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Top
10
Questions From VCs
(And
Some Sample Answers)
- What is the vision of this technology 2
years from now?
(i.e. Tell me about the
technology path… Speed? Depth? Breath?
Scalability?)
Possible Answer:
- Fundamentally there are three vectors (
Directions) to take the technology:
Speed -
Reliability/scalability is the focus now
Depth - added
venues… www/Usenet/chat rooms/message
boards/etc. is the next focus
Breadth - added
applications… longer term focus
- How are you going to reach/obtain the
$10MM in booking number from a $1MM base?
(i.e. How specifically do
you intend to scale the business – what’s
your revenue model?)
Possible Answer:
- Rollover revenue, the renewals (700K)
- Follow-on to existing customers
- upsell & penetrate the a/c deeper
- consulting services to existing
clients
- Direct Strategy
- sales teams in place.
- each teams 10-12 deals
- small medium large transactions are
working
- coverage ratio 2-2.5 times in pipe
- want 3 and working for it
- Business development (verbal acceptance)
- 2-3-4 deals planned $2mm new business
- currently have PWC lead gen./ASCAP
revenue
- sharing/E&Y in process
- Plus Jumbos not forecasted.
- cannot plan them either upside or fill
in from other
Summary: Aggressive –
yes
Sandbag - no
Crazy - no
- What is your plan for ramping sales?
(i.e. What are the specific
tactical ways you will grow the business to
access your intended revenue streams and meet
your targets?)
Possible Answer:
- Planning on a 25% turnover in sales
force…industry average
- New sales reps productivity: 0% in Q1
50% in Q2
100% in Q3
Goal is to beat these
numbers, but planned for above turnover
and productivity
- How durable is your competitive advantage?
(i.e. How long can you stay
on top, based on what advantages, how do you
sustain those advantages, and how do you
know?)
Possible Answer:
- It’s our Technology Focus…
- On a scale of 1-10, with 10 being
rocket science, we are a strong 6, maybe
7; We believe that gives us a 12-month
advantage over any new entries
- The knowledge base we have acquired by
running our systems - this is probably a
six-month advantage
- Brand - we are the first to market…
the leader... and we are raising our
capital to stay in front.
- How are you going to recruit the doubling
in staff size your plan requires?
(i.e. What is your plan for
headcount and how will you go about achieving
it?)
Possible Answer:
- We are using "dedicated outsourced
recruiters" on location and can scale
them quickly. Competitive compensation,
benefits and NOW, pre IPO options.
- Will you need another financing round
before the IPO?
(i.e. Do you have a cash
needs understanding and a plan for obtaining
it externally if you must?)
Possible Answer:
- We do not plan one for financing
reasons. Only if a "STRATEGIC".
- Played comes into view who can add
significant Shareholder Value.
- What about vertical markets?
(i.e. How does this
business scale beyond the current market and
what is your plan to access and defend?)
Possible Answer:
- We have made a conscious decision to go
Horizontal at this time..
- We believe the Vertcals will find us and
then we will move into them.
- What’s /Who’s missing?
(i.e. Where does your
strategy have holes that you have not filled,
what has held you back from addressing them,
and how and when will you address them?)
Possible Answer:
- Who else are you talking to or have about
this round?
(i.e. What other venture
firms are you in conversations with, what
stage and level of interest, and what do they
say about your understanding of the investor
market?)
Possible Answer:
- ABS Ventures
- Prudential
- Morgan Stanley
- No one has seen this presentation yet…
we plan on opening it up Mar. 1
- ANYTHING ELSE THEY MAY ASK!!!!!!
(i.e. Be prepared to defend
your business and logic from every conceivable
angle!)
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