Who should be in a start-up’s financing?

I’ve been meeting a lot of entrepreneurs these days who are thinking about whom to bring into a financing round. VCs call the group of funders a “syndicate.” Many of the entrepreneurs think of funding sources with an “either/or” mindset. Either they want to raise angel/micro-VC money, or they want to raise VC money.

Personally, we don’t think it’s about “either/or.” We think syndication is about “both/and.” I say this because of our experience with working with various firms. (My post assumes that you want to build a company as opposed to a product that you sell quickly for a modest amount).

Our group has co-invested with the following angels/micro-VC firms:

  • Common Angels
  • Founder Collective
  • Next View
  • SV Angel
  • Various individuals

Our team has syndicated with the following VC firms:

  • Accel
  • Bain
  • Bessemer
  • Flybridge
  • Greylock
  • Kleiner Perkins
  • Matrix
  • Sigma
  • Venrock

We’ve found that each cohort is very different from the other in terms value-add. Moreover, we’ve found that each firm has a different approach and style. And, we think it’s less about the firm, but is more about the individual person at that firm.

My advice is to think about a successful start-up as a team sport. You’ll need to hire various skill sets to join your team. Similarly, your funding sources should comprise of complementary team members. Some investors join boards, others do not. Some like to be hands-on, others less so.

So, I encourage entrepreneurs perhaps to think about “both/and” and to do real diligence versus broad-brush generalizations. One source of value-add from us to our companies is we know well the various firms and help our entrepreneurs navigate the various funding options and firms.

One thought on “Who should be in a start-up’s financing?

  1. I think that having 1-2 VCs lead the seed round, and have a number of high-value-add angels is usually the best option, but still includes some signaling risk.

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