3 important questions every startup should answer during fundraising

The 3 most important questions

The YC application has 38 question fields to fill out. A lot of them are basic and procedural (company name, company location, how many founders, etc.), but many are also probing questions meant to assess a specific company characteristic or trait that YC believes is a determiner of future success.

Proximity

Investors gravitate towards founders who have worked in the industry they are targeting, lived through the problem they are solving, or built alternative solutions before that they are now going to improve on. That’s why there are so many examples of security companies built by CSOs, or DeFi apps built by crypto traders, or GenZ photo sharing apps built by college kids. Those entrepreneurs are all proximate to their market. And that’s why YC asks these two questions:

Pace

The YC app has an entire section called “Progress” focused on company and product headway. Company milestones are obviously an important factor in investment decisions — the more a company has accomplished, the more valuable it likely is. But also of interest to investors beyond the achievements themselves, is how they were achieved. Or even more specifically how fast they were achieved, which is what YC is trying to find out with these next questions.

Potential

Revenue is the ultimate scorecard for any startup as every for-profit business has to make money at some point. The YC app asks multiple questions about your company’s revenue, but the most interesting answer is not what your revenue is, but rather what your revenue could be.

Examples of the 3 Ps

At Gold House Ventures, the leading Asian and Pacific Islander-focused venture capital fund, we’ve invested in over 50 companies to date. During our many meetings with startups, the most memorable pitches were often when entrepreneurs highlighted one of the 3 Ps to describe their company.

  • Proximity: Aerovect automates airport logistics with an advanced self driving system for luggage handlers and other ground support equipment. One cofounder is a Harvard computer scientist who worked in the aviation industry and is a licensed pilot. The other cofounder is a Harvard economist who studied aeronautics at MIT and has a deep understanding of airline economics. It’s hard to imagine a team more proximate to their market, with skills and intuition perfectly matched for this opportunity, than Raymond and Eugenio at Aerovect.
  • Pace: Mercaso runs a B2B marketplace for SMBs to purchase the most comprehensive assortment of wholesale fast-moving consumer goods. The team went from idea to launch in just 2 months. And in their first year of operation, the business has grown 20% month-over-month and generated millions in sales, while also building a web and mobile ordering platform and operating their own fleet of trucks and micro-fulfillment center. The speed at which Mercaso moves their business forward with a small, lean team is truly remarkable and inspires confidence in what ambitious things they plan to achieve next.
  • Potential: Vividly builds AI-powered tools and software to help food and beverage brands get the most out of their trade promotion. Over $1 trillion is spent annually on trade promotion, of which 60% is estimated to be money losing creating a huge need for efficiency improvements. Vividly is targeting the estimated $70 billion that CPG companies will spend next year on tools and services to better manage their trade promotion. It’s clear that Vividly has the potential to build a giant revenue business.

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Eric Feng

Eric Feng

7.3K Followers

Current: Co-founder of @cymbalxyz, Co-founder of @GoldHouseCo Ventures. Past: @Meta (via Packagd), GP at @KleinerPerkins, and CTO of @Hulu and @Flipboard.