The 6 Most Common Funding Questions We Get Asked at OpenView
Even experienced entrepreneurs with past rounds of seed funding and experience working with VCs have questions about how OpenView works and what they can expect from us during the diligence and investment process. Here are the six questions we hear most often from founders and management teams, along with the answers.
The 6 Most Common Funding Questions We Get Asked
1) How Quickly Can You Move?
Two of the primary things entrepreneurs in the process of fundraising want to know are: a) when they can expect money in their bank account so they can start hiring and executing, which leads to b) when they can stop fundraising, because it’s a resource-drain and a pain. Of course, they also want to know how we’ll fit in with the rest of their process, especially if (as is often the case) they’re also talking with other potential funding sources.
2) What Does the Process Look Like From Here?
Each venture firm is different when it comes to its process, and OpenView has its own approach we’ve refined over the years. We actually have this resource on our website that describes our process, but we’ll still talk people through it so they have a full understanding of what will happen from the initial phone conversation all the way through a signed term sheet to money in the bank.
3) What Do You See As Potential Reasons Why We Wouldn’t Be Able to Get a Deal Done?
This isn’t the most common question we get, but it’s certainly a great question to ask (hint). Investors can be very vague about why they pass on a funding opportunity, so asking this question can force their hand a bit into giving some specific feedback. The answer may not always be something you can actually fix, but it might help you out with future pitches. The VC may say that you don’t have a great economic model, for example, or that your market size is too constrained. Knowledge is power, and you should use any feedback you can get to your advantage and better position yourself to sell against the feedback in a future conversation. It also gives you some insight into how they are thinking about your business—perhaps they missed a critical element or are misreading a piece of data that you shared with them.
4) What Type of Involvement Does OpenView Have Post-investment?
This is a more formal way of asking: Are you going to be breathing down my neck all the time? Or, conversely, will OpenView be MIA as soon as the deal is done and we’ll only talk at board meetings? Entrepreneurs want to know what cadence of communication to expect. And the answer really depends on the company. Some simply want to know that we’ll be available as a resource when they need us, while others want more steady contact. With some companies, we might have daily conversations (combo of email/phone/in-person) for a period of time while we build the relationship, which may then taper off as the company becomes more established. With others that are at a more mature place in their development, we might have calls once a month.
5) Do You Prefer to Lead Deals? Do You Syndicate Deals?
Okay, technically that’s two questions. But they’re related. Entrepreneurs are probably familiar with syndicate deals with multiple firms investing in a single round. CEOs ask us this to better understand deal dynamics, our preference, and where we fit into their thinking. The answer: At OpenView, we always lead. Sometimes, in certain situations, we might be open to syndicate deals—for example, if we’re brought into a deal by someone else, the entrepreneur wants another firm to participate due to the unique value they bring to the table, or if the investment amount is larger than we can do on our own—but those are exceptions.
6) How Does OpenView Labs Work?
This is a very common question we hear because OpenView Labs is quite unique in our industry. Essentially, it’s a group of specialized operations teams we’ve put together who can help our portfolio companies execute post-investment; they can help with recruiting, sales, and marketing support, and various research and analytics projects. Entrepreneurs want to know if they’re required to use Labs, if they need to pay for Labs, and how the engagement works on both sides. They are also often curious how Labs works within broader OpenView relationship. For more insight into what Labs is about, click here. Entrepreneurs can also find case studies highlighting projects our portfolio companies have completed with the Labs teams here. Don’t be shy. Got any questions for OpenView about how we work, our investment process, or our favorite sock color? Ask away in the comments.