Based on my experience raising $23M across 5 rounds (bw 2011-2016), here are the top 6 questions to ask your future round’s VC lead to prevent future tension and issues:
1. Do you think I work for you?
This is more philosophical than legal because one VC can’t fire you but a Board, most likely, can. The answer should tell you a lot about the VC’s approach to working.
2. Under what circumstances will you try to fire me, replace me, or get me to resign?
Even tho your employee agreement likely stipulates this, there’s always more, especially if your VC loses trust in you.
3. Have you ever been involved with the firing of a CEO?
Related to the previous item, good to have background and context on if and when they have exited a CEO.
4. Under what circumstances will you not fund my company in future rounds?
Many will tell you they’ll keep rolling but you need to understand when they won’t. Is it when growth slows? When their thesis changes? When a competitor outperforms you? When they stop believing in you?
5. Other than what the docs say, what specific decisions do you expect me consult with you?
There are a few items in the docs (eg taking on debt or spending above a threshold) but many VCs expect much more visibility.
6. Given that we are at the <x round> stage and working toward the <y round> stage, what do I not know about Boards that I should?
I learned the hard way that I had to have certain committees (eg compensation) or that I need to present multiple budgets to the Board for approval.
In conclusion, tension with my lead VC created (or maybe unveiled) anxiety issues I continue to manage to this day. I believe that, had I known the answers to the above, I would have been much healthier (and happier) during my time as a venture-backed CEO. I hope they help you.