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Questions you need to be able to answer before you apply for Venture capital

Updated on May 29, 2013

What is your current development stage of your business venture? Choose only one.

Idea - Conceptual product without revenues/customers/employees
Startup - Prototype Product with preliminary sales
Growth - New Product - Minimum revenues
Expansion - Established Product with Customers and close to Breakeven
Mature - Established - Operating at a profit


What is the value add of your product or service? Please compare to direct and indirect competitors in your industry.

Similar product to others
Product offers new features not available elsewhere
Radically new product and service with overwhelming advantages
Product with 20%-50% cost/benefit advantage
Product with greater than 50% cost/benefit advantage


How developed is your relationship with customers? Pick the best one.

None yet
Some identified
Signed letters of intent
Current test customers
Paying customers
Established repeat customers


What are your "trailing revenues"? I.e. sales for the past 12 (twelve) months?

None
Less than $100,000
Between $100,000 to $1,000,000
Over 1,000,000
Over $5,000,000


What are your expected revenues four years from now?

Less than $1M per year
Over $1 Million, less than $10M dollars per year
Over $10 Million, less than $100M dollars per year
Over $100 Million, less than $500M dollars per year
Over $500M


In four years, what is your expected market share in your industry?

Do not know
Less than 20%
Between 20%-40%
Between 40%-70%
Over 70%
VC Quiz - Questions 7-13 of 20


How large is your target market and industry? Note that you should be very specific (selling peanuts at the circus puts you in a very small market, not in the multibillion dollar food or entertainment industry). Base your answers on the above two questions, or revise your above answers.

Less than $10 Million dollars per year
Over $10 Million, less than $100M dollars per year
Over $100 Million, less than $500M dollars per year
Over $500 Million, less than $1B dollars per year
Over $1B


What is the current state of competition in your industry?

Unidentified competitors
Many small competitors
Several large competitors dominate industry
One or Two large competitors dominate industry


What is your relative size versus competitors in industry?

Similar size / advantages to others
One of the First Movers into the industry
Best network and alliances with exclusive contracts
First Place: Currently larger by 10-40% % over next competitor
First Place: Currently the largest by 50% over next competitor


What intellectual property does your venture currently have?

None
Trademarks and copyrights
Process patents
Patent pending technology
Patented technology (granted)
Patented technology implemented in product
Patented technology - with royalty stream


Is your key executive team (CEO/CFO/Marketing/CIO/Ops) on board?

Founders only - top spots pending funding
CEO and others currently on a part-time basis
CEO and others full-time commitment
CEO and others have worked on venture for over one year full-time


Has top management had previous successes?

None...yet!
With previous employers
Own small business success
IPO or Company sold for > $10M and <$100M
Company sold for >$100M
IPO taken to market >$100M


How much money has management committed to the venture so far? This is purely capital, without any "in-kind" or labor costs.

None
Less than $10,000
Between $10,000 to $100,000
Between $100,000 to $500,000
Over $500,000


What are the most likely "exit scenarios" for your investors, I.e. how will they get their money back in five years?

Have not thought about it
Interest payment
Dividends
Sale to management
Sale to strategic buyers
IPO


What detail exists for your financial statements?

None written yet
Basic income statement only
Detailed income statement, balance sheet and cash flows
Complete set of statements reviewed by accountant
Complete set of statements audited by accountant


How developed is your marketing plan?

None written yet
Promotion, pricing and distribution addressed
The above plus branding and image
Test Marketed branding and marketing


How much market research have you done for new or follow-on products?

None
Industry literature
Surveys
Focus Groups
Market tests with selected customers
Functioning product at multiple customers


How does your business plan address inherent risks?

Best case scenario is realistic
Worst case scenarios are outlined
Multiple scenarios are considered and planned
Measures to counter risk are identified
Measure to counter risk are implemented


How detailed is your business plan document?

None written yet
Executive summary of about four pages
Business plan written by CEO of about 20 pages
Total business and operational plan, ready to implement
Professionally written and edited plan


How much venture capital are you seeking right now?

Less than $200,000
Between $200,000 to $1,000,000
Between $1,000,000 to $5,000,000
Over $5,000,000



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