Optimal Work Daily - Career, Productivity and Entrepreneurship 1889: [Part 2] How do Great Entrepreneurs Choose a Capital Provider - Maybe Not the Way You Think by Mike Smerklo
Dec 2, 2025
Choosing a capital provider is more about relationship than just money. Great entrepreneurs prioritize partners who offer long-term support and have influence within their firms. It's crucial to assess what value they bring beyond financial backing, especially when challenges arise. Valuation might fluctuate, but the right partner can greatly impact a company's trajectory. Evaluating potential partners carefully can lead to better outcomes and sustained success.
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Do Thorough Reference Checks
- Do vet the VC or PE firm beyond their pitch slides before taking money.
- Ask for concrete commitments about how they will help, not vague marketing language.
Pick The Right Partner, Not Just The Firm
- Assess the specific partner who will join your board and how they work with founders.
- Confirm that this partner has internal clout and compatible expectations about returns and involvement.
Firms Have Power Hierarchies
- Firms have internal power pyramids so not every partner carries equal influence.
- Entrepreneurs must evaluate whether the partner they're courting can get things done inside the firm.
