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Importance of Reputation When Fundraising
Read time 1.9 minutes
One of the most overlooked aspects of fundraising is the personal due diligence that you will go through when raising.
Founders often believe that they are chosen based on their idea, team, traction, etc., but the most important factor in a VC's decision-making is the founders themselves.
This is why VCs will often invest as much time in vetting the founder as they will in vetting the business. This often includes talking to former employers, colleagues, team members, investors, etc.
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As a founder, it is vital that you ensure that your reputation is spotless. When a VC or angel is thinking of investing in you, even rumours about potential problems in your past can significantly decrease your chances of fundraising.
At all times, you should aim to leave the best impression possible, as anyone from your past can end up being the reason a VC does/doesn’t invest in you.
An especially common mistake I see is founders being dismissive of others or getting arrogant after they have raised some money. This has a negative impact on founders. I can say definitively that there have been at least 2/3 of the founders whom I’ve dealt with whom I’ve told VCs not to back, and they have pulled away from deals because of it. Luckily there are dozens of times I’ve been able to give a positive recommendation.
So be positive, be kind and be honest with everyone you deal with.
Would you pass a VC Due Diligence check? |
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