How to Evasively Answer Two Common VC Questions

A few months ago Rick Segal and Paul Graham both offered good sample answers for entrepreneurs to use when asked the following two difficult questions from investor types.

First, via Rick Segal, Who’s the CEO of the business? gets asked under any of the following masks:

“Help me understand how the current management team gets the company to 50 million a year in revenue?”
“Do you think you and your team are strong enough to get it over the finish line?”
“What’s the track record of your management team with respect to successful exits?”

Rick suggests the following answer:

Your best positioning when you are starting a company is to start with and keep the title of founder. You get the maximum flexibility in dealing with company growth and minimal impact on your ego. You can answer any of the above with “Look, I’m the founder and we’re running a million miles an hour towards being successful as you can see here… The objective is to find a financial part and a solid board to help me, as the founder, grow the management team and knock this baby out of the park”

Second, via Paul Graham, How much money are you trying to raise? He suggests the following dodge:

We advise startups to tell investors there are several different routes they could take depending on how much they raised. As little as $50k could pay for food and rent for the founders for a year. A couple hundred thousand would let them get office space and hire some smart people they know from school. A couple million would let them really blow this thing out. The message (and not just the message, but the fact) should be: we’re going to succeed no matter what. Raising more money just lets us do it faster.

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