One of the many sources of intellectual reward from running a venture fund is the wide variety of people I have the privilege of meeting and the spectrum of ideas they present. Despite the variety in the backgrounds, personalities, and ideas represented by the entrepreneurs I meet, they almost always fail to get two basic questions right in the pitch during our first meeting.
QUESTION 1: What are your expectations on valuation?
VCs ask this question for at least two reasons. First, we see more deals than we can process, so having a “Pass or Fail” question like this helps make quick work of the diligence. When I hear the CEO of an otherwise interesting company say “We expect $40MM pre-money”, and the business is a year or two away from revenue, I realize my work on that company is done. We log it in the database as something we’ve looked at and move on to the next prospect in the queue.
To read the full, original article click on this link: Two Questions Entrepreneurs Almost Always Answer Wrong | PourRichard's Symposium
