Not all money is equal: Avoiding the toxic investor
Or why entrepreneurs should care about how Venture Capitalists choose who is investing in their funds i.e. who makes for a good L.P. (Limited Partner) and who doesn’t.
Mark Suster, an entrepreneur turned VC, argues that all money is not created equal and that some of it is positively toxic.
I recently read a blog post by Beezer Clarkson, Managing Director of Sapphire Ventures about why entrepreneurs should care about from whom their VC funds raise their capital.
I spent a bunch of time thinking about this position — especially since Beezer is an investor in Upfront Ventures. There are a lot of things I think entrepreneurs should care about when raising from a VC:
- How big or small their fund is?
- What percentage of their fund will you be?
- How much money will they reserve from their fund for future investments in your startup?
- How much pull that investment professional has within his or her fund? (which matters for getting future support)
- Where the fund is in its investment cycle (year 1 out of 10 or year 7 out of 10)?
- How much experience they have in your sector?
I could go on for a long time. Maybe … Read the article here