Now that you’ve finally gotten a VC on the phone for your startup what questions do you ask?! Here is a list of must ask questions to help you understand the process, move forward & close the deal. Remember – the most important part of VC outreach is making sure you are speaking to the right investors. Do they invest in this stage? This industry? Find this out BEFORE you get on the phone. Create your list and have these as two of the checks.
1. Question One: Can you explain your process if you are interested in moving forward? (This is where you learn the next steps, tailor your process around theirs).
2. Question Two: Can you describe the timeline it takes to go through this process? (Don’t tell everyone you are closing in 30 days if everyone tells you it takes 60-90 days).
3. Question Three: What Fund are you investing out, how large is it and how much is left? They will ask you a million questions, be confident and ask them. The worst thing is to spend months with a VC that actually doesn’t have any funds left, never raised it, and using you to try to attract investors without you knowing! If you know then you can manage it. You can always go to sec.gov and check.
4. Question Four: All VCs promise to do all these extra things when they want to win the deal. Ask them to speak to portfolio companies as references. They will ask to speak to customers and employees so it’s fair.
5. Question Five: Ask what their smallest, largest and average check size is. And whether they reserve capital for follow-on rounds. Very important.
If you create a process, timeline, urgency, and a sense of competition you’re the chances of your round closing increases 5x. If you don’t, every VC will ask you for extra advisory shares (for doing what they should do for free), drag the process out for every and worst case wait until you are desperate and running out of money and then negotiate a better deal for themselves. Start the process with 90 days, move everyone forward at the same time, set up a data room with all the info, do roadshows, get term sheets at the same time, put them against each other. Then…may the best VC win. Remember: when VC’s compete companies win. Questions?