Questions Asked By Venture Capitalists

Having a business plan is only the starting point for the discussion with a VC investor.  A good VC will probe for the answers to key questions, and the more effectively an entrepreneur can answer these questions, the more they will impress the VC. Below are some typical questions that a VC may ask you in the first meeting.

PEOPLE QUESTIONS:

The people behind the business is as important, if not more important than the business concept and plan when determining whether or not to invest. A good team can rescue a bad business, but a bad team can ruin a good business. Entrepreneurs sell not only their ideas, but also themselves and their teams when pitching to a VC. Therefore, you should have a prepared a personal introduction covering the following questions about you and your track record to date:

• Where are the founders from?
• Where have you been educated?
• Where have you worked — and for whom?
• Have you worked together before
• What have you accomplished — professionally and personally — in the past?
• What experience do you have that is directly relevant to the opportunity you are pursuing?
• What skills, abilities, and knowledge do you have?
• Who else needs to be on the team?
• Are you prepared to recruit high-quality people with more experience and knowledge than yourself?
• How do you respond to adversity?
• Do you think you have the mettle to make the inevitable hard choices that have to be made?
• How committed are you to this venture?
• What are your motivations?

(Source: Bill Sahlman, Harvard Business School & Dawn Capital)

BUSINESS PLAN QUESTIONS:

The business plan and presentations that companies share with VC will should cover all of the below questions and they should be written up in a written plan or presentation.

• What problem are you solving?
• How are you solving the problem?
• Who are your customers?
• How big is the problem in your customers’ minds?
• How do they get to hear about your solution?
• How much does it cost to the customer?
• What is the return on their investment in your product or service
• How much does it cost you to deliver the product or service?
• Who else does this?
• Why are you better?
• How much money are you looking for?
• How will you spend the money?
• What does the financial forecasts for the next 3 to 5 years look like?
• How does the investors make money from investing in you?