I have heard the analogy that investing with an early stage entrepreneur is akin to going to war together.  In spending a lot of time with soldiers who have experienced armed combat first hand, I can assure you that being sent to war is far worse than trying to push a minimally viable product into the market.  However, there are some similarities that make the analogy relevant, so I’ll go with it (small victories build into large wins, “enemies” are always out to derail your effort, etc. etc.).

With that said, there is really only one key question that I would want to know if I was going to war with someone – and a variant of the question that most entrepreneurs fail to ask when evaluating their potential seed investors:

“If the s*&# hits the fan, will you have my back?”

In my opinion, this is the most important question that an early stage entrepreneur can ask because the answer will expose a lot about the character of a seed investor, their mentality when making the investment and the importance that they place on you as a business colleague.  Most entrepreneurs steer away from asking such a bold and blunt question as they fear that it could expose a weakness in them as leaders (“if I am thinking about the downside, then I will expose my fear of failure”).  While, I wouldn’t recommend that you ask this at a pitch meeting, but definitely would want to know as diligence progresses.

Here are some red flag answers that I would look out for:

A: All of our portfolio companies have been extremely successful.

If anyone who has made more than 3 investments in their life says this, then I would assume that they are not telling the truth.  Even the most successful of companies have faced critical pathways that determine their long-term outcomes.

A: We do not reserve follow-on capital.

Many seed investors today do not have a follow-on strategy.  I believe that on a case by case basis, there are reasons that a follow-on makes sense and times when it doesn’t. The real question that needs to be answered is “do you have any dry powder for me at all?” For example, what if we need a bridge financing round.  What other angels or investors can you help to close the gap?  Do you know any acquirers in our space that can step up to the table?  What if my metrics are trending in the right direction, but aren’t enough to substantiate a new round?

A: We like to get involved really early and then hand the reigns over to you to grow.

Again, this sounds great when you have rose-colored glasses and the prospects of success are the only things in front of you.  But, what if things go sideways?  Finding investors who will roll up their sleeves, lose sleep with you when challenges emerge, dial for dollars at critical junctures, think through pivots, and practice your pitch/edit your investor presentation are all very important tasks that you will want your seed investors to help out with.  In fact, your job as the CEO of an early start-up is to employ everyone in your eco-system to help get you from point A to point B.

A: We have resources to help support you and your team.

The answer is way too vague as “resources” mean a lot of different things to a lot of different people.  If your resources are simply to hit the “recommend” button on AngelList, then you aren’t really helping.  If your resources are to introduce me to a part-time CFO that will cost me an additional $10k/month in burn this won’t get me out of a short-term cash jam.  If they claim a roster of venture firms with whom they have worked with over a career, then find out how they would present your team/opportunity.  However, if your seed investor has analysts (or a wife/son/dog) that can be leveraged for quick projects, an open CRM system that I can dig through for new contacts or a bench of entrepreneurs who I can leverage for critical questions/answers then, maybe, you have a good investor.

A: We will roll up our sleeves and really help (or we socialize the problem with our team internally and come up with a solution).

Again, this is way too vague of an answer.  Ask them for specific examples.  If your investor has not been on the phone at 10pm with a portfolio company in distress or a founder who is feeling the heat and needs to vent, then they are not hands on enough for me.  Similarly, an investor should be prepared to put it all out on the line for you if they truly believe that you are building something incredible.

A seed investor should be an extension of your team, a member of your battalion.  He/she should be prepared for the realities of war – the blood, sweat, tears, and yes, at times, the romance of it all.