Venture Capitalists play a fundamental role in making your startup evolve into a company. A significant part in this process is played by the money you would be acquiring through them. Hence they have a major role to play in your success. For each person, the experience of meeting VCs will be different, yet there is a general frame of questions that they all ask.
1. Where do you see yourself in a few years?
It is very important for your company to have a vision in place. You should also have a rough guideline on how you would reach your goals. They may ask you if
you’re in for the long haul or you’re just wait for a lucrative buyout after building it. They would also like to know your strategic plans to grow your company.
In poker terminology, it’s like asking if the table is hot enough. The VCs want to know how fast do they have to move in as investors and how many other investors you are talking to. They would also like to find out how important they are to you. You may try to deflect this question, but these are trained professionals with the potency to read with the lines.
3. Tell us something about your team?
Here they want to hear terms like, “Committed” and “From a long time”. Even if you are the Einstein’s child or a business prodigy, without a dedicated team you will not be able to win over your VCs. The team is really important even from a valuation perspective. If the team is weak, it automatically translates to founder being weak. VCs won’t be running the firm, you will and it becomes really important for them to know that you can.
4. What do you think about your competition?
Be a little honest here because it’s obvious that your VCs have done their homework. Name your nearest competitors but sell the VCs on the basis of your team and something unique that only you have. It maybe intellectual property or a copyright. Show you passion because that is a big gun in your arsenal and your product’s potential.
VCs also like to invest in products in an established market. For the purpose of an example, twitter carved out a market segment even through Facebook was an already established platform.
5. What are your valuation expectations?
You will have to be really careful here, you do not want to overvalue or undervalue your company. Its much better not to showcase a specific amount of valuation early on and perhaps take the curve ball saying. “We will see what the market says”. Sometimes they would be hard pressed to know about your valuation expectation, but it is wiser to generate interest towards your firm and then let the market make the valuation. However, be clear on how much capital you would want to raise.
We hope that these points help you towards having a successful meeting with your VC’S.