A Vibes-Based Founder’s Guide to Choosing a VC

Talented founders have never had more options for raising capital. The old advice focused on how to pitch VCs and convince them to invest. Today, the shoe is on the other foot. A key part of an investor’s job is convincing founders why they should take that investor’s capital.

When I’m advising our portfolio, or encouraging a founder to join our collective, I suggest evaluating investors across five dimensions: valuation, impact, brand, energy, and speed. Taken together, they form a “VIBES-based” approach to investor selection.

Valuation

Valuation is one of the most important decision points. Higher valuations are attractive because they provide more capital for less dilution. But maximizing valuation alone can be penny-wise and pound-foolish. Don’t undersell yourself and seek a good deal for sure, but avoid maniacally chasing the biggest number. The right partner may be worth a few extra points of dilution.

Impact

Money is fungible, investors are not. Will this investor open doors, make introductions, and help you win? More importantly, will they show up when things get tough? Also consider who you’re actually partnering with. Is it someone whose name is on the door, or a principal who may be at another firm by the time you raise your next round? Ideally, the firm you work with should be investing substantial reputational capital along with the cash.

Brand

The right investor’s name can unlock credibility with customers, recruits, and future investors. A really good brand becomes part of your story. There’s value in telling prospective hires, journalists, and even family members that the same firm behind a long list of legendary companies also backed you.
Caveat Emptor, brands can be built on the back of a few big exits and you need to do your diligence – how did they behave outside of those fund returners?

Energy

Fundraising lasts months. Board relationships last years.
Choose someone whose company you actually enjoy and whose judgment you trust. Saving 5% in dilution vs landing a slightly stronger brand name? Neither are worth it if you are dreading every email or board meeting for the next decade.

Speed

The ability to make decisions quickly matters. Fundraising distracts founders from the real work of building a company. But speed can also be a misleading signal. Just as some investors inflate valuations out of competitive pressure, others move unusually fast out of desperation. Spending an extra week or two to find the right partner is a small price to pay for a relationship that may last decades.