“What is your process?”

It’s an easy question to ask, but only a few entrepreneurs do.

Allen Morgan has written a great series of posts advising entrepreneur’s on their first meeting with a VC. And as he explains,

“The goal of your first meeting with a VC IS NOT to get a funding commitment. The goal of your first meeting IS to get a second meeting.”

But then what?

What is the process for a venture capital firm to progress from a successful initial meeting with a company to putting a term sheet on the table?

There isn’t an easy answer – it truly varies from firm to firm. At the heart, venture capital firms are comprised of a number of unique individual partners. Given that different firms have a number of different partners, that sometimes firms have geographical spread among its partners, and that every firms’ partners have different personalities, every firms’ decision-making process is going to be different. The organization of a partnership and its corresponding structure is going to reflect the unique situation that these group of individuals face.

For example, I know of one firm that formally assigns both an “advocate” partner and a “skeptic” partner to evaluate a potential investment. Others will consider an investment less formally. Some will write diligent investment memorandums based on specific, itemized checklists to ensure that all basis have been covered. Others rely on more of an intuitive approach to evaluation. Some have regularly-scheduled investment meetings, while others will convene when a deal is “hot.” Some firms have a formal voting process, while others are consensus-driven.

Because of these differences, both the types of questions asked of an entrepreneur and when they are asked are going to differ from firm to firm – and what these questions signal to the entrepreneur can also differ. Asking about the process may not result in a full revelation of what goes on behind the curtain, but it should yield some insights to guide the entrepreneur along the way.

“What is your process?” It doesn’t hurt to ask.