Doing DueD on your Investors

some quick reminders for first-time founders:

when you take a fund's money, remember that you're not working with some amorphous, faceless entity; you are working with a person who comes with their own experience, financial needs, cognitive biases, and emotional baggage.

I cannot stress enough how mission-critical it is for founders to reference check the person that will be interfacing with them once the investment is closed. this due diligence becomes 100x more important if that person will also become a board director.

to repeat: do your due diligence on your investors and *especially* on your board directors.

board directors can have an extraordinary impact on your company: they will directly and indirectly affect and inform strategy, hiring, stakeholder and crisis management; anything of even marginal import will require the involvement of your board.

constructive, well-rounded, stable boardrooms can have a profoundly productive impact on companies, but having just one terrible, antagonistic, director will make life miserable for you.

it will feel counter-intuitive, it may feel incredibly wrong if you have a top-tier fund waving a term sheet in your face, but if reference checks come out negative, I urge you: ask for another investor to work with and sit on your board or, barring that (VCs' egos are notoriously sensitive), turn down the money and raise elsewhere.

when in doubt, remember that a great director from an unknown fund is light years better than a bad director from a stellar fund. it might not seem like it, but eight to ten years of drama is just not worth the perceived market validation of having a good fund on your cap table.

to repeat: the (questionable) value of market validation from a good fund on your cap table is made worthless by having to work with a terrible board director.

there's so much readily-available capital in SEA right now, across all stages, that you no longer need to settle for shitty board directors or investors just to fill out your round. and the industry has grown large enough, for long enough, that learning about past behaviours and actions both good and bad are just one WhatsApp or email away.

look at the fund's portfolio, see what companies they sit on the board for, ping the founder and literally ask them point-blank: "what do you think of [x]?" if they're a good board director, you'll get a response ... 80% of the time. but if they're a bad board director, you'll get a response 100% of the time. founders like talking about good investors but they love talking about bad ones.