I just got back from NYC where our fund held its annual AGM.

As a former allocator at the Hilton Foundation, AGMs used to be all I did: flying city to city, sitting through presentations, and taking super detailed notes. It was interesting being on the other side this time. Instead of taking notes on other people's portfolios, I was presenting that of the fund.

I led a panel with a fintech founder on the future of asset-light businesses. We spent quality time with existing LPs. And I had dozens of conversations with founders. Some in the portfolio, some I’m tracking, and some just beginning their fundraising journey.

One question kept coming up:

"How do I efficiently reach investors and figure out who's actually the right fit?"

Fair question. Time is currency for both founders and investors.

Here's what I learned spending years on the allocator side, evaluating how funds source deals and make investment decisions: the diligence should go both ways.

Too many founders treat fundraising like a one-way evaluation. VCs vet you, but you should absolutely be vetting them back. The wrong investor doesn't just waste your time - they can derail your company.

Before I dive into the questions, a quick note: This newsletter takes real time to research and write. If you find this valuable, here are a few ways to support Bear and the Bull (most of which are free):

So without further ado, here are the 5 questions every founder should ask VCs before signing a term sheet

1️⃣ Where are you in your fund cycle?
A VC who's 80% deployed behaves very differently than one who just closed their fund. Early-cycle investors have more capital and urgency. Late-cycle investors might be pickier or unable to follow on when you need them most.

Why it matters: Fund dynamics directly impact how much support you'll get and whether they can participate in future rounds.

Red flag: Vagueness about where they are in their fund lifecycle or reserve strategy.

2️⃣ What is your board strategy?
A partner on 8+ boards is stretched too thin to meaningfully support you.

You're not just raising money. You're choosing a long-term partner. Make sure they have the time and resources to actually help.

Why it matters: Board attention is finite. If your investor is spread across too many companies, you won't get the strategic support you need during critical moments.

Red flag: Already on 10+ boards or inability to articulate how they add value beyond "opening doors."

3️⃣ Who is on your IC, and who has veto power?
The IC meeting isn't always what it seems.

Sometimes the "yes" needs three layers of approval, or one partner has veto power. You need to know if your champion can actually get you across the finish line.

Why it matters: Time is everything in fundraising. You need to know if you're talking to a decision-maker or someone who has to "bring it to the partners."

Red flag: Vague answers about "the partnership will decide" or unclear timelines from first meeting to term sheet.

4️⃣ Do you lead rounds?
If they don't lead, you need to know they have real relationships with funds who do—otherwise you're left hunting for a lead investor on your own.

A strong non-lead investor will have specific names and warm intros ready.

Why it matters: Lead investors set terms and bring credibility to your round. Non-lead investors need to add real value through network and support, not just capital.

Red flag: "We're flexible on leading" without a clear track record either way, or inability to name specific co-investors they work with regularly.

5️⃣ Can I speak with a founder you backed who struggled or shut down?
Anyone can be supportive when you're crushing it. This question reveals how a VC behaves when things get hard. And guess what? Things always get hard. If they won't connect you with someone, that's your answer.

Why it matters: Your investor's character shows up during the hard times—the down rounds, the pivot, the near-death experience. Their past behavior is the best predictor of future support.

Red flag: Only offering their "unicorns" or getting defensive about providing references from challenging situations.

The Bottom Line

Fundraising isn't just about getting money. It's about choosing partners who will be in the trenches with you for the next 7-10 years.

Ask hard questions. Do reference checks. Trust your gut.

The right investors will respect you more for it. The wrong ones will reveal themselves quickly.

I even created a handy 1-page guide for this. Respond to this email to get your copy.

📰 Exciting announcement coming: I'm working on a Forbes feature with one of the world's leading fintechs this Wednesday. Follow here to be the first to read the announcement.

🎧 New Money Memories episodes coming soon! Be on the lookout for supplemental newsletter issues highlighting guests and diving deeper into their stories. Sneak peek: an upcoming guest in real estate called Jaina Anne who is a travel card hacker for real estate. I loved this quote in particular:

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Till next week,
Ilona

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