When you need to pitch to venture capitalists for funds, you must know what type of questions to expect. The failure to answer the venture capitalists’ questions can significantly decrease the likelihood of getting adequate funds. Following is a list of crucial questions revolving around specific elements that an entrepreneur should go through to prepare himself for the funding parties’ session.
Product and Service Offering
An entrepreneur should articulate the company’s product and service offering and deduce the offering’s unique selling proposition. In this area, you can expect the below key questions:
- Why should the customers buy your product? What is their problem that you solve with your product?
- Do you have any product enhancement roadmap in the future?
- Which are the differentiating factors of your products in comparison to the competitors?
- Is there any substitute or complementary product? How can it affect your product sales?
- Were there any earlier versions of the offering? What have you changed about it, and what was your learning from it?
- Could you provide a demonstration of your current and going to change product or service offering?
Competitors
The competitors play a substantial role in understanding your growth in the market. Mark Elenowitz states that venture capitalists and other funders will not entertain an entrepreneur that says their business does not possess any competition, apart from the case of a rare zero-level competition. Therefore, ensuring credibility is crucial to obtain an ample amount of funding. Anticipate the below questions in this field.
- Who are the competitors for your business?
- Do you possess any competitive advantage in front of your competitors?
- Does the competition has an advantage over you? List down the ones that will significantly affect your brand growth?
- How can you compete with the competition in terms of features, price, and product performance?
- Which are the barriers that you will face while entering the market space?
Customer Acquisition
Customers are a vital part of a business. Therefore, venture capitalists will pitch you to tell them about your customer acquisition strategy. Below are a few questions concerning this topic.
- What will your company market your product or service offering?
- What is the PR strategy of the business?
- What is the social media strategy, if any?
- What is the total cost of customer acquisition?
- What is the forecasted lifetime value of a customer?
- Which type of advertising will you opt for?
- What is the standard sales cycle between the initial customer contact and the closing of the deal?
Traction
Early traction symbolizes positivity. The venture capitalist will pay keen attention to the company’s early traction to understand its future. Prepare yourself to answer the below questions.
- Did your company receive any early traction? It can include sales, app downloads, traffic to the website, and so on.
- Is there a way you can accelerate such early traction?
- What are the critical reasons for early traction? How do you plan on continuing the same in the near future?
Thoroughly studying the above questions and deducing suitable answers will give you an edge to finalize the funding deal.
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