Questions You Can Expect a Venture Capital Firm to Ask Venture capital firms are constantly making decisions on whether to invest in a startup business or not. This is not an easy decision as these firms are looking to get a return on their investment. What is their investment? They invest money, expertise, and time into a start up to help it grow and become successful. There are a few reasons why your application to a venture capital firm is declined. It can be that it is not within the firms focus. Most firms have a set criteria, such as investing in technology companies only, for example. As long as the company is within the firm’s investment parameters, there are some questions you are likely to be asked. Knowing what to expect can help you prepare to increase your chances of a favorable answer.
Venture capital firms will often focus heavily on the team behind the start up than the product. Investors need to know the team have the drive, experience, skills, and temperament to grow a business and make it flourish. Therefore, the common questions yo can expect include who the founders and key members of are the start up and what experience do they have, along with any additions the team may need in the short term. Investors are looking for a business that can be scaled and grow into a meaningful concern. You need to immediately address the question on why your business can become large, with high growth opportunities. Ensure you do not present small ideas; focus on the market and the percentage you feel you can capture over a period of time. Most investors are looking for a company that can bring in at least $1 billion in sales each year. If your business has gained early traction or customers, then this will appeal to the venture capital investors. A business that gains early traction will be more likely to secure the financing with better terms. This can be the creation of a beta or viable product, brand name customers, strategic partnerships, and customer testimonials. The investors will want to know how this can be accelerated and the reason for the traction to date. Passion and determination are two things that investors are looking for in the business founders. They want someone that is dedicated to growing the business, while facing challenges. They don't want dreamers; they want knowledgeable and passionate operators.
It is very important to investors that the business founders have a good financial understanding, along with an understanding of the key metrics of the business. You need to show you can handle these with confidence. You need to know what you want to spend money on, tell the investor what needs improving to grow. Effective entrepreneurs know their top priorities, their KPI's (Key Performance Indicators) and will focus teams on metrics that reflect these priorities. An investor is going to want to know the potential risks off the bat. They need to know your thoughts and how you will mitigate the risks, reducing them in the long run. All business plans have risks, so be prepared to answer questions, such as legal risks, technological risks, product liability risks and more. The next big question you can expect is why your company’s product is so great, what sets it apart from competition. You need to articulate why your product or service is so unique. Questions about products and services can be from product milestones to why consumers should care about the product or service you are offering.
About Us: L'ATTITUDE Ventures is a purpose led venture company that invests in early-stage US Latino led and owned businesses with large and high growth opportunities. The company started in 2019, addressing the troubling economic costs to our country and the underfunding of US Latino entrepreneurs. The company invests, elevates, and accelerates Latino owned businesses by investing early. L'ATTITUDE Ventures invests from $200,000 to $1.5 million in Latino led and owned technology companies that offer or provide technology as core to businesses. Full details on L'ATTITUDE the process and pitch submission form can be found on their information packed website at https://lattitude.vc