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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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Angel Investing Business Entrepreneurship Investing InvestStream Video Startups Venture Capital

A New Livestream Series – The Raise

As founders, a VC, angel and, now, through our advisory business at Founder Craft, we get asked for advice or “feedback” a lot. The questions range across a wide spectrum. However, they have one thing in common – they as for our opinions.

My Partner at Founder Craft, Gregarious and I have been doing some live streams over the last few months in addition to my InvestStream videos on YouTube and Instagram.

A little over a month ago, I was in Oman for an Investment Committee meeting and Greg messaged me. He said he was thinking about raising money for his new startup, Fanabulous! and what did I think about streaming the process.

I thought it was a great idea. Doing each episode, completely unscripted, focusing on him as a founder preparing to raise money for his new startup, should resonate with founders and even with some investors.

After some fine tuning, we launched ‘The Raise‘, an interactive, live-stream where Gregarious (the Founder) and I (the Investor) dive into the process of his fundraise.

You can subscribe to the YouTube channel to receive notifications of every episode. If you have questions, feel free to throw them up in the comments or drop us an email at raise@foundercraft.com

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Angel Investing Entrepreneurship InvestStream Video Startups Venture Capital

4 Tips for raising money for your crypto/blockchain or tech startup

In this video, I answer a viewer’s question about raising money to take one’s idea and turn it into a reality. The question was focusing on ideas in the crypto/blockchain world as well as more traditional tech startups. I share 4 things I believe are important before one starts fundraising.

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