How can I be sure that a venture capital firm will be a good fit with my company and our goals?
Finance & Capital mentor Guy Kawasaki responds: Before working with any investor or venture capital firm, you should research the firm and, more important, the partner from the firm you will work with.
Check out the firm's track record: ask for references from past investments. Ask those entrepreneurs about their experiences in dealing with the partner. Entrepreneurs who have been funded by your prospective partner should be able to give you detailed information on how he or she has worked with them in the past. Have the VCs been available to consult and give guidance to the start-up's executives? Do they attend the board meetings on a regular basis? Do they open doors for the company with other investors, potential employees, customers, and partners? How many other active investments are they currently working on?
Also, find out if the firm has invested in similar deals, and check the success rate of those deals. Your partner should specialize in your industry sector. Make sure the firm and your partner can provide you with the essential tools you need. They should assist you in building a solid foundation for your start-up. That foundation includes the experience, knowledge, and resources necessary to execute in an existing market or perhaps in a new one. Your VC firm and partner should be knowledgeable, so avoid "drive-by VCs" who provide capital and little else.