看看VC的兜里有多少钱

看看VC的兜里有多少钱
How deep are the pockets of your VC?
by John Nesheim
During fly fishing last week in a secret place in the high mountains, I had to dig deep into my reserves of patience and determination, as well draw upon extra physical stamina and clever tactics, in order to catch the fish I was so eager to land in my net. I dug, the reserves were there, and I landed some beautiful trout.
"Who is your investor?" is one of the first questions I ask an entrepreneur who contacts me with questions about his startup.
The answer I am seeking is a response to this question: "How deep are the pockets of your venture capitalist?"
In other words, how much cash is that VC willing to invest in your startup, year after year, when all goes bad, until you finally turn your hard work into business victory (a successful liquidity event).
So you must check out VC candidates before you accept money from them. Here are some questions I suggest you put to the VCs on your list:
How much cash does your fund have left to invest before you raise a new fund? Often you will find they have only a few tens of millions of dollars remaining. That may be enough for a single two million dollar investment in your company, but what if you need three more rounds of that size before your company turns cash flow positive?
What is your history of sticking with difficult startups that needed more rounds of financing than were planned? Look for real examples. Talk to the CEOs and founders of those companies. Quality VCs will be glad to give you the contact information so you can investigate and learn. You do not want a VC that cuts and runs (no more investment) as soon as the first bad news arrives (and it will).
What have been the terms of bridge loans the VC has done within the past two years? Look for a VC that will explain the situation that led to the bridge loan, give you the terms and explain the outcome that followed. Top tier VCs have nothing to hide. The more you know in advance, the easier it will be for all of you when you get to doing your first bridge loan.
Be aware that angels rarely invest more than once in a startup. They are not deep pocketed VCs, even if they are very rich. Angels are very one time oriented.
Tiny venture firms are reluctant to put in cash to save a startup. Their fifty million dollar fund cannot afford to take such bets. But a five hundred million dollar fund will.
Corporations rarely do bridge loans. Like never. So don't count on them to follow up on the bridge when you need them to. They will accept dilution and say goodbye, exit the board and start forgetting to answer your emails.
BOTTOM LINE: Do your research before putting a VC on your target list for your next round. There are more than two thousand to choose from. You can find those that have deep pockets. Put them on your list. They will stick with you during the hard times. They know the real startup world is mostly filled with such difficulties. And they know that bridge loans are a good way to continue growing your startup in a healthy manner. This is part of what you need to know to add to building your unfair competitive advantage. A CEO who knows how to pick VCs for the hard times is a very valuable CEO.