The way you talk with your accountant is very different from how you engage with your HR. What these two people know about you, they want to know from you, and their thinking patterns are extremely different.
Most founders forget that these differences exist with VC firms as well. They prepare a single deck and send it to various VCs like Sequoia, Benchmark, and Tiger Global, and expect to make an impression everywhere.
But every firm scores startups differently.
A firm like First Round Capital weighs the founder’s pedigree at 70% of its investment decision, while Tiger Global operates more like a quantitative hedge fund where the founder is nearly irrelevant compared to net revenue retention (NRR) and gross margins. Pitching the same narrative to both firms signals a misunderstanding of how each firm creates value.
To give founders a structured view of these differences, we have compiled an analysis of how the world’s 12 most active VC firms screen startups, which signals they treat as red flags, and how their expectations shift across funding stages.
Key Takeaways
- VC firms like YC and First Round that cater to early-stage startups must bet on founders themselves instead of numbers. A compelling deck with weak founders will not move them. A scrappy founder with zero revenue can.
- Benchmark and Tiger Global expect far more quantitative proof from the Series A and beyond startups they invest in.
- Pitching the right narrative to the right investors is a better approach compared to pitching the same deck to more investors.
The VC Decision Equation: What Actually Matters?
The evaluation criteria of the top 12 firms can be grouped into four core pillars: The Team, The Market & Secret, The Product & Moat, and The Traction & Math.
Firms that primarily enter at the seed and pre-seed stages must bet on founders rather than financials, because the financials do not yet exist. Firms entering Series B and beyond enjoy the luxury of quantitative screens and apply them rigorously.
What are the VCs looking for?
Here is a firm-by-firm breakdown of each of the 12 most active firms’ preferences:
The Multi-Stage Giants: Sequoia vs a16z
Sequoia and a16z are both stage-agnostic and founder-first VCs that typically back startups targeting massive total addressable markets (TAMs).
Roelof Botha, the former Managing Partner of Sequoia, kept capital efficiency as the core filter.
a16z, on the other hand, bets on founders with one extreme, undeniable superpower. Marc Andreessen actively avoids “checkbox deals” that are good at everything but exceptional at nothing.
The Pure Seed Funds: YC vs First Round Capital
YC runs a high-volume accelerator where they back hundreds of companies per batch, specifically focusing on relentlessly resourceful founders. In contrast, despite focusing on the same stage, First Round will only sign a small number of checks per year. Their founder, Josh Kopelman, estimates that 70% of their decisions are based purely on the founder’s unique relationship to the problem they are solving.
The Fundamentals Funds: Benchmark vs Tiger Global
Benchmark enters at Series A and B, and they are obsessed with unit economics. Bill Gurley built the firm’s reputation on the belief that gross margins, switching costs, and network effects are what truly drive enterprise value.
Tiger Global enters at Series B and beyond and operates more like a quantitative hedge fund. They do not take board seats, they rarely meet founders more than once, and they screen almost entirely on growth rate. Specifically, they look for net revenue retention (NRRs) above 110% and gross margins above 60%.
The Contrarian Bets: Founders Fund vs Khosla Ventures
Both Founders Fund and Khosla Ventures back ideas that most investors would immediately dismiss as too risky or too early.
Founders Fund, shaped by Peter Thiel’s philosophy, hunts for monopoly potential. They want proprietary technology that is 10x better than the status quo and founders who have a defensible, secret, and contrarian insight.
Khosla Ventures, on the other hand, takes a science-first approach. They go deepest on climate, healthcare, and hard science problems.
The Pattern Recognition Funds: Accel vs Lightspeed
Accel and Lightspeed are both stage-agnostic and geographically diverse VCs focusing on enterprise software and consumer technology.
Accel places the highest weight on team domain expertise and recurring sales. For instance, Sonali De Rycker, a partner at Accel, looks for founders with an unfair distribution advantage and an exceptional understanding of customer preferences.
However, to land in the good books of Ravi Mhatre (co-founder of Lightspeed Ventures), you must have clear product differentiation and capital efficiency.
The Thesis-Driven Funds: USV vs General Catalyst
Union Square Ventures (USV) and General Catalyst are both highly selective and thesis-driven. Both firms only invest in companies whose success aligns with the future each firm expects to materialize.
USV is the stricter of the two. They only back businesses that get stronger as more users join. If your product does not have a genuine network effect, the conversation ends there.
In comparison, General Catalyst is slightly more flexible. Hemant Taneja, their CEO, focuses on category-defining businesses, particularly in healthcare, AI, and climate. He explicitly looks for founders who treat regulation as part of the product, not a blocker.
The Cheat Sheet: How to Pitch the Top 12 Firms
| Type of firm | Name | Preferences |
|---|---|---|
| Multi-stage generalists | Sequoia | Rewards founders who can tell a coherent story connecting capital efficiency to long-run market dominance |
| a16z | Rewards founders with a single, undeniable superpower, even at the expense of balanced performance across other dimensions | |
| Seed specialists | Y Combinator | Relentlessly resourceful founders who can build under pressure |
| First Round Capital | Founders with a unique relationship to the problem they are trying to solve | |
| Unit economics focus | Benchmark | Firms with healthy gross margins, switching costs, and network effects |
| Tiger Global | Quantitative filters like net revenue retention (NRR) and gross margins | |
| Contrarian funds | Founders Fund | Startups with monopoly potential founded by people with a defensible contrarian insight |
| Khosla Ventures | Deep technical expertise | |
| Pattern Recognition Funds | Accel | Deep domain expertise and demonstrable understanding of customer preferences |
| Lightspeed Ventures | Clear, defensible product differentiation advantage and capital efficiency | |
| Thesis-driven funds | USV | True network effect and user engagement that compounds over time |
| General Catalyst | Regulation-ready, category-defining businesses |
The best founders do not just prepare for diligence. They prepare for the specific lens through which each VC will evaluate them. They know which VCs want unit economics before vision and which ones prioritize growth rates over story. The pitch does not change because the company changes. It changes because the evaluator does.
Founder & CEO
Why Cap Table Health Functions as a Parallel Filter
The evaluation frameworks described above are firm-specific, but one finding is consistent across all 12 firms: poor equity structure emerged as a deal-killer at every stage of the funding process.
Sequoia flags messy SAFEs immediately. Benchmark walks away if founders are over-diluted before Series A. Accel checks that the ESOP pool is properly structured before discussing valuation. Tiger Global flags unusual investor rights that could complicate a future IPO.
The mechanism is straightforward. A broken cap table signals either poor planning, misaligned incentives, or accumulated legal complexity that will surface in diligence regardless of how strong the business is. A strong pitch can open a conversation; a broken cap table can close it.
The specific signals investors examine include:
- Founder dilution: Above 25-30% before Series A is a red flag at most firms
- SAFE terms: Uncapped notes from angels make institutional investors nervous
- ESOP pool: A missing option pool signals poor planning
- Vesting schedules: Missing cliff clauses suggest misaligned founding teams
- 409A valuation: An outdated or unsupported 409A is a compliance risk that investors will catch immediately
Give Investors the Transparency They Look For
This is exactly where Eqvista comes in. Our cap table management software gives founders a real-time, fully diluted ownership view, which is one of the first documents any investor will request in diligence.
For companies approaching a funding round, Eqvista also delivers 409A valuations that are audit-defensible, so your equity story is as clean as your pitch.
If you need guidance at any point, don’t hesitate to reach out, our experts are here to help you navigate the process.
