Part 3/20 - Twenty Questions You Will Be Asked By Venture Capitalists (If You Get That Far)

By Laurence K. Hayward

This is part three of a twenty part series on this topic.

3. What makes your business different or unique?

While seemingly straightforward, this question actually can have two wrong answers. That's because a business can be both too common and too unique for a particular investor. If it's too common, the VC will be concerned with the competition and the lifecycle of the business. More specifically, is the window of opportunity large enough and will the company be able to build a viable business amidst many competitors? If it's too unique, the VC will be concerned with whether a market really exists and the time required to achieve critical mass. As David Gladstone writes in his book Venture Capital Investing, “The product or service should not be revolutionary; rather, it should be evolutionary.1” Many truly revolutionary products require educating the marketplace, and that can be an uncertain and lengthy undertaking. With that said, VCs tend to favor those opportunities that are unique in some critical aspect. For example, the concept of coffee sold retail was not unique, but the idea of creating a strongly branded national chain that sold high-priced, coffee-based concoctions in an upscale setting helped set Starbucks apart.

Laurence K. Hayward is the Founder and CEO of TheVentureLab. To learn more about him follow the link here