A reader recently asked me if VCs preferred entrepreneurs who are willing to relocate their companies.

In my post, The Importance Of Geography, I make the point that VCs do use the location of a company as a selection criteria. VCs that only have capabilities in the US might not invest in a Chinese startup. As a result, a founder’s willingness to move his company into the VC’s target geography can make the difference when the VC is deciding to invest.

There are, however, some other considerations that should influence an entrepreneur’s (and VC’s) willingness to back a company that is moving. First, both investors and entrepreneurs should only be interested in moving the company if it does not disrupt the core business. If a swath of effective employees would have to be replaced, new partnerships forged or new customers acquired, investors might be averse to backing a company that is relocating.

Second, some VCs are hesitant to back entrepreneurs that don’t have deep relationships in the local ecosystem. There’s a rational argument for this – without a local network, finding talent and getting introduced to key contacts can be difficult.

In sum, the decision to back a startup that is changing locations is typically made on a case-by-case basis. When a move into a VC’s target geography is beneficial for the company, however, it is generally looked upon favorably.