Investors ask questions that might look trivial or even boring until you understand the background. This presentation helps you as a startup CEO or CFO to decode investor questions.

1. Decoding Questions Investors
Might Ask You as a Startup.

2. Portfolio Fit.
Portfolio
Mix
Individual
Application
• Do phase and industry fit to the investment
strategy of the investor? Meaning: Does it fit
what the VC has promised to their limited
partners, who provided the money the VC is
investing?
• Does it increase or decrease systemic risk of
the portfolio (does it mean putting “all eggs
in one basket”)? Meaning: Does it increase
the risk of losing all investments? Example: If
Apple decided to allow AdBlockers on
iPhones, all players who rely on mobile
advertising suffer a lot. It’s a systemic risk.

3. Strength of Application.
Portfolio
Mix
Individual
Application
• Is this better than other investment options
we as investors have?
• Does this have the potential to earn back
money that we will lose on other
investments in our portfolio?
Meaning: can this become really big?

4. Elements to Consider.
Portfolio
Mix
Individual
Application
Market
Product
Team

5. Market Size.
Market
Product
Team
• Is the market big enough?
• How many buyers need it and could
realistically be reached through the
distribution channels?
• Which amount of money could they
(budget) and would they (value for them)
spend?

6. Example Question on Market from
Y Combinator Application.
Market
Product
Team
“How do or will you make money?
How much could you make?”
• Is the market big enough?
• How many buyers need it and could
realistically be reached through the
distribution channels?
• Which amount of money could they
(budget) and would they (value for them)
spend?

7. Product Value Added.
Market
Product
Team
• Would it make some people extremely
happy? Meaning: Can you sell this to early
customers?
• Does the happiness exceed the cost to
produce it? Meaning: Will it make or lose
money?
• Is it a two-sided or multi-sided market? Any
example for a two-sided market is a job
platform, where you need both job seekers
and companies with vacant positions.
• If two-sided: Would it make both sides
extremely happy?

8. Example Question on Product from
Y Combinator Application.
Market
Product
Team
“What is your company going to make?”
• Would it make some people extremely
happy? Meaning: Can you sell this to early
customers?
• Does the happiness exceed the cost to
produce it? Meaning: Will it make or lose
money?
• Is it a two-sided or multi-sided market? Any
example for a two-sided market is a job
platform, where you need both job seekers
and companies with vacant positions.
• If two-sided: Would it make both sides
extremely happy?

9. Fit of the Team.
Market
Product
Team
• Is this team in a better position to lead this
product to success than other teams that
might work on similar ideas?
• Can they cover all roles needed, from
building the product to selling it?
• Will the be able to grow this company
together for the next two or three years,
and overcome obstacles?

10. Example Question on Team from
Y Combinator Application.
Market
Product
Team “How long have the founders known one
another and how did you meet? Have any
of the founders not met in person?”
• Is this team in a better position to lead this
product to success than other teams that
might work on similar ideas?
• Can they cover all roles needed, from
building the product to selling it?
• Will the be able to grow this company
together for the next two or three years,
and overcome obstacles?

11. Further Elements to Consider.
Portfolio
Mix
Individual
Application
Market
Product
Team
Can they
do it?
Want to
do it?
Cultural
Fit

12. Example Questions on Team from
Y Combinator Application.
Can they
do it?
Want to
do it?
Cultural
Fit
“Please tell us something surprising or amusing
that one of you has discovered.”
“Why did you pick this idea to work on? Do you
have domain expertise in this area? How do
you know people need what you're making?”
“If you've already started working on it, how
long have you been working and how many
lines of code (if applicable) have you written?”

13. Example Questions on Team from
Y Combinator Application.
Can they
do it?
Past
Achievement
Good Thinking
“Please tell us about an
interesting project,
preferably outside of class
or work, that two or more of
you created together.
Include urls if possible.”

14. Example Questions on Team from
Y Combinator Application.
Can they
do it?
Past
Achievement
Good Thinking
“How will you get users? If
your idea is the type that
faces a chicken-and-egg
problem in the sense that it
won't be attractive to users
till it has a lot of users (e.g. a
marketplace, a dating site,
an ad network), how will you
overcome that?”

15. Comments, Corrections, Further
Questions?
W http://www.alexander-franz.at/en
T @AlexFranzAT
L https://at.linkedin.com/in/alexanderfranz
X https://www.xing.com/profile/Alexander_Franz