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Questions VCs may ask you

I’m a former founder who’s reviewed over 30,000 pitches as a General Partner at Hustle Fund and as a former Partner at 500 Startups. This is a list of questions I regularly ask early-stage founders in order to decide whether or not to invest. - Sourceful

VC, startup

Questions Early Stage VCs May Ask You



Elizabeth Yin, General Partner

Last updated: 06/17/2020



________________





I’m a former founder who’s reviewed over 30,000 pitches as a General Partner at Hustle Fund and as a former Partner at 500 Startups.



This is a list of questions I regularly ask early-stage founders in order to decide whether or not to invest.



Questions highlighted in blue are what I personally care most about.



Questions in black are what many early stage software investors may ask.



________________





Team

* Tell me a bit about your background and your co-founder(s)’s background.

* How do you all know each other?

* How long have you worked together and in what capacity?

* Why is your team uniquely motivated to solve this problem?

* Why did you pick your co-founder?

* Who do you need to hire during the next 18 months to be successful?

* When was the last time you had disagreed on a business issue? How did you resolve it?

* Do the founders have the knowledge to build the technology or would they need outside help?

* What does the cap table look like? (equity distribution across founders)

Problem You’re Solving

* What is the specific problem you are solving?

* How big / serious of a problem is it?

* Why is this a problem?

* Who has this problem?





Solution / Product

* How are people solving this problem today?

* Describe your solution to this problem.

* What effort / timing is required to switch from a different solution to yours?

* (For deeptech) What is unique about the tech? (Do you have any patents / IP / trademarks?)

* What is your product roadmap for the next 6-12 months?

Market / Market timing

* Why now?

* Why hasn’t this worked / been done before?

* How big is this specific market?

* How many people does it affect?

* How much money are people spending to solve this?

* What is your unfair advantage?

* Who would you see as your key competitor at the moment? Why?



Customer Acquisition / Unit Economics / Go-To-Market

* Who is your customer persona?

* Who is the end user?

* Who is the buyer?

* What does a day-in-a-life look like for these people?

* How much are people paying today? (range?)

* How much do you think you can charge in the future?

* How are you currently getting users / customers? (what customer acq channel(s)?)

* How do you think you will get users / customers in the future?

* How much does it cost you currently to get a user? And in which channel?

* How much does your solution/product cost (COGs)?

* How much will it cost in the future?

* Why do people buy / use your solution?

* What is the sales cycle to-date?

* How does the product team interact with current and potential customers? If so, how and how often?



Competition

* What differentiates your solution from other alternatives?

* Who are you more afraid of: Google or another startup?

* Who are you most afraid of?

* What happens if a Google (or equiv) does this?

* Who are the major players?

* What is your moat?





Traction

* When did you start the company?

* How many customers do you have to-date?

* Or how many pilots / contracts signed?

* When are the start dates of those pilots / contracts?

* What are the contingencies?

* Or how many LOIs signed? What do those look like?

* How much revenue have you generated to date?

* (Note: GMV is different from revenue)

* As product revenue vs consulting / services revenue?

* What are your margins?

* Any notable customers?

* Any enterprise customers paying big money?

* What does retention or churn look like? (if you know)

* What does engagement look like?

* Any upsells?

* When will your company break even in terms of profitability and cash flow?





Fundraising / plans

* How much have you raised to date?

* At what terms?

* Who are your current investors?

* How much are you looking to raise?

* What are you looking to achieve (milestones) with this round if everything goes well?

* Use of proceeds?

* Where are you in your round?

* Have the current terms been set? And if so, what are they?

* What is your burn rate?

* What is your top priority for the next 3-6 months?

* What are your capital costs? (if capital intensive, like hardware / e-commerce)

* Minimum batch sizes / inventory / etc?

* Have you secured a lead investor for the round? If so, who and how much is the lead investing?







________________







Elizabeth Yin, General Partner

www.hustlefund.vc

@dunkhippo33

Info
Tags VC, startup
Type Google Doc
Published 08/06/2020, 12:50:58

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