Questions Early Stage VCs May Ask You
Elizabeth Yin, General Partner
Last updated: 01/14/2022
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
@dunkhippo33