14 Questions VCs Will Ask About Your Startup
By Julian Humphreys ● August 18, 2016 22:55
The six startup companies in the fifth cohort of CFC Media Lab’s IDEABOOST pitched to some of the biggest names in Canadian venture capital earlier this summer. The VCs in attendance included Prashant Matta, Associate at Omers Ventures; Al Lysne, Managing Director of Ryerson Futures; Alex Baker, Partner at Relay Ventures; Peter Becke, Partner at Hello Ventures; a new fund with Scott Lake, Co-Founder of Shopify; and Janet Bannister, Partner at Real Ventures, the largest VC firm in Canada, established in 2007. From that event, here are the 14 things Venture Capitalists want to know about your startup, divided into four categories – Product, Team, Company and Customers.
1. How does your product work?
This may sound obvious, but founders are sometimes so immersed in their own worlds that they forget to clearly demonstrate exactly what their product is and why someone might need or want it.
2. Why would a competitor have difficulty recreating your product?
Unless you have a patent or proprietary IP, a competitor can simply recreate your product and sell it as their own, so VCs want to know what’s unique about your product and how you can hold on to that uniqueness.
3. How long does it take to get up and running with your product?
A product may do amazing things, but if the learning curve is too steep and the payoff not immediately obvious, it’ll be dead in the water.
4. How does your product differ from the competition?
There are always competing products similar to yours; if there aren’t, that might in itself be a problem! The devil is in the details. How does your product differ from the competition, and how does that make a difference to your company’s long-term future.
5. At what stage of development is your product right now?
Many pitchers talk a good game, but a VC wants to know what’s real and what’s pie in the sky. This question does just that, by getting right down to what’s important – what have you actually got, not six months or one year from now, but today.
6. What’s your motivation?
VCs want to know what’s motivating startup founders – other than the obvious dream of fame and fortune. A founder’s motivation gives clues as to their character, as well as their ability to stick with the project over time.
7. What’s your background?
Especially in technical fields, VCs want to know about your background. Do you have credibility with potential customers and a network you can draw on?
8. How did the idea for the company come to you?
VCs want to know about the origin of the company. A good origin story can go a long way in marketing the product and company.
9. Where are the expansion opportunities?
VCs aren’t just interested in what you say you’re going to do. They want to know what you’re going to do when you’ve done what you say you’re going to do. What are the related markets or products you can expand into over time?
10. What’s the pricing model?
Especially in tech products, there are so many different pricing models. VCs want to know how you’re currently thinking about pricing, and how you might think differently with them on board.
11. What’s the go-to-market plan?
Early-stage startups are often still in beta mode, with an inner circle of pre-market customers doing informal product testing. VCs want to know how that inner circle is going to expand over time.
12. What’s the long-term vision for the company?
VCs are normally in it for the medium-to-long term, so they need to know how you see your company growing over time.
13. How are you currently getting customers?
How you are currently getting customers offers clues to how easy it will be for you to get more customers over time. VCs want to know how people are hearing about your product, and how you will market it.
14. How are your current customers experiencing the product?
You may have thousands of customers, but if every one of them hates your product that’s not good! VCs want to know how your current customers are experiencing your product, so they can get a good sense of the long-term viability of your company.
Connect with our IDEABOOST network on CFC Media Lab’s Facebook page. see more photography by Kyle Burton. Follow us on Instagram @CFCCreates and Twitter @CFCMediaLab, and visit our CFC Media Lab “Non for Profit” page on LinkedIn. We appreciate the contributions made by our funding partner Corus Entertainment. IDEABOOST is supported in part by the Federal Economic Development Agency for Southern Ontario.