Here’s a list of questions that VCs ask startups during the diligence process, along with some color on what they are *really* asking when they pose certain questions.
This is all written from the perspective of an early stage startup investor (me 👋) meeting a new startup, but hopefully it’s a useful resource to anyone investing time or money in a startup — whether you are vetting a new idea, evaluating startup jobs, or discussing a partnership with a startup.
Generally, I try to get through most of these topics in a 45 minute “first meeting,” so that’s why it’s helpful for startups to have a well-structured narrative (often using a deck) that can guide the conversation and tell the story behind a company.
In a second or third meeting, the questions get much more specific, and they will be focused on the “what do you need to believe” assumptions for that specific company.
None of these questions are meant to be trick questions or “gotchas,” so this should just be a reference of topics to think through while prepping for an investor meeting or evaluating a new startup opportunity.
Most investors will tell you that a great team is the most important part of a startup’s success (I agree!). Of course, it’s much easier to assess a team if you’ve worked with them before, and that’s why investors and entrepreneurs often work on multiple startups together.
If an investor hasn’t met a team before, here are some of the questions he or she might ask to get a sense of how the team came together, their motivations for starting a company, and what they are good at.
- Who’s working on this company right now? How large is the team?
- How did the founding team come together? Who else have you hired?
- Why are you working on this problem (motivation)? What makes you uniquely suited to solve this problem (unfair advantage)?
- Are there any key gaps on the team you’d like to fill?
- Who are the other investors and advisors you’re working with?
Just like a normal interview, these questions only add a tiny bit of color to what you would find on someone’s LinkedIn, so realistically, a lot of the…