Blog Post

A few more things no one tells you about VC…

Despite our regular posts on angel investors and coverage of how to pitch, land, and then “deal with” VCs, we still get plenty of recommendations for funding topics we’ve forgotten, neglected, or simply not heard about yet. (Keep ’em coming!)

Today I got a nudge from Aruni Gunasegaram, of Austin, Texas. Aruni is the founder of Babble Soft, a company she started with her husband to create Web and mobile communication software products that help simplify parents’ lives. (They’re new parents, themselves!)

After reading our post on 7 Steps to Land and Leverage an Angel Investor, Aruni sent us 7 Things No One Ever Tells You About Raising Venture Capital, by Ben Yoskovitz.

A serial entrepreneur who has raised pro-money, Aruni likes Ben’s list. She suggested we share it.

Ben’s ‘7 neglected VC Tips’ (in brief):

  1. Signing a term sheet is only step one.
  2. It might not be worth negotiating the finer points of the deal at the term sheet stage.
  3. Due diligence is an “interesting” process. (Ben links to a good explanation from Softbank EIR Furqan Nazeeri, on what to expect in the DD process.)
  4. The paperwork is extremely detailed and extensive.
  5. Most of the deal focuses on negative details.
  6. You pay all the legal bills.
  7. Don’t just focus on [only] how much you’re raising and what chunk of the company you’re giving up.

Ben is also a founder, of Standout Jobs, based in Montreal, Quebec Canada. Read the full text of the list, and more from Ben, on his Instigator Blog. Aruni shares some her own founders’ tips on entrepreMusings.

8 Responses to “A few more things no one tells you about VC…”

  1. Aruni:

    I came to terms with a small seed fund, traveled a great distance to sign the papers, and jet-lagged and bleary eyed, fresh off the place, bent over (literally) to sign.

    Just as my pen was poised over paper, an assistant came in and said, ‘that;s an incorrect draft, please use this one’, and I looked at the 40 page document, insisting that I read it over, even without my counsel.

    It is NOT easy standing on one leg trying to find the worm in the apple, but I did, and it was a doozy.

    I walked out. I felt that there was a lump in my throat the size of a tangerine, all the way to Boston.

  2. I happen to know both Ben whom I met through his blog and Aruni, whom I met through her husband Erin. They are both passionate and capable entrepreneurs and the post that Ben is one of the reasons why I think that they are both winners. I am happy to say that I gave similar advice today to a dotcom looking to start their VC raise soon – so I’m glad that my comments are validated by someone who raised VC funding recently.

  3. Thank you for linking over and sharing my thoughts with your audience. Hopefully the process of raising financing will continue to get more transparent, which certainly helps those raising money but also VCs and angel investors. If a little more transparency and information helps diminish the tension and conflict that can arise between entrepreneurs and those providing financing even just a little bit, that’s a big win.