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