

Ask HN: My startup has multiple VCs pitching us. How do we choose? - oversubscribed

My first instinct is to pick two and have them split the round, but they all want to lead.
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gregcohn
Congratulations. Here are my suggestions:

1\. Don't assume they won't flex if you inform them you're willing to work
with them only on your terms.

2\. Before you start optimizing for terms, however, get as much information as
you can about your prospective partners and decide who you most want to work
with.

3\. Choose based on who you want to work with, and try to use the competitive
situation to get you the best possible terms.

When we were reviewing term sheets, we did a lot of diligence, in particular
talking to other entrepreneurs who were in -- or had been in -- the portfolios
of the funds. Of course you want to understand the basics of how working with
that person or firm was, but you also want to get some color on how things
played out for the deals that went sideways or failed.

Startups often have bumps along the road, and opportunities present themselves
for VC's to take advantage or take the high road. How the partner(s) in
question have handled themselves when faced with these options, and how the
fund dynamic played into that, will tell you a lot about how things are likely
to go for you under similar circumstances.

Good luck!

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oversubscribed
So you recommend going with just one firm? We've heard that asking two to co-
lead might be advantageous.

~~~
gregcohn
I wasn't explicitly taking a position on that issue, but rather suggesting
that the "who" is more important than the how.

"Co-leads" can mean different things, and in any nomenclature having two funds
in roughly equal positions in an early-stage round can be great... and can
also have unintended and significant consequences.

If you're not aware of these nuances, please add a seasoned advisor to your
team asap.

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relaunched
Terms. Ceterus parabus, terms (valuation / dollars, etc) will dictate who
wants to be in the deal the most. If you are fortunate enough to be in that
situation, get the most out of it. I will caution you, do it carefully. You
don't want to start off that type of relationship with your investors feeling
screwed...they have long memories.

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ericboggs
Optimize for the long-term relationship, not the short-term transaction.

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ilyaeck
Consider fit, long-term value and their brand above valuation.

