A venture firm we are considering for our round has an investment in a foreign competitor. Should we be concerned?
If you love the partner that is giving you a term sheet, and that partner is pretty senior in the firm (a true Managing Director) — not sure I’d worry. 6 times out of 10.
- First, the Indian firm may well be from an affiliated but different venture fund.
- Second, whatever conflict there is, the partners have already thought through it. Which probably means it’s not a big deal — at least not today.
- Third, nothing’s that confidential so who cares if numbers are shared. And shared they will be. No matter what anyone says.
But … if the partner you are talking to for your company isn’t very senior, and the partner on the other deal is pretty senior … you may get left aside if the first investment takes off. Less support, less pro rata, etc.
If Big Partner Bill invested in Spotify, and Junior Partner Elena invested in NewCoolMusicSite … Spotify is gonna win. It just is.
Maybe in that case … don’t do it.