An Angel investor’s guide for making founder reference calls:
1. WHO to call
Personally, I will often do both ON SHEET calls (references provided by the founder) and OFF SHEET calls (references I source myself).
This is an example of when a large personal network is helpful. I advise sourcing at least one Off Sheet reference for each founder.
2. WHEN to call
I don’t even talk to a founder for the first time until I’m ~50% committed to the deal. So, I reserve reference calls for the beginning of the due diligence process: Late enough to get to know the founder, but soon enough to address any major issues before wasting time on due diligence.
3. WHY to call
The purpose of a reference call is to verify, not to discover. You’re not the CIA. You’re not conducting a background check for a security clearance. For me, the reference call is often to determine if the founder has the *qualitative* attributes you believe them to have: Honesty, unwavering drive & ambition, integrity etc.
4. WHAT to ask
A few of the most frequent questions I will ask a reference:
- How long have you known the founder?
- What about him/her stood out to you?
- Is there anything about the founder/company that a potential investor should be aware of?
- What is the founder’s core strength?
- Are there any areas for improvement?
To all the investors out there: Do you conduct reference calls? If so, what’s your protocol?
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