Build: An Unorthodox Guide to Making Things Worth Making

by Tony Fadell

So you should always pay very close attention to how a VC treats you when they should be on their best behavior—when you’re getting along in the process and it seems like you might come to an agreement. If they start screwing around with you then, it should always ring alarm bells in your head. Here are a few other warning signs: VCs who promise everything under the sun to get you to sign, then don’t deliver. Often they’ll repeat themselves over and over, telling you just how much personalized attention you’ll get, how much help, how much this or that. Make sure to talk to other startups who’ve worked with them to find out what they actually offer when they’re not in sales-pitch mode. VCs who force the timing—who give you a term sheet to sign right here, right now—to make you feel panicked. A VC once gave me a term sheet as I was walking out of the meeting and pushed me to sign it on the spot. I asked if this was a used car dealership and told him I’d only sign after I read the terms. Greedy VCs who will invest only if they can take an outsized piece of your company. Typically a VC needs between 18 and 22 percent to make their model work—step carefully if they begin asking for more. And don’t assume they’re the only game in town—if your gut is telling you to keep looking, then keep looking. Some VCs court very inexperienced startups with the intention of pushing them around and telling them what to do rather than allowing the founder and CEO to run the company. Mentorship ...