Insider tips for accelerators, incubators & VCs – 7 questions to know if a startup invest will be successful
There you are, listening to a startup pitch, considering to give them money. A lot of money. The main question in your head: will this startup be successful? Before you invest, you want to be as sure as possible this company will thrive. Therefore, you should spot those crucial points that will tell you about the startup’s prospects of success. But how to get to the key facts? We share some effective questions for accelerators, incubators and VCs to screen a startup – and for startups to prepare themselves for them. Let the interviews begin!
Questions to ask a startup #1: “Where do you see this company in five years?”
Aim: reveal the quality of the strategic plans to make the company grow. There should be a guideline of goals and how to reach them. Another aspect you could observe is if the founders are in for the long run or just want to lucratively sell it – which is crucial for their business decisions.
Questions to ask a startup #2: “Let’s talk about the skills of your top team members. What is each person best and worst at?”
Target: Team and CEO
Aim: learn about the CEO, how good he knows his team and whether he respects them. This is a predictor of the company’s culture and team spirit. Incidentally, you will get to know about the intellectual resources of the team.
Questions to ask a startup #3: “How does your first product differ from the most recent one?“
Target: Products & Services
Aim: this will give you an idea of the company’s innovative strength. Consider the company’s research and development process and their responsiveness towards the customers’ needs and desires. This is what will help them survive and thrive.
Questions to ask a startup #4: “Why do you think this company will run out the competition?”
Aim: observe if they are well-positioned. They need to have a battle plan to beat their competitors but also know what their competition is up to. The startup’s product needs to have certain key features that will give its competitors a hard time copying.
Questions to ask a startup #5: “Have you acquired any customers yet?”
Target: Customer Acquisition
Aim: you are looking for traction when you are considering investing in a startup. If they have spoken to possible customers and if these showed interest, it will tell you about the market for the product.
Questions to ask a startup #6:“Why are you raising the funds you want and how far will they get you?”
Target: Financials & Inversion
Aim: see if they did their homework. To run a profitable business, the founders must know their numbers and make reasonable and realistic projections. Also, you want to be sure they know how to handle your inversion, right?
Questions to ask a startup #7: “Why could the company fail and what would you do?”
Aim: when you go where it hurts, you will see whether the CEO is a good planner. He needs to be aware of the possible risks and have backup plans if he is a leader of a soon-to-be successful company.
Let’s get to the bottom line: accelerators, incubators and VCs should investigate the strategic approach and the level of self-awareness of startups, but also find their weak spots as well as their unique strengths to be able to make a grounded prognosis of their success. So listen closely, read between the lines – and trust your entrepreneurial instinct! If you are still looking for promising startups or matching investors, have a look at CODE_n CONNECT!