As a Founder about to pitch an idea to a group of Venture Capitalists, this is one thing you need to know: you could have a genius idea yet still blow up your pitch if you don’t prepare.
Preparation is an essential factor for success. Everyone hopes to be polished, but in order to get there, you must first put in the effort.
It is clearly obvious that Venture Capitalists sit through a good number of pitches, hence in order to have an advantage during your pitch, you must be prepared to describe your business and answer every question that is thrown your way to show your level of seriousness and commitment.
In this article, we’ll go over some of the questions that Venture Capitalists might ask based on the stage of your business and because they have a system for identifying great investment prospects, they usually ask the same questions.
Read also: How You Can Avoid The Most Common Pitfalls.
We’ve categorized these questions into the pre-seed and seed stages as most startup founders are usually between these 2 stages of fundraising but we’ll be focusing on one stage in this article
Questions asked in the pre-seed stage are usually about the team, the market, the competition, finances, legal, market validation, and competitive advantages. VCs in this stage are basically investing in you to do exactly what you claim you can do and the questions will reflect just that.
- What is your background in this industry?
- How are responsibilities distributed among your team members?
- What is your team’s history of collaboration?
- Are you fully committed to this business, or do you have other commitments?
- What metrics do you and your team use to determine success and failure?
- Why is this a good time to bring your idea to market?
- Who is your target audience?
- What makes you believe that your company has high growth potential?
- How long will it take to achieve market impact?
- What is your TAM (total addressable market), and how do you intend to achieve it?
- Who is your competition?
- What does your competition do well that you’ve yet to achieve?
- What do you know about the market that your competition doesn’t?
- Is your price higher or lower than the competition’s?
- What distinguishes your features from those of your competitors?
- How long will it take for your company to become profitable?
- What are your financial projections over the next three years?
- How much debt or equity funding do you believe you’ll need in the future?
- What is your projected burn rate?
- What are your forecasts based on?
- What is your corporate structure?
- In which country was your company incorporated?
- Does your company possess any intellectual property?
- What steps have been taken to guarantee that your company’s intellectual property does not infringe on the rights of any other person or entity?
- Would any of your employees or their prior employers be able to sue you for intellectual property?
- How do you know that customers want or need what you’re selling?
- Have you developed a market-ready minimum viable product?
- How did you identify volunteers for your study, and how were the findings analyzed?
- To evaluate interest or demand, what kind of SEO analysis did you conduct?
- Is anything new or disruptive about your product or service?
- What sets your idea apart from others in the same industry?
- Do you have any “unfair” advantages?
- What do you think you’ve figured out that no one else has?
Most of these are questions that you would normally ask yourself on a regular basis, so answer them honestly and transparently even before you’re asked. Don’t try to hide the problem or downplay the consequences.
Watch out for the next article as we will be sharing questions Venture Capitalists will ask you during the Seed stage.