Written By: Marc Halpin
Sometimes when you’re juggling ‘all the things’ as a startup Founder it really can be difficult to see the forest for the trees.
You’ve got a lot going on, right!?
Just one part of that craziness is how to raise your seed round. You’ve got to find the investors, build your business plan (deck), pitch well and then answer a 1,000 questions.
What if I was to tell you the most important question that you’re going to be asked when pitching a VC and how you should answer it? That information might come in handy, right?
Now before I get there, here are a couple of key things to be aware of. You’ll need to be able to demonstrate the following before the question is even asked.
1) You are addressing a large TAM (Total Addressable Market)
2) You’re a good human (Nice, likable, and maybe even fun)
3) You have some traction (Dogs eating the dog food)
4) And lastly, that you’re building a tech company!
So, let’s say you’re good with 1) through 4). What is this most important question? Well, it looks innocent enough, innocuous even, but after playing this game for over 20 years I think it’s the one that you’ll REALLY need to think about before you even meet a VC.
Ready? Here it is…
How do you get customers?
That’s it? Yes.
Why? Well the answer to this question is going to highlight to a competent VC, whether you have a game plan for growth, whether you are likely to have a high margin (tech) business, whether you really know the industry you are working in and a host of other things that will be pivotal as to whether she invests.
If you’re good, you’ll be covering this succinctly on your ‘go to market slide’. So, let’s get a little granular:
How NOT to answer this question:
- I’m going to spend 70% of the investment on SEM, that’ll work for sure.
- I’m planning to hire some superstar sales guys and girls
- I’m focusing on the product right now. “When I build it, they will come”
How TO answer the question:
- I figured a nuance out in this space because of my Founder Market Fit, let me explain
- The customers are all inbound. I can’t keep up, here’s why
- My business is demonstrating network effect (the holy grail)
If you can answer questions 1), 2), 3) & 4) positively and you can honestly answer the “how do you get customers?” as described in the ‘How TO’ section above, I’m going to say in this market you’re going to get funded.
Want to chat about this in detail? Let’s do it. Drop me an email.
BTW, how do you get customers?
Kerosene Ventures – Helping Great Founders Raise Capital