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Key Questions 
Founders Should 
Ask Investors 
Adam Quinton 
Founder and CEO 
Lucas Point Ventures 
#FounderQuestions 
Gle...
About Us 
2
Getting the VC Meeting 
• Warm introductions 
• Tools 
- Executive Summary 
- Pitch Deck 
11/13/14 Adam Quinton | @adamqui...
Basic Fit – Are They into You? 
• What is the 
technology/market 
focus of the fund? 
• What stage do they 
focus on? 
• D...
Agenda 
1. 
• Reverse Due Diligence 
Background 
2. 
• Key Things You Need to Know 
3. 
• When to Say “No!” 
11/13/14 Adam...
Why Reverse Due Diligence? 
You Owe It to Yourself 
• It’s your company, your 
team, your life! 
• So put as much thought ...
1. Reverse Due Diligence Background 
• What You Are Getting 
Into When You Take 
Professional Money 
• Doing Your Research...
What You are Getting Into When You 
Take Professional Money 
“The day you raise money from a 
venture investor, you’ve als...
VCs are Demanding but (Mostly) Fair 
11/13/14 Adam Quinton | @adamquinton 9
Doing Your Research 
• Study websites like crunchbase, 
angellist, cbinsights and talk to 
investees 
• Being Prepared: 
–...
Your Goals in Assessing Investors 
1. Understand how a VC operates, 
including how they make money 
2. Work out whether th...
2. Key Things You Need to Know 
• Right From The Start 
– Are We Talking Serious $$$ 
– Ownership/Deal Philosophy 
• Once ...
Are We Talking Serious $$$ 
• How big is the fund they are investing from? 
=> Are you an option or an investment? 
• How ...
Ownership/Deal Philosophy 
• Do they primarily seek to lead rounds? 
• What is their typical target ownership %? 
• How ma...
Investment Process 
• What is the typical time 
from first contact to 
close? 
• What are their key due 
diligence require...
How Things Work 
Post Investment 
• What do they see as their key value 
add? 
• Do they stress that they are “hands 
on”?...
Milestones 
• What milestones will they track 
to determine if they would lead 
our Series A? 
• What happens if you don’t...
Winners and Losers 
• What have their returns been? 
• Ask them to name their main successes and 
failures 
• How many exi...
3. When to Say No 
11/13/14 Adam Quinton | @adamquinton 19
When to Say No 
• The investor is a jerk (not the same as tough) 
• Negotiations get dirty 
• They fail the gut test 
11/1...
Wrap Up 
1. Reverse Due Diligence Background 
- You know why it matters and it’s OK to ask 
2. What You Need to Know 
- Di...
Final Caveat 
11/13/14 Adam Quinton | @adamquinton 22
Thank You and Questions? 
@adamquinton 
adam@lucaspointventures.com 
www.lucaspointventures.com 
www.analysttoangel.com 
c...
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Key Founder Questions Webinar

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As a founder, potential investors have a lot of questions for you. But it's okay for you to ask questions too -- in fact, investors think more highly of those founders who are thoughtful enough to ask the right questions.

This is your company, so you need to make sure that you are doing your due diligence before entering into a long-term relationship with an investor.

Published in: Business
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Key Founder Questions Webinar

  1. 1. Key Questions Founders Should Ask Investors Adam Quinton Founder and CEO Lucas Point Ventures #FounderQuestions Glenn McCrae Chief Strategy Officer EGFS
  2. 2. About Us 2
  3. 3. Getting the VC Meeting • Warm introductions • Tools - Executive Summary - Pitch Deck 11/13/14 Adam Quinton | @adamquinton 3
  4. 4. Basic Fit – Are They into You? • What is the technology/market focus of the fund? • What stage do they focus on? • Do they invest in your geography? 11/13/14 Adam Quinton | @adamquinton 4
  5. 5. Agenda 1. • Reverse Due Diligence Background 2. • Key Things You Need to Know 3. • When to Say “No!” 11/13/14 Adam Quinton | @adamquinton 5
  6. 6. Why Reverse Due Diligence? You Owe It to Yourself • It’s your company, your team, your life! • So put as much thought into due diligence on investors as they do on you • YES – you can and should ask questions 11/13/14 Adam Quinton | @adamquinton 6
  7. 7. 1. Reverse Due Diligence Background • What You Are Getting Into When You Take Professional Money • Doing Your Research • Your Goals in Assessing Investors 11/13/14 Adam Quinton | @adamquinton 7
  8. 8. What You are Getting Into When You Take Professional Money “The day you raise money from a venture investor, you’ve also just agreed to their business model” Steve Blank: Fund Raising is a Means not an End 11/13/14 Adam Quinton | @adamquinton 8
  9. 9. VCs are Demanding but (Mostly) Fair 11/13/14 Adam Quinton | @adamquinton 9
  10. 10. Doing Your Research • Study websites like crunchbase, angellist, cbinsights and talk to investees • Being Prepared: – Allows you to focus on direct questions that are not in the public domain or on issues that are unclear – Makes you look smart, prepared and professional when you interact with VCs 11/13/14 Adam Quinton | @adamquinton 10
  11. 11. Your Goals in Assessing Investors 1. Understand how a VC operates, including how they make money 2. Work out whether the way they operate aligns to help or hinder you and your company 3. Confirm if these are people you want to partner with ... for a LONG time 11/13/14 Adam Quinton | @adamquinton 11
  12. 12. 2. Key Things You Need to Know • Right From The Start – Are We Talking Serious $$$ – Ownership/Deal Philosophy • Once Things Are Moving Along – Investment Process – How Things Work Post Investment • When You Are Closer to the Finish Line – Milestones – Winners and Losers 11/13/14 Adam Quinton | @adamquinton 12
  13. 13. Are We Talking Serious $$$ • How big is the fund they are investing from? => Are you an option or an investment? • How old is the fund they are investing from? • How many checks do they write a year? • What is their typical check size? • How much dry powder/reserves do they keep per investee? 11/13/14 Adam Quinton | @adamquinton 13
  14. 14. Ownership/Deal Philosophy • Do they primarily seek to lead rounds? • What is their typical target ownership %? • How many seed rounds have they done and for what % of them: a) Did they lead the subsequent A b) Follow on in the A c) Not participate in the A 11/13/14 Adam Quinton | @adamquinton 14
  15. 15. Investment Process • What is the typical time from first contact to close? • What are their key due diligence requirements? • Who green lights investments? 11/13/14 Adam Quinton | @adamquinton 15
  16. 16. How Things Work Post Investment • What do they see as their key value add? • Do they stress that they are “hands on”? • Which Partner will be involved? • What is the fund’s policy on governance/Board Seats? • Do you have a say in which member of the fund gets the Board seat? • What is their expectation re exit timing? 11/13/14 Adam Quinton | @adamquinton 16
  17. 17. Milestones • What milestones will they track to determine if they would lead our Series A? • What happens if you don’t hit those? • What happens if you are close but need more runway? • How many times have they participated in a Bridge Round? 11/13/14 Adam Quinton | @adamquinton 17
  18. 18. Winners and Losers • What have their returns been? • Ask them to name their main successes and failures • How many exits in your space in the past three years and to whom? • How did they handle companies that struggled? • Ask for 3 CEOs of investee companies to talk to 11/13/14 Adam Quinton | @adamquinton 18
  19. 19. 3. When to Say No 11/13/14 Adam Quinton | @adamquinton 19
  20. 20. When to Say No • The investor is a jerk (not the same as tough) • Negotiations get dirty • They fail the gut test 11/13/14 Adam Quinton | @adamquinton 20
  21. 21. Wrap Up 1. Reverse Due Diligence Background - You know why it matters and it’s OK to ask 2. What You Need to Know - Difference questions at different stages 3. When to say “No” - It just doesn’t feel right 11/13/14 Adam Quinton | @adamquinton 21
  22. 22. Final Caveat 11/13/14 Adam Quinton | @adamquinton 22
  23. 23. Thank You and Questions? @adamquinton adam@lucaspointventures.com www.lucaspointventures.com www.analysttoangel.com contact@earlygrowthfinancialservices.com www.earlygrowthfinancialservices.com @earlygrowthfs 415-234-3437 11/13/14 Adam Quinton | @adamquinton 23

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