Mistakes Founders Make With Corporate VCs

Mistakes Founders Make With Corporate VCs

June 9, 2021 by investor

Founders looking to raise funding from corporate VCs should avoid the following mistakes:

1. Not matching the corporate VC to the needs of the startup – corporate VCs bring not only money but strategic value.
2. Not understanding the corporate VC investment strategy – some corporate VCs invest for a financial return, while others invest for a strategic partnership.
3. Not building a strong relationship with the corporate VC team – it’s best to forge a good working relationship upfront as it will bring value later.
4. Not doing diligence on the corporate VC –  the founder should be doing as much diligence on the corporate VC as the VC is doing on the startup.
5. Not knowing what you want from the corporate VC – it’s best to identify the needs of the company first and then choose a VC based on that.
6. Not preparing for the product and technical diligence a corporate VC will put on your startup – a corporate VC comes from the large company world with higher standards for product and technical work.
7. Not getting the corporate VC to waive audit rights – audits are a major cost in time and dollars.
8. Not preparing for regulatory issues especially in the financial space – not preparing for corporate team transitions.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.