VCs look for businesses with products or services that address a demonstrable market need or demand. Is your product or service something the buyer needs? Does it solve a problem? Or is it something that would be “nice to have”? It is said that VCs prefer innovations that resemble aspirin to those that resemble vitamins. The idea being that people feeling pain will swallow the aspirin; while vitamins may be beneficial, people may or may not take them.
However, if the product or service is more like a vitamin, then it becomes that much more important to establish how people will come to demand it based on certain market trends. And, in either case, it will be important to demonstrate how substantial the problem or opportunity – how many people have it, and how much are they willing to pay for a solution?
Can you demonstrate convincing and tangible evidence of market acceptance by credible potential users (not just proposed distributors or technology-development partners) who are willing to be contacted for due-diligence purposes? The answer to this question directly addresses an investor's concerns about marketability and profitability. It is your opportunity to demonstrate the need for your offering within the targeted market segment and its corresponding revenue potential.
This is one of the many questions VCs ask an interviewed entrepreneur.
As the interviewed entrepreneur, you can expect pointed and challenging questions as the interviewer tries to narrow in on the answer - in this case, whether to pursue the opportunity. So, in order to help you prepare, outlined in the following posts at our blog are twenty questions that VCs frequently ask entrepreneurs.
Check out the blog post here - 20 Questions You'll Be Asked By VCs (If You Get That Far)
