VCs Might Ask YouThe 10 Toughest Questions

Investors are a different breed of business people. Equipped with deep funds and intuition, they make the riskiest decisions to help businesses grow.

If you can think like an investor, you are ready to negotiate with one.

Savvy investors know a good bet when they see it. To determine if your company is ready for investment, they may ask you tough questions

It’s your job to be prepared.These slides will help better prepare you for the toughest inquisitions

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What makes your company unique?

1

Be straightforward and specific. Investors have heard

that products “save money and time” too many times.

It is better to have a narrow description of your company,

rather than a vague one.

What is your weak spot?

Before your VC meetings, make sure to become experts at answering these “gotcha” questions.

Stick to the truth. Savvy investors understand that every company has a weakness at every stage, and will poke until they find a hole.

2

Why should we invest?You have to be a domain expert to determine whether your company is worth investing in.

3You need to convince investors to believe in you.

Why hasn’t this worked before?Understand why competitors have failed in the past. And then use that analysis to evaluate how you will succeed.

4

What do we need to know about your company?5Use data and numbers so that it sticks in your investors’ heads. Pick four or five numbers that are specific to your company.

Ex: We have grown revenues 140% in the last two years. We have also helped over 1,500 clients.

What is your company’s valuation?It is important to have a valuation prepared.If the price isn’t set, then investors may push you to a price. Avoid doing so.

6

Prove that your company is a good bet for investors. This means that your total addressable market (TAM) needs to be big.

Show how much of that is the serviceable available market (SAM) and finish with the serviceable obtainable market (SOM).

How big is your market?

7

This is not a fit for us. Would you like an introduction to [blank] VC firm?This may seem like a good route. But most likely, it is a dead end. If an investor passes on your offer, they will tell other investors why they did.

Politely accept and move forward with the introduction. Just be wary that it may not lead to a productive outcome.

8

Why haven’t you gotten traction?

9

Do not approach VCs until you have achieved traction. Venture capital should be looked at as an accelerator for existing success, not a runway extender to get it right.

How much are you raising?Underestimate how much you want. If you’d like to raise $5 million,

start by asking for $2 million.

10

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