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Exploitative, Reasonably Fast, Normal Terms, Risk Averse

Fund: Artiman Ventures

Posted by mach4 on 2017-09-01

PUBLIC:

We went to them through a referral.

Though they started off slowly, they moved through diligence pretty quickly. Even early on, they mentioned that they would bring in a new CEO which seemed strange (as our CEO had gotten us thus far). Our founding team had discussed this issue earlier amongst ourselves and felt that we would bring in someone for a Series B or C. So, while we all (including our CEO) were OK with it, we felt it was rude as it was suggested early on without giving him a chance.

While we had Alpha customers in a particular vertical, one partner insisted that was a wrong market. Another partner (who was in that vertical) told us to ignore the first partner.

They went through a very detailed diligence and spoke with our customers and references. Their own network of CTO/CIOs seemed rather modest and it was not clear whether their network would be valuable.

While they claim to be "white space", this is completely FALSE. They are quite risk averse and the term sheet was designed to further minimize their risk.

They also explicitly tried to set one founder against another (asking him privately "Are you sure you have enough equity?").

They had some average EIRs who they seemed to want to push onto us. They seemed to position these pushes like suggestions, but their attempts were clumsy.

We did get a term sheet from them. We wanted a syndicate. Interestingly, many of the other VCs we talked to asked if they could bring in their own syndicate partner. To their credit, the term sheet did NOT have egregious terms). There were some issues that penalized the entrepreneurs too much and we negotiated on some of those.

While we got a term sheet and had initial agreement on most points, the deal did not go through. Their approach seemed sleazy. In fact, based on our conversations with the VC, our lawyer (from the largest bay area startup law firm) told us that the founders should not be surprised if they are fired to allow the VC to recoup some of the (founders') equity stakes.

Many of my experiences seem to mirror previous comments. I will not go to them again.

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