You failed a VC Pop Quiz…now what?

Jason Yeh
October 11, 2022

Pop quiz, hotshot… 

There’s a bomb on your fundraising bus in the form of a difficult question from a VC.

You make something up…you look stupid.

You don’t answer it…you look stupid.

What do you do?  WHAT DO YOU DO?

First, thanks for humoring my early 90’s movie reference (that’s from Speed in case you missed it). I used to worry about dating myself or completely losing the Gen-Z founder crowd with these references until I learned that old episodes of Full House, Gilmore Girls, and Full House were getting popular again via Netflix. Whew. Now you can’t tell what decade I come from!

But this is serious. What do you do when a VC asks you a tough question you don’t have the answer to?

First, background on these questions

Let’s start by smoothing out an inaccurate expectation many founders have about what it’s like to meet with VCs.  There is this fearful belief that meetings with investors will be adversarial. Founders think VCs will be looking to prove a founder doesn’t know what they’re talking about with esoteric pop quiz questions. They think a VC revels in landing a “gotcha!” question.

Not only is this not accurate, it’s also a counterproductive mindset to have when entering meetings.

The goal of a VC meeting is not to make a founder look stupid. It's to better understand the founder and the business that they're running. So, when VCs run through questions looking for specific details, while it might feel like they're giving you the third degree for no reason, it's actually an attempt to better answer three major questions:.

  1. Is this a big opportunity?
  2. Are they onto something? 
  3. Is this a great team?

So you’re stumped…how to respond?

Now that you understand the underlying driver for these questions, you should be able to respond even when you don't have the specific answer to their question. The key to handling a question you’re stumped by is to first consider what the underlying detail they’re focused on is. 

For example, if the question is about CAC (customer acquisition cost), they probably want to better understand your sales and marketing. How are sales being produced, what channels work, what opportunities are there to improve GTM?

If they ask about engagement, they're probably curious about product effectiveness. How good is the product at solving the problem? How unique is the solution? How popular is the product? 

Once you determine what that underlying understanding a VC is trying to get to is, you can then respond with details you do have that will help them with their understanding even if it doesn’t answer the specific question. 

Um, but I don’t understand their question

What if you don't understand the question and don’t actually know what they’re getting at? Well, that's simple. 


There’s no shame in clarifying what they're trying to better understand. 

The best way to ask is to tell them what you think you're hearing so you show you have a lot to offer but want to clarify before sharing more.  

For example, “I understand you want to know what our day-15 retention is. I don't have that stat off the the top of my head, but are you curious about how well the product is performing or something else?” That's a great way to show them that you want to give them more and that you're not completely in the dark. Give them room to tell you what they'd like to know.

The real purpose of it all

Remember that early- stage investing is not scientific. I can barely call it “numbers driven” with a straight face. Even when an investor asks about Day-15 retention or MoM (month-over-month) growth rates, those answers on their own do not give a Deal or No Deal response via some sort of algorithm. There is so much more that a VC needs to hear to gain comfort and excitement to make an investment.

So whether you provide specific answers or not, realize that the best version of any Q&A interaction with a VC should be a dialogue. Those questions and answers are jumping off points for discussion that provide more color around who the founder is and what business they're running.

But don’t get it twisted…

I need to make sure that the takeaway here

isn't “You don't need to know everything about your business.” 

On the contrary… you need to know everything about your business. You should be obsessed with it anyways, so knowing intimate details about it and the market should just be a byproduct of your obsession.

The takeaway should be that while you need to know everything about your business, you just don't need to know all the trivia about your business. So spend time understanding your business, immerse yourself in it like you would your favorite hobby, and be prepared to have collaborative conversations with VCs to get them excited to invest in your company.

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