Whether you go through an Associate or get straight through to a Partner, the relationship starts and ends with the Partner. The Partner is most likely going to be your ally for life. He's likely going to be the one who joins your board, and he's likely going to be the one you spend all of your time with. You'll meet the other partners if they like your deal, but you're only going to substantially deal with one guy.
When the venture capital Partner is meeting with you he is thinking one thing "Is this deal worthy of presenting to my other partners?". Venture capital firms tend to consist of a group of partners who rely on the individual partners to vet deals and present their best options. If you can't convince the Partner to endorse you for a meeting with his fellow partners, you're not going to move forward.
The Big Show: The Partner Presentation
The final act in this story is the "partner presentation" where you will present your pitch to the full partnership. Most venture funds vote unanimously for new deals to be approved, so even one Partner that isn't behind you is a problem.
If you haven't gotten to the partner presentation you're not likely to get past the goal line. Even if you're hearing all great things from everyone you've met, until you have that meeting you don't really have a forum where the investors can make a real decision.
The Coveted Term Sheet
Once the partners have agreed to make an investment in you, their offer will come in the form of a Term Sheet. A Term Sheet is an overview of all the key terms of the deal, which will later be taken into a more formal legal agreement between the two companies.
The Term Sheet's purpose is two-fold. It's a Letter of Intent that shows the entrepreneur that the firm is serious about the deal and it's an Offer Letter on what terms the venture capital firm is willing to invest. The latter is what gets far more interesting since it sets the valuation of the company, the amount invested, and any important rights or provisions the investor wants as part of the deal. If some of the terms confuse you, we would recommend taking a look at our article on Common Venture Investment Terms.
Venture Capital Due Diligence
The due diligence process may occur at almost any point in the process of pitching venture capital firms based on how comfortable they are in understanding your deal. Some may begin digging into the details of your company even before you get to pitch a Partner, so that they are sure they want to get more engaged on your deal.
Otherwise it will tend to occur after a Term Sheet is issued. A venture capitalist doesn't want to spend countless hours digging into your back story if you can't even agree on what terms they might invest. The most valuable asset of a venture capital firm is time, so spinning cycles on a dead deal is a huge problem.
The due diligence process will vary per firm and deal. If the company is still in the early prototype stage there may not be much to dig into, but if the company is already up and running and generating revenues, the venture firm will certainly want to look at financials, talk to customers, and make sure you're a solid investment.
The final step of pitching a venture capital firm is the "the close". This means both parties have agreed to the terms within the Term Sheet and are ready to begin the legal process of updating their respective legal agreements and ultimately transferring the funds to your bank account.
The close is not quick. Entrepreneurs sometimes think that since a "deal is done" and the terms have been agreed upon, that the money will show up any day now. That simply isn't true. The deal is then handed to the attorneys from both parties who will begin getting into the nitty gritty of the legal agreement where certain problems can then pop up later.
Even a fast close can take 30 days. A more typical close is longer than 45 days. 90 days would mean there were probably some points of contention between the entrepreneur and the investor. Longer than 120 days means the deal can potentially be at risk. Faster is better in this case.