Questions to Ask a VC

"What can you bring to the table beyond capital?"
Many VCs will be able to offer money, but the best ones also bring strategic value, industry connections, and advice. This question helps uncover what kind of support the VC can provide in addition to funding. Capital is important, but it's not enough—great VCs serve as partners and mentors.

"How involved will you be in decision-making?"
Understanding the level of control and influence a VC intends to exercise is crucial. Some VCs like to take an active role, while others prefer a more hands-off approach. Knowing where they stand on this spectrum will help you gauge compatibility. Too much involvement might stifle creativity, but too little can leave you without guidance.

"What’s your track record in this space?"
A VC's experience in your specific industry matters. Asking this question will provide insights into whether they have previously funded successful startups in your sector and understand its nuances. Data shows that sector-specific VCs tend to outperform those without that expertise.

"What’s your follow-on funding strategy?"
Initial capital is critical, but scaling a business often requires follow-on funding. A VC committed to supporting future rounds demonstrates a long-term partnership. Ask how much follow-on investment they typically provide and what conditions must be met.

"How do you handle startups that face difficulties?"
The reality is that many startups will face challenges. Understanding how the VC reacts during tough times will give you a sense of their temperament. Do they offer support, or do they cut their losses? How they respond in such situations will determine the longevity and quality of your relationship.

"What’s your exit strategy?"
VCs invest with an exit in mind, so it's vital to know their timelines and expectations. Whether they're looking for an IPO, acquisition, or some other exit, their strategy will influence the direction and growth of your startup. Ensure that your vision aligns with theirs, as divergent goals could lead to conflict.

"Can I speak with some of your portfolio founders?"
A VC's current portfolio companies can provide valuable insights into what it’s really like working with them. Speaking with founders who have both succeeded and failed will give you a well-rounded perspective. If a VC is hesitant or refuses this request, consider it a red flag.

"What are your red flags in potential investments?"
Every VC has deal-breakers. Understanding what they consider red flags will help you assess if your startup aligns with their preferences. Common red flags might include founder disagreements, high churn rates, or lack of product-market fit. Knowing this early will help you prepare and address any potential concerns.

"How do you add value during an economic downturn?"
Startups are vulnerable during recessions or market shifts. Ask how the VC has helped their portfolio companies navigate tough economic conditions. A great VC offers strategic advice, connects you to essential resources, and adapts their approach during downturns to ensure your company survives and thrives.

"How do you assess the potential of an early-stage company?"
This question will give you insight into how they evaluate risk and opportunity. Some VCs place more weight on the product, while others focus on the founding team. Understanding their evaluation criteria will help you understand what aspects of your startup you need to strengthen.