10 Questions to Ask Your VC…Before You Invest
April 2026
Eric Rosenfeld
Roughly 87% of US companies with more than $100M in revenue are private, and only 13% are public [source: American Investment Council]. Increasingly, the biggest fortunes are being built in private markets – think OpenAI [$850B], Anthropic [$380B], and SpaceX [$1.4T], all venture-backed and still private. Most of the fastest-growing private companies are VC-backed and staying private longer, sometimes indefinitely. [source: Fortune].
So why not simply invest in the venture fund your friends or financial advisor recommend – or choose the VC fund your employer’s 401(k) might soon offer, as proposed by the Dept of Labor? Because only about 20% of venture firms ever return investors’ capital [source: Kauffman Foundation], and just a small minority deliver the kind of “venture” returns LPs actually sign up for [sources: Carta and VC Journal]. A 3X net return over 10 years – around 12%/yr compounded – is considered a solid outcome in venture, yet few funds achieve it [source: SaaStr].
Given that so few funds truly succeed, how should you pick one? Start by asking these 10 questions…before you invest.
1. What’s the fund’s real edge?
Does the fund have a clear, differentiated strategy and thesis? The most successful venture funds are the best in the world at something specific: a business model, a science or technology domain, an industry, or a geography. What uniquely qualifies these managers to see and win deals others miss? Look for unique perspectives, insights, and access that only this team could have, given their background, experience, and network.
Example: “We invest in opportunities created by the convergence of AI & cybersecurity.”
OVF’s edge: By focusing on Oregon and Southern Washington, OVF enjoys privileged access to top local deal flow [the “pick of the litter”], can run deeper diligence, and can provide more hands-on support. Additionally, OVF’s 180 venture partners – many of whom are successful entrepreneurs themselves – help attract top founders, improve decision-making, and add more value than a conventional, thinly staffed fund.
2. What is the fund’s proprietary source of deal flow?
Great returns start with great deal flow. Are top founders actively seeking out this fund? Do they have durable sourcing advantages – long-standing relationships with leading founders, executives, universities, and research labs?
It’s important to understand not just how many opportunities they see, but whether they consistently see the right ones early.
OVF’s deal flow: OVF’s 19-year brand in the region, plus long-term relationships with business and technology leaders and partner organizations like the Technology Association of Oregon, give the fund privileged access to the most promising startups with a presence in Oregon and Southern Washington. For more than half of OVF’s recent investments, OVF is the only Pacific NW VC firm on the cap table.
3. How rigorous is their diligence & decision-making?
Ask to see a couple of recent investment memos. Do they reflect original thinking, independent research, and clear risk/reward analysis? Or are they mostly copy-paste from the company’s pitch deck and data room? Which domain experts did they speak with, and what did they learn that wasn’t obvious from the management team’s materials? If the fund’s memos don’t reveal fresh insights, odds are their investments won’t either.
OVF’s diligence: OVF leans heavily on its venture partner network and broader expert relationships, pulling in subject-matter specialists for each deal. A core part of the process is interviewing current and prospective customers, competitors, analysts, journalists, consultants, and other thought leaders, then building independent market and competitive analyses as well as revenue and exit models based on OVF’s own assumptions. Founder references include discreet, off-the-record backchannel conversations with former employers, employees, and investors.
4. What is the team’s track record?
Venture is a team sport that plays out over decades. How long have the fund’s managers worked together? How many funds have they raised and managed as a group? Are they former founders who have truly built and exited companies?
On performance, ask for net IRR, TVPI [total value to paid-in capital], and DPI [distributions to paid-in capital]. Then ask: How are these valuations determined? Is there a documented, repeatable valuation method, and is performance audited by a PCAOB-registered accounting firm? Request sample quarterly and annual reports to see how transparently they report the good, bad, and ugly.
OVF’s track record: Over 19 years, OVF has invested more than $200M into 89 startups, generating an average 16% net IRR and a 3.2X TVPI for its investors. The investing team’s average tenure together exceeds 10 years. OVF’s investments and financials are audited annually by Geffen Mesher & Co., a PCAOB-registered firm.
5. How does the fund actually support its portfolio?
Beyond writing checks, what does the fund do for founders? Are they actively helping recruit executives, make customer introductions, and bring in follow-on investors? Do they lead rounds – taking on the work and responsibility – or mostly follow others?
A simple test: Do founders want them on the board, and are they invited to stay as the company raises successive rounds?
OVF’s portfolio support: OVF leads roughly 75% of its initial financings, with the remaining 25% as follower or participant. OVF typically secures a board seat and a board observer seat, and – with help from its venture partners – plays an active role in recruiting, customer introductions, and connecting companies to national and global VC and PE firms and strategic corporate investors.
6. Does the fund charge a standard fee?
A standard venture fee structure is “2 and 20”: a 2% annual management fee and 20% carried interest on net profits. Anything meaningfully below that can make it hard to attract and retain strong managers; anything above that is a tax on performance and considered greedy. Carried interest should be calculated on a whole-fund basis, not deal-by-deal, to keep incentives aligned with overall outcomes.
OVF’s fee structure: Standard 2 and 20, with carry calculated on a whole-fund basis.
7. Does the fund have an all-star advisory board?
This should be comprised of people who have built successful companies or managed large pools of capital. Are they serial entrepreneurs and institutional investors who can contribute to and challenge the fund’s strategy, policies, processes, and positioning?
OVF’s advisory board: OVF’s 16-member advisory council includes successful entrepreneurs, institutional investors, and consultants to institutional investors and family offices. This “Council of Wise OVFs” meets regularly to advise on fund strategy, structure, and policies.
8. How much skin do the managers have in the game?
Ask how much each general partner [GP] is personally investing and what percentage of total committed capital comes from the fund’s managers. Typical GP commitments are in the 1-3% range, but the dollar amount and share of personal net worth matter too. If they don’t believe enough in their own fund to write a meaningful check, why should you?
OVF’s GP commitment: >1% of total committed capital.
9. How sophisticated is their governance and compliance?
Ask for the fund’s compliance manual, due diligence questionnaire [DDQ], and key policies. These documents should cover how investment decisions are made, how conflicts of interest are surfaced and managed, valuation methodology, code of ethics, and how various risks are monitored and controlled.
OVF’s documented policies: OVF maintains comprehensive compliance, diligence, valuation, and risk management policies, as well as a full DDQ and code of ethics, all available to prospective investors.
10. What league are they playing in?
We are judged by the company we keep. Are top‑tier investors co-investing alongside or after the fund, and doing so repeatedly? If not, why not? If the fund isn’t attracting elite co‑investors and high‑caliber angels, it’s fair to question whether they’re consistently getting access to elite founders. Strong funds tend to syndicate with other strong funds; everyone else tends to syndicate with whoever is left.
OVF co-investors: OVF has developed active working relationships with more than 50 national venture funds [including Accel, a16z, IQT, Madrona, and Updata], 20 private equity firms [including Bain Capital, Insight Partners, and Spectrum Equity], and 35 strategic corporate investors [including AWS, CrowdStrike, Samsung, and Stanford University]. Many of these partners treat OVF as their “feet on the street” in the Oregon/Southern Washington region.
Why this all matters
Investing in venture capital is not just an opportunity to diversify one’s portfolio and access uncorrelated, potentially superior returns; but also, a chance to invest according to one’s values and interests. Not many investment vehicles provide access to something as intimate as people's dreams. Venture capital, when it works out, helps people realize those dreams – and that’s about as American as it gets. It can be one of the best feelings in the world. Just make sure you ask a few important questions before you invest.
To learn more about Oregon Venture Fund’s performance, strategy and process, please reach out to Melissa Freeman, OVF Director, Investor Relations at Melissa@OregonVentureFund.com for a brief overview.