This is a sample list of questions. This should be a rolling list of questions you hear from LPs.
Idea + Market Pull | Why is now the right time to start this startup? Why couldn't this business have succeeded 24-48 months ago? What newly made it possible whereas formidable entrants couldn't exist before? If there's nothing new, incumbents would have line-extended into here already. |
Idea + Market Pull | Find out if they're thorough: Do they have a full understanding of the problem? - Can you describe the history of this idea and how it builds on prior attempts to solve this problem? - Ask them the why behind their decisions to help them go deeper. |
Idea + Market Pull | What is “hard” about what they’re trying to build? |
Idea + Market Pull | Do they have basic risk awareness? What are the biggest risks? Where does this fail? And what are you doing to mitigate each risk. |
Economics | Does the company understand its unit economics? How confident are they, and how correctly so, in their understanding of which parts of the business have operating leverage? |
Economics | Is it big enough? Is the addressable market big enough to support at least $200M/year in revenue? |
Economics | Pace of movement and capital efficiency (e.g. how far can they can on little capital). |
Economics | How capital intensive will this business be over time? |
Economics | Sanity check margin potential over time—will they get squeezed and are they raising enough money. In today's market, it's important they have a path to breakeven before running out of cash. |
Team | Are the founders driven to do this for a long time; is this the last business they’ll ever start. Is starting this company the natural culmination of what the founder has been working toward in the years leading up to incorporation? |
Team | Do the founders seem unstoppable? Find out if they're relentless: Probe what they're doing to keep learning their market and iterate faster. |
Team | I would tell my best friend to join this team. |
Team | Are they desperate for success or for their product to exist or are they larping as founders? |
Team | Can the founder(s) both build and sell? |
Speed | Are they moving fast? What do you want to get done by the end of the year? |
DDQ file:
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