Last night I was fortunate enough to be able to sit in on a venture capital presentation. A friend of mine was pitching his idea to a few investors and I was taking mental notes of what the VCs were asking. Below are a few questions that were asked and my analysis.
On a scale from 1 to 10, how passionate are you about your idea?
The investors were trying to gauge how serious and confident the entrepreneur was about his company. They also wanted to know how confident each partner was on a scale from 1- 10. They stressed that commitment level was extremely important.
Do any of your partners have other obligations that would distract them from the company?
They basically wanted to know if any partners had other jobs or family-oriented responsibilities that would distract their focus.
If we were to bring in a CEO that wanted to make changes to the business that would be in the best interest of the company, how comfortable would you be with that?
They wanted to see how flexible and open the entrepreneur would be to relinquishing some power in the best financial interest of the company. They wanted to test his comfort level.
What are the backgrounds of each partner — where are they located, what have they done in the past, and what do they each bring to the table?
The investors were definitely more interested in the quality of the team than the actual idea. They clearly stated that the “team is more important than the idea.” I agree, without a strong team that each bring unique value and dedication to the table, you can’t get far.
Are you looking to sell the company once it’s established?
They wanted to know if you’re in it for the long-haul or not.
How far along are you to launching? And what are the milestones that you’ve already established?
They wanted to see that he was setting goals and achieving them.
I hope these insights into a VC presentation gave you an idea of the sort of questions to expect when you’re trying to raise capital. This was just a snippet of the entire meeting, but it’s enough to get you thinking on that level and to get you started on preparing for your pitch!
Very insightful Dave – that’s one thing I’ve never done that I’d like to do. There’s certainly nothing like sitting in on the real thing
Great post. I think that any startup should ask themselves these same questions and anyone that they plan on partnering with.
Dude,
I love the articles bro. I eat lunch with you everyday and you don’t even know it!
I read my few blogs and this is always one of them.
I like this article a lot really because it shows you that as long as you believe 10000% in what you are doing and are insanely passionate about it ( I think the only way to truly be is know that your idea works) then you can make anything happen you want!
Keep them coming bro.
-Adam
Hey Guys,
Thanks so much for your comments — so glad that you are lovin’ the article! It was fun sitting in on that presentation and especially being able to convey those messages to you!
David,
Really interesting article. I completely agreee VCs are REALLY focused on the poeple, not just the idea. I recently wrote about a similar topic in terms of what it’s like to raise money as an entrepreneur. You might find it: http://amargoel.com/2007/07/12.....-be-ready/