Founders Pose Smart Questions at Valor’s Fundraising Friday | Capital Factory Austin Edition

A diverse and engaged group of startup founders gathered this morning around breakfast tacos for Valor's Fundraising Friday series at Capital Factory.

We talked about founder life, what’s annoying about VCs (lots), and Buddhism. One of the book recommendations from a founder was “10% Happier.” Along the way, the founders cut loose with some great questions early on a Friday, including:

What’s the best first question to ask a VC?

Most founders ask “what’s your check size.”

That’s a transactional beginning to a relationship that will be anuything but over the long term. An even more informative approach is asking the VC what they bring to the table besides capital. When you hear a clear answer, following it by asking for a case study or an example.

How do you avoid the”not enough cash to finish the product” / “no one gives you cash till you have customers” trap?

We talked about turning to angels for capital, and advocates for introductions.

If the business thesis is not clarified with customer validation, these two resources can help you get through that thin patch. Advocates make introductions to pilot, beta or even free customers. Often these are just people who want to help and care about the people or solution. Angels can add some capital to help get the product to the next level.

How does Valor bring value to a founder besides capital?

We work with our founders in three major areas:

  1. Enterprise introductions
  2. Go to market strategy and marketing stack
  3. Product development strategy

What’s a major “secret” turn-off for Valor in a prospective startup?

This was a fun question–really creative.Homogeneous group-think and narrow, unexamined perspectives in the founding team and the culture they are building are a real turn off.

Homogeneous group-think is a real turn off. It creates a stale culture.

We like to see diverse teams that tolerate tough debate (which is not to be confused with rude debate, posturing or arrogance). A respectful, numbers-driving culture that cares about its people, has the strength of heart to engage in hard conversations and continues to expand its operating range by bringing on new people and new perspectives is the kind we like to fall in love with.

Capital Factory lives up to its brand promise of being the center of gravity for startup action in Austin.

It was a real pleasure to connect with the scrappy founders building great solutions there. Check it it out next time you’re in Austin.