How to run references on a venture manager

Evaluating managers
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References are how you test the claims documents cannot settle: whether a manager's account of a decision matches what others remember, and how the manager behaves under pressure. With an emerging manager, references often carry more weight than usual, because there is less fund history to study. Call more than the list, call people who saw something go wrong, and match each reference to a specific claim.

Five kinds of reference, and what each tells you

  • Founders. Usually the strongest references available for a first-time manager, because they speak to behavior rather than intent. Ask about a hard quarter, not a good one.
  • Former colleagues. These test attribution: whether the decisions the manager describes as theirs were theirs, and how they worked inside a partnership.
  • Co-investors. How the manager conducts themselves in a round, whether they do the work, and whether the co-investor would invest alongside them again.
  • Service providers. Counsel, administrators and auditors can speak to whether the manager is organized, responsive and realistic. This is informal operational diligence.
  • Peers and other allocators. Other managers and allocators who have reviewed the manager before, where they exist.

Match each reference to a claim

Before each call, decide which claim you are testing. If the deck says the manager led a round, the reference should be able to confirm that they led it. If the manager describes a sourcing edge with a particular community, a founder from that community should be able to describe how the relationship worked. A reference who is enthusiastic but cannot recall specifics is weaker evidence than a measured one who can.

Questions to ask references

  • How did you first work with this person, and what was their role?
  • Tell me about a moment when something went wrong. What did they do?
  • Was there a decision where you disagreed with them? How did they handle it?
  • Would you work with them again? Why?
  • Who else should I speak with about them?

The last question is the most useful. It leads you to people who are not on the list.

Go beyond the list

A manager chooses the names on a reference list, and a good list will be favorable. That is fine, but it is not enough. The more revealing conversations are usually with people the manager did not name: a founder from a company that failed, a co-investor from a round that went badly, a former colleague from the prior firm. A strong reference list includes at least one difficult reference already. If none appears, ask for one.

Consent and confidentiality

A manager should ask permission before listing anyone, and you should expect some references to be limited in what they can say. Former colleagues may be bound by confidentiality obligations to a prior employer, and founders decide what they can say about their own company's information. These limits are normal. Ask early what each reference can speak to, so a restriction does not surprise you on the call.

When references come back mixed

Mixed references are common and often informative rather than disqualifying. Separate patterns from single comments. One founder who found the manager too hands-on is a data point; three who describe the same issue is a pattern. Bring what you heard back to the manager and listen to how they respond. Defensiveness tells you something; a considered account of what happened and what changed tells you something else.

What references cannot prove

References confirm behavior and attribution in the past. They do not predict fund performance, and they cannot substitute for reviewing the plan and the operating setup. Use them to test specific claims and to understand how the manager works with people, which is what you are signing up for over the life of the fund.

Related questions

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