Each venture capital (VC) fund has its own particular strategy for selecting startups to invest in. Some VC funds only invest in startups within a particular industry vertical. Some only invest in startups which have founders that fit a certain experience or demographic profile (e.g. founders who have already successfully exited a previous startup or founders who are female). Many VC funds also specialize in startups of a particular maturity, such as startups that have already raised at least $10 million or startups which have raised less than $5 million so far.

A “first check” venture capital fund is an investment fund that invests in very young startups which have not yet received any other outside investment. In other words, the VC fund’s investment money will be the “first check” to be deposited by any investor into the startup’s bank account.

This type of first check funding is also called seed funding.

Since each fundraising event is a hurdle that many companies never past, there is much more demand from early-stage startups and founders for first check venture capital funding than for later funding, yet the risk for first check investors is also significantly higher than for later VC investors.

For the ambitious founder, this often means finding that critical first check investor can be difficult. For the ambitious fund manager, this often means there is a significant opportunity for above-average performance if you can develop a system for predicting success of very early-stage startups within a particular niche. This is particularly the case now as evidenced by the fact that from 2006 to 2018, the total percentage of institutional VC funding going towards first checks dropped from 19.7% to only 9%, meaning the relative competition for first check investors is less than half of what it was roughly a decade ago.

What is the Dollar Amount of a First Check Investment?

The amount of a first check investment varies significantly from one VC firm to the next and from one startup to the next. On the low end, VCs such as Great North Labs invest as little as $10k while other first check VC funds write multi-million dollar checks. Most typically, however, first checks from VC funds tend to be in the range of $25k to $300k.