Jeff has a new article with great insights into why you should carefully choose your VC and why social competence is an imperative for a successful partnership.

"There are several kinds of investors in the private equity world. The obvious starting point is the A-list investors with big names, their track records are typically enviable and the partners often have some star power associated with them. The brand name itself is an attractor for both qualified and capable employees, and also some public relations boost. The downside is that the egos can be pretty large, resulting in the potential for disruption through board members acting more as sole operators than complimentary team players."

While the echo has been very much supportive of the argument so far, I don't think the answer is so simple. We are not living in the ideal world. I often wonder what's better taking the higher valuation combined with risky relations to your investor or the (often lower valuation) and choose a partner that really understands your business and does not ask you about your business model every other board meeting.

If you ask me it really depends on your business model and your sales approach (i.e. consumer or just a handful of major b2b deals). Even it may be riskier I would tend to a straight auction (if you can pull this off with the business plan you have) in a consumer business. In a highly specialized environment and corporate sales I would look for a better partner and accepting a eventually smaller valuation. Corporate VCs can be very tricky - while they bring a great amount of extra knowledge there can be competitive issues arising pretty soon. So you make sure there is no competitive problem for you or your clients soon.

I think it's pretty obvious why many entrepreneurs are doing less background checking. Most entrepreneurs have invested in heavily for years and many early rounds are live or death of a project opposed to "just another investment decision" for a VC. While there are serial entrepreneurs that have the ability to launch an auction for their round it's still the bigger gamble for entrepreneurs and they tend to make sure they do not jeopardize a prospective investment partnership with an intensive background check.