A short & sweet Guide to Picking the Right Investor (for early stage companies)

Not all early-stage investors are created equal (only slightly biased here). Some can help you build your company with the right mix of judgment, hustle, and network. Others can slow you down or distract you when you least need it.

Here’s a quick guide to choosing the right kind of investor — and spotting the ones to avoid*.

Generated by GPT-4o

Green Flags: What “Value Add” Actually Looks Like

The phrase “value-add” gets thrown around a lot (plenty of good memes here — but that’s a separate post). Here’s what we’ve seen consistently move the needle for founders beyond the initial check:

1) High-leverage customer intros

Quality over quantity. A warm intro to the right person can save you months. One company we worked with landed Stripe as a customer, thanks to my Uncork partner Andy’s relationship with the exec team. Would it have happened eventually? Probably. But the intro made it easier and faster.

→ Ask portfolio founders: Did the investor make intros that moved the needle?

2) Talent help: strategy + intros

The best investors help across two levels with regards to talent:

1. Strategic: org design, hiring strategy, and people dynamics

2. Tactical issues: intros to execs, ICs, and recruiters they trust

→ Ask what they’ve done for companies at your stage.

3) Trusted referrals across the board

Need a GTM coach, brand designer, or PR consultant? The right investor will provide helpful suggestions and intros — they’ll connect you directly to people they’ve worked with before and trust.

4) Capital backstop in tough moments

Sometimes you need someone to believe in you right now. Maybe payroll’s short by two weeks due to a delay. Maybe you’ve got a killer plan and strong early signals but need a little more runway to get there. Some investors are known for showing up in these moments.

→ Look for firms with real reserves and a track record of stepping up when it’s hard, not just when it’s hot. Ask if they’ve participated in insider rounds or bridge financings/extensions before.

5) A community you actually want to be part of

Strong founder communities can be underrated. Learning from fellow founders (both those at your stage and those slightly further along the way) and building friendships with people who get what you’re going through can be a huge unlock. Bonus points if the investor creates thoughtful ways for that to happen (events big and small, forums for communication, targeted matches).

6) A sounding board & thought partner

You don’t need someone with all the answers — but a good investor helps you ask better questions, pressure test your thinking, and focus on what matters most.

7) High integrity & personal fit

A founder friend once put it this way: Would you be happy sharing your success with them? Or more bluntly: Would you feel good making them money?

This is a working relationship that could last a decade or more. Do you like spending time with them? Do you trust them? Do they show up consistently?

This could be a whole post on its own, but it’s worth mentioning: different types of investors show up differently. Multistage vs stage-focused, lead vs participatory, generalist vs specialist, operator-turned-VC vs career VC — each has pros and cons, and some are more likely to lean in on the kinds of support I’ve described above. There’s no one-size-fits-all — it helps to reflect on your own strengths, gaps, and working style, and think about what kind of partner will truly complement you.

Red Flags: Things to Watch Out For

(Many of these may seem obvious on paper or in hindsight, but can be surprisingly easy to miss in fast, high-pressure raises.)

1. Not asking good questions and/or showing no work/understanding of your market/problem space. Might signal shallow thinking, lack of preparation, or low effort.
2. Hand-wavy claims about “value” with no specific examples.
3. Lack of conviction (e.g. overly relying on the conviction/opinions of other investors or on others on their team).
4. Saying they’ll do something (e.g. “I’ll intro you to X” or “I’ll send feedback tomorrow”) and then consistently not doing it.
5. Poor, opaque communication during the raise.
6. Weird power dynamics (e.g. long unexplained delays, asking for unfair terms)
7. Exploding term sheet / intense or unfair pressure to sign quickly. Real conviction should not expire in 24 hours.
8. Investments in conflicting companies.

✅ How to Check for the Good Stuff

The best way? Once you’re deep enough into the process (typically — but not always — post-term sheet), ask for founder references — and ideally do a few backchannel calls too.

Importantly, ask for:
→ A founder whose company didn’t have a flashy outcome
→ A founder who went through something especially hard (e.g. a co-founder break-up, a layoff, a lawsuit, a big pivot, etc.)

Most people are easy to work with when things are going well. You’ll learn the most from how they show up in tougher moments.

Fundraising isn’t the finish line — it’s the starting point. Surround yourself with investors who make the next chapter a bit easier, more supportive, and ideally, more enjoyable!

*While generally applicable, these points are especially/most relevant for picking lead investors.

Thank you to my wonderful friends Matthew and Dion Dong for thoughtful suggestions that helped refine this post.