Be Prepared for Your Pitch

by Paul Jozefak

One thing to remember when pitching to a VC is that you have to be prepared. When I say prepared, I mean in regards to questions which are going to be thrown at you. Further, when I refer to questions, I mean the questions VC's are going to ask. Specifically, you will hear most of the following questions if you are very early stage and are trying to get me excited about your idea (obviously this is not an exhaustive list):

Customers:
1.  Who is your target customer?
2.  Why will this customer buy from you?
3.  Have you done market testing?
4.  How many potential customers were you able to test your product on?
5.  Will these customers be willing to pay for your product?
6.  Will they only pay once or continue paying?
7.  Do you already have paying customers and if so, how many?
8.  Are you talking to your customers regularly?
9.  Has customer feedback gone into tweaking the product?

Product:
1.  Who developed the product? In-house or contract developer?
2.  Is the product done and if not, what remains to be completed?
3.  What is the underlying technology?
4.  How easily could someone copy your product?
5.  Is there a competitive product in the market already?
6.  How long did it take to create/complete your product?
7.  Are you using the product yourself?
8.  What did development cost?
9.  How will you tweak the product in the future?

Market:
1.  How big is your market?
2.  Is your market Germany, EU, World?
3.  How much of this market do you want to win?
4.  How will you address your market?
5.  What is it going to cost?
6.  How well do you know your market, i.e. have you worked in the target market?

Employees:
1.  How many do you have.....full-time, part-time?
2.  Do they have options?
3.  What kind of salaries are you paying (going to be paying)?
4.  How long have they been on board?
5.  Has there already been churn and if so, why?
6.  Who are your future hires?
7.  Do you have specific people in mind when it comes to future hires or will you need a headhunter?

Management:
1.  How many of the managers are founders?
2.  How much of their own capital have founders/management invested?
3.  What are current and future (post-financing) salaries of management?
4.  What additional management hires are necessary?
5.  What are the weaknesses of current management?
6.  Do you have company cars (yes, I will ask this!)
7.  Is the complete management team in one location or separate offices?  
8.  How often does management meet as a group?
9.  How long has the management team worked together?
10. Has management had previous exit experience?
11. Has management been part of venture-backed companies previously?
12. Has management previously worked in start-ups?

Financing:
1.  How much are you raising and why?
2.  What will you initially spend the money on and how are you prioritizing this?
3.  How much time did you plan to complete fundraising?
4.  Are you looking for one or multiple investors?
5.  Do you have a valuation in mind? (Of course you do but is it negotiable?)
6.  Are you current investors participating in the round....pro-rata or more than that?
7.  If the current investors aren't participating, why is this the case?
8.  Are future rounds planned?
9.  Will an ESOP be part of the current round?
10. How long have you already been out fundraising?

Miscellaneous:
1.  Why are you talking to us? (Seems like a no-brainer but you'd be surprised how often people stumble on this one!)
2.  What do you expect from me outside of cash?
3.  Have you done any reference calls on us?
4.  Would you like me on your board?
5.  How much time do you expect me to invest as an investor?
6.  Have you ready my blog? (Yeah, I do ask this every now and again but only when I sense that some is prepared!)

Again, this is not an exhaustive list. I thought I'd just do a brain-dump of things that come to mind. I hope in some way this gives you a sense of the types of things we throw out when hearing a pitch. Maybe it's helpful when meeting with other VC's as we do tend to ask similar questions. Nevertheless, don't presume we've read all of this beforehand in your business plan and know it already if it's in there. We want to have a discussion with you and get your answer in person when you are pitching to us. The more questions I ask, the more interested I tend to be.