How much diligence should founders do on prospective investors before accepting their capital or board seat?

Jeff Jordan · Jan 16, 2023

Founders' single biggest lever on board trust is being highly selective about whose money they take, rather than spending an hour with each GP across ten term sheets and picking one

You are potentially picking your boss for a decade, so you should invest time establishing shared values and vision

37:00 20VC: a16z's Jeff Jordan on The Ultimate Guide to Investing in Marketplaces, Two Core Features to Look for in All Marketplace Investments, Why Fragmented Supply is so Important & Lessons from Airbnb, Pinterest and Instacart on What Makes the Best Cohorts

Sam Corcos · Dec 11, 2023

Diligence effort should scale with the stakes: for a prospective board member you should do as much diligence as you would before marrying someone

It's a question of where the ROI on diligence lies

44:39 20VC: Why Founders Should Take as Many VC Meetings as Possible, Should Founders Meet Associates, How to Get Intros to the Best VCs, How To Extract the Most Value From Your Investors, Why Post IPO Operators Are the Best Angels with Sam Corcos @ Levels

Brad Feld · Sep 30, 2019

Great VPs of sales are best at selling themselves — if one can't sell themselves to you, that's a problem — and most VCs are equally good at selling themselves, which is why self-presentation is uninformative.

Selling ability shows up first in self-presentation, so a strong pitch about oneself carries little diagnostic information about character.

29:39 Self presentation skill is uninformative since top vps of sales and vcs are both skilled self promoters

Eléonore Crespo · May 9, 2025

Founders should run CIA-grade back-channel diligence on a prospective board member, going well beyond the references the VC offers — asking execs at portfolio companies and people inside the fund itself.

Founders introduced by the fund will only tell you half the truth because it's a small world, and when things get hard a bad board member will kill you.

39:02 Run back channel references beyond the vcs own referrals

Sam Corcos · Dec 11, 2023

Founders should accept a non-zero failure rate on angel investors rather than doing reference diligence on every small check — backchanneling other portfolio founders isn't worth it for a $25,000 check

It's a question of how much time you'll invest to get a 0% failure rate; some investors promise engagement, then ghost as soon as they get allocation, and the diligence cost outweighs the value of a small check

43:37 Accept a non zero failure rate on small angel checks rather than full reference diligence

Harry Stebbings · Dec 11, 2023

Half an hour of angel diligence is worth it — check Crunchbase for their other investments and WhatsApp founders in your network

With a good founder network you get honest answers on an investor very quickly

44:20 Half hour of basic diligence crunchbase and founder network checks is worth it