Four Questions that Venture Capital Firms Ask Entrepreneurs

If you are entrepreneurs and you are looking forward to get some funds from a venture capital firm, you must be prepared to answer some questions that may be asked by the VC investors. Below are some questions entrepreneurs are likely to face:

What is the potential market size for your services or product currently?

This is one of the most likely questions entrepreneurs face. If the market is not growing or is too small), then investors might not be interested in investing in it. The aim of this question is to check if entrepreneurs understand their market.

How much potential market are you capable of achieving?

This question accompanies the previous question. Here the VC firm want you to give an idea of the company’s potential. It also tests if your assumptions are realistic.

Why will customers buy your product?

If you’re asked this question, the VC investors want to know if your product or service will attract customers. When addressing this question, focus on the need that the product or service will address.

What is your competitive advantage and how is your business protected?

Here, the VC firm wants to know the advantages of using your product or service. Do you have IP protection or copyright, lowest cost of production, special knowledge, etc.

References

http://www.askivy.net/articles/venture-capital/interview-preparation/role-descriptions-in-venture-capital

https://businesscollective.com/12-of-the-hardest-questions-venture-capitalists-will-ask-you/

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