How to Make Sure You Pick the Right Investors - Advice from SaaStr CEO Jason Lemkin
In our latest video, SaaStr CEO and Founder Jason Lemkin delves into 11 ways you can identify bad investors before signing a term sheet.
Use this 10-part test to avoid common pitfalls:
#1 Do reference checks
#2 Ask if they write second or third checks
#3 See how many control they want
#4 Figure out their long-term goals
#5 Ask about the lows too
#6 Ask about outside CEOS
#7 What was their worst investment?
#8 Ask what CEO they're a fan of
#9 Should you ask your potential investors to sign an NDA?
#10 The best advice if you're going from bootstrapping to venture capital to avoid a mistake
00:00 Introduction and Workshop Overview
00:10 Understanding VC Bias and Transparency
01:02 The Eight-Part Test for Identifying Bad Investors
02:47 Importance of Reference Checks
05:47 Second and Third Checks: A Crucial Inquiry
08:27 Control and Board Seats
12:54 Longevity of VCs: Will They Be There in 10 Years?
16:22 Learning from Tough VC Experiences
17:40 The Role of Outside CEOs in Startups
19:58 Understanding the Worst Investment
21:29 The Importance of Asking Key Questions
22:40 Addressing Copycat Behavior and NDAs
25:31 Bootstrapping vs. Venture Capital
30:54 The Second Check: What You Need to Know
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