123 Typical Questions Venture Capitals ask Founders after Pitch 2021

+123 Typical Questions Venture Capitals ask Founders after Pitch 2021

Intro

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In addition to a concise and effective pitch, founders need to be ready for the next round of a presentation: the questions.

When a VC is asking questions, they’re indicating that they’re interested in your company.

When you have strong answers with relevant data, you’re more likely to turn that interest into tangible support from a VC.

Founders should always have their answers prepared ahead of time in order to be ready to secure that support. 

Product strategist Benjamin Lindor compiled 123+ questions from the VC experts of

🔹 Sequoia Capital (invested in companies now with an aggregate market value of $3.3 trillion). 
🔹 a16z (investors in companies like Airbnb, Instacart, and Lyft).
🔹 Kleiner Perkins (early investors in Amazon, Google, and Uber). 
🔹 YCombinator (launched 2000+ companies with a combined valuation of $300+ billion). 

By using this list, you’ll be able to get a clearer sense of what questions you’ll be asked.

You can use this understanding to adjust your presentation as needed and it’s strongly recmmended preparing your answers before the Q&A Session.

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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?

Customers

  • 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?

Business 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 Size

  • 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?

Timing

  • Why hasn’t this worked before?

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?

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