123 Questions VC’s Enjoy Asking You After Your Pitch
Collected from top VC firms and programs like Sequoia Capital, a16z, Kleiner Perkins, and Y Combinator.
What is the most difficult question that VCs ask and what is the best way to tackle it ahead of time?
Founders need to be prepared in pitching their startup to investors. The failure to have thoughtful and reasonable answers to VC questions will decrease the likelihood of the company getting funded. The following is a list of key questions entrepreneurs should anticipate getting asked. The deeper you go into conversations (and later de dilligence) the more will be asked. Itt’s not only good preparation but also a great checklist for you to SWOT-analyse your company.
Key areas covered
Business Model (3), Competition (6), Competitive Advantage (7), Customer (11), Financials (10), Fundraising (10), Growth & Marketing (13), Idea (5), Legal (11), Market (4), Market Validation (3), Product & Technology (11), Recruiting (3), Roadmap (2), Team (11), Team Experience (12), Timing (1)
Ok, let’s start…
Business Model
- How will you make money?
- How much does customer acquisition cost?
- How many users are paying?
Competition
- What competition do you fear most?
- Who are your competitors?
- Who might become competitors?
- Why won’t a huge corporation build something like this?
- Compared to your competition, how do you compete with respect to price, features, and performance?
- What are the barriers to entry?
Competitive Advantage
- What do you understand that others don’t?
- What’s new about what you make?
- Why isn’t someone already doing this?
- What, exactly, makes you different from existing options?
- What are the key things about your field that outsiders don’t understand?
- What do you know about this space/product others don’t know?
- How is your product different?
Customer
- What are the top things users want?
- Who needs what you’re making?
- Who would use your product?
- What resistance will customers have to trying you and how will you overcome it?
- How are you meeting customers?
- How are you understanding customer needs?
- What do you understand about your users?
- Who is going to be your first paying customer?
- How do you know customers need what you are building?
- What makes new users try you?
- Why do the reluctant ones hold back?
Financials
- What is your burn rate?
- What are the company’s three-year projections?
- What are the key assumptions underlying your projections?
- What future equity or debt financing will be necessary?
- How much of a stock option pool is being set aside for employees?
- When will the company get to profitability?
- How much burn will occur until the company gets to profitability?
- What are your unit economics?
- What are the factors that limit faster growth?
- What are the key metrics that the management team focuses on?
Fundraising
- Have you raised funding?
- How much equity and debt has the company raised; what is the capitalization structure?
- How long can you go before funding?
- How much is your company valued at?
- Do you prefer debt or equity?
- How much is being raised in this round?
- What is the company’s desired pre-money valuation?
- Will existing investors participate in the round?
- What is the planned use of proceeds from this round?
- What milestones will the financing get you to?
Growth & Marketing
- Why do the reluctant users hold back?
- Where do new users come from?
- How many users do you have?
- How will customers and/or users find out about you?
- What is your distribution strategy?
- What is your user growth rate?
- What is your growth like?
- What makes new users try you?
- What’s the conversion rate?
- How much does customer acquisition cost?
- How do you define success for you and your company?
- What is the projected lifetime value of a customer?
- What advertising will you be doing?
- What is the typical sales cycle between initial customer contact and closing of a sale?
Idea
- So, what are you working on?
- Why did you pick this idea to work on?
- Are you open to changing your idea?
- Someone just showed us an idea like this right before you guys. I don’t like it. What else do you have?
- Have you considered various mutations of your idea?
Legal
- Have you incorporated, or formed any legal entity (like an LLC) yet?
- What kind of entity and in what state or country was the entity formed?
- Will you reincorporate as a US company?
- Please describe the breakdown of the equity ownership in percentages among the founders, employees, and any other stockholders.
- Are any of the founders covered by noncompetes or intellectual property agreements that overlap with your project?
- Who writes code, or does other technical work on your product? Was any of it done by a non-founder?
- Is there anything else we should know about your company?
- What key intellectual property does the company have (patents, patents pending, copyrights, trade secrets, trademarks, domain names)?
- What comfort do you have that the company’s intellectual property does not violate the rights of a third party?
- How was the company’s intellectual property developed?
- Would any prior employers of a team member have a potential claim to the company’s intellectual property?
Market
- Who needs what you’re making?
- How big of an opportunity is there?
- If your startup succeeds, what additional areas might you be able to expand into?
- How much money could you make in one year (in 5 years)?
Market Validation
- How do you know customers need what you’re making?
- How do you know people want this?
- What part of your project are you going to build first?
Product & Technology
- What is the next step in product evolution?
- How does your product work in more detail?
- What’s the conversion rate?
- What has surprised you about user behavior?
- How is your product different?
- What is rocket science here?
- What are the major product milestones?
- What are the key differentiated features of your product or service?
- What have you learned from early versions of the product or service?
- Provide a demonstration of the product or service.
- What are the two or three key features you plan to add?
Recruiting
- Who would be your next hire?
- Who would you hire or how would you add to your team?
- How many employees do you have?
Roadmap
- What are you going to do next?
- Six months from now, what’s going to be your biggest problem?
Team
- Who is “the boss”?
- Will your team stick at this?
- How did your team meet?
- Who in your team does what?
- What domain expertise do you have?
- Why did your team get together?
- In what ways are you resourceful?
- Would you relocate to X?
- What will you do if we don’t fund you?
- How do we know your team will stick together?
Team Experience
- What else have you created together?
- What’s the worst thing that has happened?
- What’s an impressive thing you have done?
- Tell us something surprising you have done?
- What problems/hurdles are you anticipating?
- What obstacles will you face and how will you overcome them?
- What’s the funniest thing that has happened to you?
- What systems have you hacked?
- What’s the biggest mistake you have made?
- Tell us about a tough problem you solved?
- What’s the funniest thing that has happened to you?
Timing
- Why hasn’t this worked before?
