Seven Questions to Ask Venture Capitalists When Raising Funds
As a startup founder, you must clearly know the position, expectations, and goals that your VC is asking for
Before you hold a meeting with Venture Capital (VC) make sure to study first the VC you are going to visit, so that the interview and introduction process can run more smoothly and on target. Likewise, if in the end the VC is interested in investing in your startup, ask in detail the things you must know. This is important so that you as funder can clearly know the position, expectations, and goals requested by the VC.
This article will explore seven important questions that must be asked by founder to the VC during a meeting, as written by venture capitalist Pedro Sorrentino.
Knowing Asset Under Management (AUM) or Net Asset Value
As a startup owner you have the right to ask how much net asset value a VC. That way you can know what steps to take and how much money you deserve as an investment. All of this should be based on the stage of fundraising you are running.
This question is important, so that you can find out if their ownership target is in line with your expectations regarding the company's valuation. You should have an advisor to help you find a specific CAP price or valuation that you believe is fair value before talking to a VC. If you are able to run the fundraising process competitively, the market will determine the value. However, what needs to be considered is creating a common expectation in order to quickly get approval from the VC.
What is the average check value
If you already know the target holdings and the average check value, then you can estimate how much valuation will be given by the investor. Some investors will refuse to mention the valuation of the startup invested, but there are also investors who are willing to mention it. It is your duty as funder to make these commitments with investors.
When a good relationship has been established with a VC, most of the startup owners then treat the people involved in the VC like a friend. Sometimes this prevents you from running the process properly.
The ideal is to try to make a schedule that is mandatory to be fulfilled, both by you as a founder startup also by the VC. So the fundraising process can be completed in time deadline set.
It is important for you startup owners to ask questions regularly, such as what the next step can be so that VCs can commit to providing funding.
If the relevant VC can give you the right answer, then the VC is serious about you. However, if the VC is reluctant to answer and tends to avoid it, it means that they are not interested and just want to know and learn about the products you have. Beware of VCs like this.
Send an email after the meeting
After the meeting with the VC, try to write in detail the results of the meeting and send the email to the VC. This can show that you are serious and willing to commit to the existing plan. Also schedule the next meeting with the VC, try to be founder startups that have initial initiatives.
If you are currently doing fundraising with more than one VC, it's a good idea to mention the situation when you are having a meeting with a VC. Show that your startup has the best products and is being targeted by other VCs. Thus, you can grow confidence not only for you startup owners but also for VCs who plan to invest in your startup.