Five Questions that Will Let You Spot a VC Bluffer

Many — okay, most — VCs aren’t paying attention during pitches. Either they’ve already decided they don’t like the deal and haven’t told you, or they are distracted by email, or something else, but the upshot is the same: They are bluffing, so they start spewing non sequitur questions.

So, here are five questions that tell you the VC is on autopilot in the meeting:

  • What about China and India? (Kudos to Chris for that one)
  • Why won’t [arbitrarily insert Google/Yahoo/Microsoft/Oracle here] do this?
  • What do you need to add to the team? (Kudos to Dave)
  • What should I be asking, but am not?
  • Why don’t you raise $Y instead? (Note: $Y is a random number between 1/2 and 2-times the number you asked for.)

Feel free to add more.

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  3. Updated: Three Questions About Sudoku and Airports — and Enviro-Sudoku
  4. Playing Ball with Donald Rumsfeld
  5. Superman and the Payphone Problem

Comments

  1. How do you intend to “cross the chasm?”

  2. Richard Rodgers says:

    What is it that keeps you up at night?

  3. Paul Sweeney says:

    “I don’t see any barriers to entry here”…..

  4. Steve Murchie says:

    What are you going to about [random new technology]?

  5. Rory says:

    Great list. Next post please: How to answer these questions/call out the bluffers in order to make them genuinely interested in your pitch.

  6. Levi says:

    Do you have a patent pending for your technology? If not, have you looked into getting one?

  7. What’s the cleantech play here? Does it run on ethanol?

  8. Jeff says:

    Would you say your technology is disruptive?

  9. John_Doe says:

    So, tell me, how did you know xxxx? ( xxxx is the person brought you to the meeting)

  10. pete says:

    How do you plan to exploit the “Long Tail”?

  11. ming666 says:

    great questions and follow up questions. these questions are sort of like the music at the academy awards. that said there are a whole range of questions and statements that could be put together. such as.
    “all of our partners have deep connections with “players” in your industry” hint hint – we will get you more business than you can handle. oh by the way the check is in the mail and well you know the rest.
    “Is the team turning in 80 hour weeks?” this comes from younger VCs who suffer from what i like to call “battlefield envy” or “i’ve never done it before but I did case study it at B-school”
    they are in love with the romantic notion of being an entrepreneur but could never endure the chaos of battle. Its like the old Woody Allen line – “those who can’t do teach and those who can’t teach, teach gym.”
    the 2 walkout questions for me are the “what keeps me up at night” – with one guy i actually told him my wife’s snoring. – that woke him up.
    and the all time ultimate a-hole question is what would stop somebody else from doing what you are doing.

  12. Shefaly says:

    This has got to be the best post I read here!
    He said: “Well, if every day of your life, every body was treating you like a hero, like a modern day John Wayne, you too would start believing your own hype and forget that the reason why you exist is to make money for your investors by investing in these entrepreneurs.”
    Enough said.

  13. Ken F says:

    I am on my third start-up, and on the BOD for a fourth, sitting in on some of their pitches as well. I have heard these questions over and over and over ad infinitum on my first two and for the company that I’m on the BOD.
    I have, however, learned. I rarely get these questions very often on my current company. Why? I have realized two very, very important things over my years that has cut way down on The Bluff.
    #1. People invest in people.
    Be passionate about what you are doing. The #1 thing if they don’t know you. It never ceases to amaze me how absolute 100% confidence and zeal overrides creates instant rapport.
    Never, ever, ever go in cold to a sell. If you don’t know the VC make and establish a relationship with whomever you are going to pitch BEFORE you pitch them. Call them on the phone, chat, write some emails, whatever. If you can’t, then break the ice right up front.
    Have an amazing team. Yeah, hate to break it to you, but if they don’t know you, you have to make them go WOW with your talent.
    Be the expert, but not an asshole.
    Know every answer to every stupid question they will ask. The Bluff questions. Because sometimes it’s a bluff, but sometimes it’s because you haven’t answered the standard questions. You have to have barriers to entry. Period. You have to answer the “well what’s to stop Google from doing it?” question. (Short Answer: It’s easier for big companies to buy smaller ones, especially when you have a superior solution and more market share.)
    Don’t ARGUE. Damn! I can’t stress this enough. Nobody wants to invest in an asshole. Instead of saying “you’re wrong” (Yep, I have seen it happen. I’ve even said it a few times myself till I learned the hard way) say “that is a very good point, and here is how we solve that”. It’s not about kissing ass, it’s about standing your ground firmly and at the same time pointing out some alternatives.
    #2. People invest in what they know.
    I can’t tell you how many times I pitched VC’s who invest in everything but what I was doing. Bio tech doesn’t do telecom (my last company). Outcome? No investment. What a surprise.
    Now I carefully research the investor, make sure they invest in our space, in the investment range we need, and do not have any conflicting investments. I ask them prequalifying questions so as not to waste their time, or more importantly, my time.
    All that being said, most VC’s (and really you are probably dealing with some low level associate shmoe) really don’t know jack. Generally they are looking to protect the ass(ets) and that leads to operating from a position of fear.
    On top of that with the number of deals coming through, they are also operating from boredom. How many times last year did they get pitched “The myspace of cars”, “the myspace of makeup”, “the myspace of (fill in the blank). Can you blame them for being bored?
    Know your stuff, know the answers in ADVANCE, have a great team, be passionate, these are the most important things.
    After all that… you better have a damn good idea.
    PS I learned the hard way, and now it is paying off. We just started talking to investors two weeks ago for seed and the response has been incredible.