Calling all startup CEOs: What matters most in choosing a VC?

Dorsey & WhitneyThis post is sponsored by Dorsey & Whitney.

The investment landscape continues to go through a prolonged roller coaster ride this year, and we’ve seen the IPO window open and narrow on almost a weekly basis. Despite the mercurial ride, investors infused $7.9B in 790 firms in Q3, setting the investing pace on the best trajectory we’ve seen in the last decade.

Many entrepreneurs are also facing an uphill climb because while VCs are still investing in startups, they are doing so with far more caution and discretion. On the bright side, the micro and early-stage VC market continues to attract new money and announce new funds, providing entrepreneurs with an attractive avenue for capital.

From an entrepreneur’s standpoint, deal terms like valuation, dilution, liquidation preference and control rights continue to be important elements in getting a deal closed. But beyond that, we’d like to know: what else is important to you when you’re doing a deal? For example:

  • VCs with hands-on startup CEO experience: Some argue that VCs should be battle-tested as a CEO in running their own startup in order to acquire the skills and insight necessary to provide real value to portfolio companies. What do you think?
  • Specialists in their space: As entrepreneurs remain nimble and opportunistic, they are also seeking investors who have a deep understanding of their competitors, customers, and technology. These investors can become real strategic assets in meeting new customers and gaining competitive insight.

What’s your opinion on raising funds in this current environment? We invite CEOs to participate in our “Calling all CEOs: 2011 Fundraising Survey.”

It’s just a few questions (and should take you less than five minutes). As a thank you for participating, you’ll receive a copy of the survey results as well as a chance to win an iPad 2!

Take the survey here.

This post was written by By Ted Hollifield, Partner at Dorsey & Whitney, a corporate international law firm with a strong focus on technology-based startups and venture capital. Ted is a partner in the Palo Alto office. He specializes in corporate and securities law with an emphasis on representing startup companies, venture capital and angel financings, public offerings and IPOs, as well as mergers and acquisitions.

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