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Performing due diligence on VCs - before the meeting

Suzanne Dingwall has some good tips on things to check about a VC before the meeting.
You should never take a meeting with a VC until you've determined whether there is a likely fit between the two of you. Where is the VC in its fund cycle - is it at the beginning of a new fund? Is it about to start raising its next fund? Is this VC raising a fund now, and having difficulty? The answers impact your ability to build an investment syndicate (who wants to co-invest with a lame duck fund?), and suggest how you need to adjust your pitch to fit the circumstances.

If the VC is a generalist (most in Canada are), you may want to adjust your pitch so it focuses more on how the current opportunity is an extension of other industries in which they have had success - for example, pitching enterprise 2.0 as an inevitable extension of current enterprise applications, rather than as a business model discontinuity.

If your VC is focused on your sector, you need to understand where it has already invested in the value chain, and whether your business overlaps with those plays. This VC is not looking for a missionary investment, but for a company that creates real barriers to entry. No "first mover advantage" slide here (in fact, keep that phrase out of all your pitches, please).

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. View sample issues of Venture Intelligence India newsletters and reports.

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