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MenuWhat are the top questions investors ask entrepreneurs when raising a seed round for a pre-revenue startup?
We will be pitching a social media app.
Answers
Assuming that you have a product in market and have some traction
1. What is your growth plan?
2. What is your 3, 10, 20, 30, 60 day retention numbers?
3. If you have UGC, what is the % of DAU who are creating content?
4. What is the ratio of DAU to MAU to install base?
5. What is the viral coefficient, what is the viral cycle time?
If you don't have traction
1. What evidence do you have that this product will work?
2. How will it stand out from competition?
3. What is the market size?
4. How balanced is your team?
5. Why is your team likely to crack this product/market?
If there's more context, I can probably help better over a call.
Here's a different perspective: what's next in social media?
Are you the giant killer?
With the saturation that's happening in the web, I would push for getting your concept right (as a story) and connecting that to your demo, growth projection and competitive advantages. This linked narrative could allay most fears.
I'd love to talk with you about the possibilities of deep links and in-app interactions.
Related Questions
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What is a fair rate of return on a $70K investment?
An agency is an instant cashflow model business. Ugly to scale due to logistics of a team and the mess of being in a client-service business model. But easy to rapidly monetize. Make a phone call. Close a client. Collect the cash. (Yes, that's a bit over simplified). Your girlfriend shouldn't grab a dime from anyone before locking in her first client. An agency can be entirely self-funded and there's little reason to pursue funding. After she had generated her first $50,000 in clients (for example), she can supplement growth with debt financing. And, in no way, is the idea of your generous, retiring parents investing $70,000 into a first time business owner, when statistically most businesses fail ... a good idea. Fair rate is a flexible concept. If I was lending out $70k, I'd want to see 3x $210k back as a minimum. Irregardless of whether that is "fair"... it would be the minimum (for illustrative purposes) where the process of the due diligence and contracts and parting with $70k liquid in trade for a "maybe" $140k gain would be of interest.RT
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Pitch Decks: What do investors think of comedy in pitch decks?
Instead of calling it "comedy", aim for humor. Humor that supports a key discovery helps to anchor that insight in the investor's mind. I've coached many pitches, and find that when presenters are nervous they try to go for an improvised laugh, thinking it will cut the tension. However, in most situations, it comes off as just that: improvised and cheesy. Which confims to the audience that the presenter is nervous and unsure. Humor an advanced communication skill which requires strategy, planning and practice. The best humor is subtle and smart. The goal is not to get a laugh, but to get a knowing smile.DG
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Who are some of the pre revenue start up friendly investors available to the Vancouver Canada region?
AngelList is your best bet. Since you're asking the question, chances are you don't have a way to get introduced to these investors. The simple truth (like it or not) is the chances very low that you'll get a deal done without an introduction from someone they trust. AngelList can help with that, so can going to networking events. And finally, If you're the introverted developer type, you can also get their attention by just building something really cool on your own, followed by some serious traction. Arguably the best strategy of them all.DR
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In a startup with a globally-spread remote team, does it still make sense to incorporate in U.S./Delaware vs. somewhere overseas?
Delaware C-Corp I usually Delaware is the best choice for any startup looking for fundraising with a US focus. However, if you are a remote and global team, an overseas or foreign corporation or US tax purposes might make sense. You'd have to talk to an advisor who can dive into your situation, but it would be more difficult for the US owner come tax time, as he'd likely have to file form 5471 to the IRS for any controlled foreign corporation, and form 90-22.1 for any foreign bank accounts. There are a lot of other concerns I didn't hear you raise that entrepreneurs usually have and ask me about, namely banking and merchant accounts/ payment processors. In terms of accepting online payments, any US corporation or LLC is far and away the best option for a company. It's difficult to suggest without knowing more about the company but you might explore Delaware, Wyoming, Hong Kong and other offshore jurisdictions for your legal entity. Each tend to have positives and negatives and there is no one size fits all solution. I do write about issues of incorporation quite regularly on my website FlagTheory.com - so you can read those articles for free, or we can schedule a call - Clarity.fm/incorporation when you have specific questions. Thank you and hope this was helpful!EJ
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How do you get exposure on AngelList to attract angel investors?
What of the following things does your startup have? > Founders who have graduated from prestigious universities / previously exited companies to known acquirers / worked for a known companies (with known being a brand-name company such as Google, Amazon, Facebook etc) > Three or more months of statistically meaningful growth (e.g. for easy sake, double digit growth of a number in the thousands) > At least one investor who is active on AngelList (defined in the ideal state by at least one investment in a company who raised their round through AngelList and ideally whose social graph is connected to "high signal" members of the AngelList network) If you have none of these things, then at least, have advisors and referrers who have a strong AngelList profile. And another option is to seek out the AngelList scouts and pitch them directly. They are more open to this than anyone else and I've seen companies with very little traction and very little social proof get featured because a scout believes in the founder and/or the story. Without any or most of the above, it will be difficult to stand out or build relationships via AngelList, in my opinion. I assume now AngelList operates on a concept similar to the LinkedIn "degrees of connection" model, whereby an entrepreneur can now send unsolicited messages to investors so long as there is a degree of connection between the investor and the company. I get a few unsolicited emails a week from companies whose advisers or investors aren't people I follow but that because of the way they determine "connection strength", these unsolicited emails still gain my attention. I assume this is the case for all investors. So the more that you can build your list of advisers and referrers, the more connections you can solicit. That said, AngelList's inbound email system is almost entirely ineffective for "cold" emails to really high-profile investors. Happy to share with you what I think to be your best options for raising profile for your company.TW
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