founders are comfortable sharing. Don’t pry but don’t hold back on asking the questions you think will help you get an understanding of who the investor is and how they work.

In short, make sure you take the time to do your due diligence on investors. It’s critical to know who you’re potentially partnering with for the duration of your startup.

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Early-Stage Startup Deal Terms in India 2020

There was a recent thread on Twitter about how even in 2020 angels and VCs in India continue to put ridiculously onerous terms into early-stage deals.

I recently invested in an Indian startup that closed a pre-series A round and the documents were more than 100 pages. When I was at 500 Startups, with the help of BMR Legal, we modified the 500 Startups KISS Agreement for India and open sourced the documents in the hopes that it would simplify early-stage documentation and reduce the amount of time to close a deal and the cost of doing early-stage deals in India, much like Series Seed docs and the SAFE have done in the US.

Here’s a presentation I gave in January 2020 at CIE-IIIT Hyderabad on some of the deal terms in India to watch out for. Unfortunately, there’s no video of the actual presentation I gave so I recorded a voice over for you.

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If there are additional terms you have questions about or terms you’ve come across that are onerous, please leave a comment on the YouTube video and I will respond. Hopefully, other founders will benefit from it as well.

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Angel Investing at Scale with Fabrice Grinda

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Fabrice Grinda is the founder of Zingy, Aucland OLX and FJ Labs, a VC firm and venture studio based in NYC, focusing on marketplace businesses. FJ Labs has invested in hundreds of companies such as Alibaba, Bla Bla Car, Zolostays, Brightroll, ZoomCar and many many more. In 2018, Forbes named Fabrice the #1 Angel investor in the world. On this episode of Invest Stream, Fabrice shares his journey as an entrepreneur and how that led him to invest in startups in France and Europe, his thoughts on the cryptocurrency vertical, what approach he took to working with the entrepreneurs that he invested in and much much more.

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How to Start Your First Early-Stage Venture Fund

Arjun Dev Arora, Founder of Valence Advisory, shares lots of pro tips about how to go about raising an early-stage venture capital fund for the first time. Why should one do it? What are some of the pitfalls? What do Limited Partners (LPs) want to see and what do they not like and a lot more about how one should go about raising a first time fund.

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Arjun was a Partner at 500 Startups, Founder & CEO of ReTargeter (acquired by Sellpoints in 2015), and head of business development @ Yahoo! Real Estate and has been recognized at the: White House, United Nations (UN), and the Global Summit for Entrepreneurship, for his success and commitment to a values-centered organization.

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Off the Beaten Path: Wall Street to Startup Investor – A Fireside Chat with Me!

Who is “Pankaj Jain” besides being the founder of Invest Stream and Founder Craft What came before? 

If you’ve followed my erratic writing over the years, you might have some idea. I’ve been a risk manager at the largest hedge fund in the world, Long-Term Capital Management (LTCM), operator, product manager, entrepreneur, community builder at BarCamp Delhi, co-founder of HeadStart Network Foundation and Startup Weekend India

I’ve been a venture capitalist at TLabs and 500 Startups, advisor to startups, funds and platforms like AngelList India and most recently, a dabbler in startup and venture capital related video content

My friend and former colleague, Ritesh Bansal, suggested interviewing me on the show to bring out more about who I am and what my journey has been. Naturally, I couldn’t refuse an invitation to be on my own show. Get ready for a frank and open discussion between an old friend and I. This is going to be Ritesh’s first time being visible on any social media channel, so please be gentle with him. It’s an #AMA so feel free to ask me anything.

I’m looking forward to seeing you for the AMA-style chat on July 28th, 2020 at 9:30am PDT / 12:30pm EDT and 10:00pm IST. If you’d like to RSVP and have a calendar invite, click the button. Otherwise, head over to YouTube with your questions.

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