Could I see myself or my wife working for/with this CEO? Would I quit my job and go work for this person? That’s the crux of it. If you’re a CEO out raising money, that is the lens with which you should view every interaction with a VC. You should come across in such a personally compelling way that they’re drawn to you. That’s the bar they are holding you to.
The right amount of diligence is a great topic to think about, whether a company is ready for investment or not. This episode was made for founders getting ready for investment, or founders who want to start asking the right questions about their work. Ben and David discuss in depth what you can reasonably expect from VCs conducting diligence, and how to set yourself up for long-term value creation. Most importantly, Ben and David discuss the questions you should be prepared to answer and the questions you should be prepared to have asked about you.
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Links from the Show:
[02:45] – The importance of Diligence
[03:50] – Early Stage and People Diligence
[13:15] – Market Landscape
[18:02] – How can an Entrepreneur find the right VC for the right landscape?
[22:11] – What is the best diligence a found has done on Wave Capital?
[24:10] – ‘Where does the money come from?’
[29:35] – Diligence on the Product
[37:06] – Post-Term Sheet Diligence
[41:02] – Accounting Diligence
[42:47] – Legal and IP Diligence
[48:30] – Diligence on Seed vs Series B and beyond
[50:00] – Diligence Variation based on time, risk, and opporunity
People Worth Knowing:
Companies Mentioned in Episode:
Episode Specific Terms:
IP Assignment Agreement
Pre and Post Term Sheet Diligence
Product Risk vs People Risk
Representations and Warranties
Sovereign Wealth Fund
The Data Room
VC Sourcing Strategy
Ben and David’s Affiliations:
Wave Capital, @WaveCapitalVC
Pioneer Square Labs, @psl
What is ACQ2: The Acquired Interviews?
ACQ2 is Ben and David's conversations with expert founders and investors. Acquired the stories of great companies — and ACQ2 dives deeper into the lessons we can learn from them, often with the protagonists themselves.