VC Recruiters, Be Prepared to Answer These Questions!

When I started out in venture capital and startup recruitment I knew there was more to my role than just understanding the job description in my hands. I quickly learned that because venture capital and startups are so “hot”, I had to be prepared to answer some basic questions:

1) What series funding has this portfolio company received?
2) What’s the difference between each series of funding?
3) What’s venture capital vs. angel investments?
In layman’s terms, allow me to give you a quick tutorial on how to adequately prepare.

What series funding has this company received?
If you’re recruiting for a portfolio company, conduct as much research as possible. Know the big players, their roles in the company, what their product is and does, how they came into existence, etc.

If you can leverage executives from that company directly, great! If not, use the point person between the firm and the portfolio company. You could also be a dinosaur and just Google it. This is basic information and won’t be hard to find.

Now that you know what series funding the company has received, don’t just use it as a canned answer; understand what it means!

What’s the difference between each series?

Seed Funding: This is for very early stage investors. It could consist of cash from friends and family, not necessarily angels and VCs. The range is typically $50,000 to $1 million. The purpose of this investment is to develop a product that can compete in the market.

Series A Funding: The purpose is now to take an existing product and refine it so the company can start aiming for profitability and sustainability. Funds are often used to bring on new hires who can help achieve this. The range is typically $1 million to $5 million.

Series B Funding: This is needed now that the product is successful and the demand is high. Taking risks and experimentation is no longer the priority, but rather taking a successful product and scaling a business as quickly as possible. This amount can include anything from $5 million upwards.

It doesn’t end there though. We have an entire alphabet to work with, people! But your time is precious, I understand. Series C (the funding received by Skytap, one of OpenView Venture Partners’ newest portfolio companies) is obviously the next step and it goes on.

It’s important to note that selecting the right series of funding is critical to the future of your startup. The wrong decision could put your business in serious danger. Ask Friendster about it. Next week, we’ll discuss the difference between angel investors and venture capitalists.

Stay tuned,
Vic