What you should be asking VCs before signing the term sheet

Published in
7 min readNov 2, 2021


By Elnaz Giboulot & Ester Davanzo, based on interviews with Benoit Georis, Armelle De Tinguy, Sofia Dahoune and Sebastien Lefebvre

David Bessis, CEO of Tinyclues at Elaia’s onboarding session

After decades of meeting with startups and founders, at Elaia, we’ve noticed that there are some great questions that aren’t being asked enough. When you’re a founder looking for a VC that’s the perfect fit, it’s important to ask some questions to be sure that you’re making the right choice because once the term sheet is signed, you’re looking at a lengthy relationship that will go through good times and bad, so having the right partner will make a tremendous difference. You need to think about which VC you want to work with, since your relationship is probably going to last many years, and remember: money and valuation shouldn’t be the only question you’re asking.

In the last couple of years, things have changed: when Elaia started out, money was a rare resource and investors were few. Today, money is flooding into the ecosystem and entrepreneurs are the ones in power: you decide who you want by your side.

We spoke to investment managers, business angels, former entrepreneurs, venture partners and analysts to see what questions they wished startups would ask more often so that we can help you prepare for your next pitch and partnership.

Here is a quick checklist to help you choose the right VC to work with:

#1 — First things first: who is your VC?

Most of the time, you can find all this information on the VC website and this will already allow you to do a first selection.

  • Do you fit their thesis and investment model? For example, at Elaia we focus on tech and deep tech B2B ambitious ventures, which means both that we don’t invest in B2C and that we have a strong B2B expertise. We invest early, from pre-seed to series B, and we are passionate about helping our portfolio entrepreneurs all along their journey! According to Xavier Boreau, co-founder and CFO at HarfangLab, «Elaia is famous as a deep tech VC and we have many similarities: research focus, innovation and a search for excellence».
  • What is the size of the average investment they put into the company, and what is the maximum? Most French funds tend to be allowed to invest 10% of the total amount of the fund in one company so that they can diversify their portfolio. This means that we can invest up to €15M in one company. Does that line up with your startup’s ambitions?
  • What is the investment geography of the VC? Which other regions are they present in? What is their relationship like with international investors? Ask questions relevant to your aspirations. If you’d like your company to operate in Asia, America or elsewhere, ask about their success abroad. If you’re interested in expanding to other countries, ask about their international relationships. This is not a show stopper but could influence your decision and help you know what you are getting into! At Elaia, we invest all across Europe, mostly in France and Spain, and we have supported all of our portfolio companies in their international expansion, namely Shift Technology.

#2 — Dig deeper: make sure that you perfectly know your VC

Knowing the VC early on will make you gain time and allow you to install a more fruitful relationship from the very beginning, since you will know exactly how they work and how they can help you out.

  • Where is the fund at in terms of stage (is it first or fourth year) and what is the duration of the fund? The answers to these questions can impact the ambition of your project and it’s helpful to know in advance to be as prepared as possible and to have an idea of the timeframe at which the fund will want to exit. At Elaia, we have 3 funds that are investing at the moment: Elaia DV4 Fund, PSL Innovation Fund and Elaia Alpha II.
  • Look at their track record. At Elaia, we are proud to have three seed funded unicorns among our portfolio companies and, after a couple of decades in business, we decided to embrace a process of transparency with respect to our performance on our 1st fund.
  • Can they provide references? Due diligence is mandatory for a founder. It’s easy to find a VCs portfolio online, and you can reach out to their startups from there to get honest feedback. Through your references, find out more about their behaviour with their entrepreneurs — in the good and the bad times. Look at their interaction from the start: is it timely, is it relevant? This will already show some traits of the future relationship. At Elaia, we will provide you the phone number of any entrepreneur we invested in, but you have to ask for it, so keep it in mind! Also, do not hesitate to ask the hard questions when doing a reference call!
  • Don’t be afraid to ask the tough questions to your VC because it helps both parties become trusted partners. If you’re met with generic responses, dig deeper to find out more. Be sure that you feel comfortable as much as possible and that you can count on them because they will be with you for a long time (5 to 10 years approximately), by your side on board meetings, making impactful decisions. For example, the question «Have you ever found yourself in a difficult situation as a VC, and how did you get out of it?» can help you understand how they work with founders beyond the first investment.

#3 — What do they have to offer?

  • A sectorial experience? If your startup falls into a sector they’ve already invested in, this can be very helpful because they will have a good understanding of what you do, beyond theory. They will know the market and the appropriate go-to-market. According to Arnaud Rihiant, founder of Djust, «The Elaia team has a perfect understanding of our market». Indeed, we have invested in e-commerce solutions and marketplace platforms dedicated to B2B, such as Mirakl.
  • A long-lasting support? What kind of support and help will you receive post investment? Do they provide you with operational resources? More and more funds offer some operational assistance and guidance to startups that ask for it, but some don’t and you want to know what you get before signing for it! At Elaia, we provide what we call Venture Care: peer to peer, a slack, playbooks, negotiated perks, a talent database, regular workshops and internal events. Not all money may result to be good money: choosing a VC who is passionate about your project and job is key, and according to Jeremy Jawish, CEO & co-founder of Shift Technology, we bring «not just money, for real».
  • Shared principles and vision? Asking the questions «Why do you want to invest in my startup? What attracted you, and what is your vision for my project?» is a simple and easy way to be sure that there is alignment of values and vision between the founder and the startup, and that you both are clear on what the next steps are. From here, a relationship of trust can start to be built.

You want a good sparring partner. You should also be able to count on them to help steer you in the right direction if you’re going off track along your journey, and you want to be able to share ideas and understand one another. So make sure that you share the same values and that you have a common plan for the future!

#4 — Useful tips 🧞‍♂️

  • It is your company, your business. Don’t expect the VC to create the full plan for you. If the VC knew how to do what you do, he/she would be an entrepreneur! Make sure to have a clear project, a strong business plan and a foolproof strategy, but remember that a VC will also provide you with strategic advice, business and recruitment guidance: if you’re only looking for some financial reports, you won’t need an investor but a bank!
  • You should trust each other. Developing a close relationship based on trust can be very useful in a bunch of stressful periods, so do not hesitate to share doubts with your VC, understand what really moves them, what they believe in and why they do what they do. At Elaia, we know that our entrepreneurs’ success is our success. Moreover, since we make very early bets, we are aware that the value of our investment lies mostly in the people and our complementary team of scientists, entrepreneurs and business-savvy people is hands-on and dedicated to their success.

#4 — And finally, the DON’TS 🙅

  • Giving yourself a valuation without being asked for one can be a risk if your deal terms don’t match. Try to only do it when asked by the VC.
  • You don’t want to oversell, but you also need to show ambition and that you have a well founded vision. Try to be very precise and specific about your company, product and ambition. The ambition of your company should fit the ambition and the size of the fund you’re aiming at; the more important in sizing the fund is, the more you’ll have to reassure the VC on the addressable market.
  • As a founder, don’t take the feedback personally. It’s the VC’s job to analyze, they’re not judging, they’re trying to figure out all the information and all the obstacles and challenges that could arise. It’s an opportunity to understand what can be improved and elevated to have a better chance at success. The feedback is also reflective of your startup at that moment, not of the entire project and idea, so there’s always room to improve.

To conclude, the perfect VC does not exist, but you have all the means to find the perfect match for your startup: whether you want it to be more or less tech-driven, research-based, operational, impact-focused, etc. You have the upper hand, so make the right choice by taking into consideration all the important criteria and be prepared to ask the most suitable questions!

Are you a tech or deep tech entrepreneur? Let’s talk, get in touch with us here!

Want to know what our entrepreneurs think about us? You can check out this video to see what they’re saying about Elaia!