You back strong founding teams with a solid idea.
Common questions you should consider asking in due diligence:
How do we know that your team has the experience to solve the problem?
What experience have you had with this problem yourself – how do you know this is actually a problem, and who has this problem? What can you share about your experience with this market? How can you give us confidence that you know how the market operates?
What is the specific problem you’re solving–for your customer?
Too many ideas are a solution that’s looking for a problem to solve. Who is your customer? What is their problem? How does your solution solve their problem? Let’s take, for example, Google. “We sell consumer data to advertisers. Advertisers have a problem, and it is that they don’t know how to reach the right audience online. We solve this problem through the world’s best search engine, which gives advertisers highly customized information.”
What’s your plan to get the idea in front of customers?
Get tactical about the next three, six, nine months. How many people will they talk to? When will the product or service be ready to sell? What do they know now? What do they not know and need to find out? What do they need to raise money to find out. And what will they spend it on?
Where you can add the most value to entrepreneurs at this stage:
Lived experience with the problem:
Teams will often make assumptions about their target customer and their problem without actually having a deep understanding of the real issue the customer faces and whether their solution solves it. If there isn’t a strong member of the core team who deeply understands the customer, you should encourage that they bring such a member onto their team.
Customer, customer, customer :
Make sure your team is spending all of their time with customers at the beginning. Encourage them to get out of the lab and get a minimum prototype in the hands of customers as quickly as possible to test whether they are even on the right track.