Questions to Ask Startup
Twenty questions to ask a startup you are considering joining, funding or partnering with. They cover customers and pricing, burn and runway, churn, how the founders divide authority, and the terms attached to any equity you are offered.
The questions
Open any question for the note
Who is the customer, in the sense of who signs the invoice?
Why ask it
Founders often describe a user rather than a buyer, and the gap between the two is where young companies stall. If the person who benefits and the person who pays are different, ask how the payer was convinced last time. A clean answer names a job title and a budget line.
How many customers do you have now, and how many did you have a year ago?
Why ask it
Two absolute numbers resist spin in a way that percentages do not. Growth from two to four is a hundred per cent and means almost nothing. Watch also for whether they can produce the numbers immediately, since founders who track their business closely do not have to look them up.
What do you charge, and how did you arrive at that number?
Why ask it
The reasoning behind a price tells you whether it came from customer conversations, a competitor's page, or a guess that nobody has revisited. Companies that have never tested pricing usually have more headroom than they think and less certainty about value than they claim.
How do customers find you today?
Why ask it
The honest answer at an early stage is often the founder's own network, which is fine as a start and dangerous as a plan. What you want to know is whether any repeatable channel exists yet. If the answer is a list of channels they intend to try, the company has not solved distribution.
What does it cost to acquire a customer, and how long until that cost is repaid?
Why ask it
The payback period is the number that determines whether growth funds itself or consumes cash. If they cannot compute it, ask what they spent last quarter and how many customers arrived, which produces a rough figure and shows whether they think in these terms at all.
What is the monthly burn, and what is in the bank?
Why ask it
Two figures that turn a vague sense of runway into a date. Ask for both rather than for months of runway, since the derived number is easy to present optimistically by assuming cuts or revenue that has not happened. A founder unwilling to share either with a serious candidate or investor is telling you something.
What has to be true for you to raise the next round, and who told you that?
Why ask it
The source matters as much as the milestone. Targets that came from conversations with actual investors are grounded; targets the founders set themselves may bear no relation to what the market will fund. Whatever the milestone is, it is also what the company will prioritise while you are involved.
Which competitor do you actually lose deals to, and why?
Why ask it
Asking who they lose to gets past the usual claim of having no real competition. The best answers include a specific weakness of their own product. If they insist they never lose, they are either not selling much or not conducting any kind of post-mortem on the deals that go quiet.
Who has stopped being a customer, and what did they say when they left?
Why ask it
Churn conversations contain the sharpest information in the business and most founders remember them vividly. Look for whether the reasons are fixable, budget and timing, or structural, the product did not do what they needed. A company with no churn story yet is simply too young to know.
What share of revenue comes from your largest customer?
Why ask it
Concentration determines who really sets the roadmap. Above roughly a third from one account, the company is effectively a supplier to that customer and will bend to their requests. It also means one contract decision can halve the company, which is worth pricing into whatever you are risking.
What did you believe a year ago that turned out to be wrong?
Why ask it
You are testing whether the founders update on evidence. Strong answers are specific and cost something: a channel they abandoned, a segment that never converted, a feature they built and removed. An answer that resolves into a virtue means either a very short memory or a rehearsed script.
How do the founders divide responsibility, and where do you currently disagree?
Why ask it
Founder conflict is one of the most common ways early companies come apart, and it is visible in advance if you ask directly. A pair who can each name the other's domain and describe a live disagreement calmly are in better shape than one who insists they agree about everything.
Have any founders or early employees left, and what happened to their shares?
Why ask it
This is where you find out both about turnover and about how the company behaves when things get awkward. Unvested equity clawed back aggressively, or a departure nobody will explain, predicts how you would be treated on the way out. Ask before you are the one leaving.
How many shares are outstanding, and how much has been promised but not yet issued?
Why ask it
Without the fully diluted total, any grant you are offered is an uninterpretable number. The promised-but-unissued part matters too, since verbal commitments to advisers and early staff dilute you when they are papered. A founder who knows these figures cold is a founder who understands their own ownership.
What does the preference stack look like, and at what sale price do common shares get nothing?
Why ask it
Preferred shareholders are paid first, so a company can sell for a substantial figure while employee shares return zero. Asking for the number where common gets nothing is a single question that captures the whole structure. Discomfort at the question is itself a useful signal about the terms.
How involved are your investors, and what do they push you on?
Why ask it
You learn about governance and about pressure at once. Investors pressing for growth at any cost produce a different working environment from investors pressing for margin. If the founders describe their board as entirely supportive, ask what the last board meeting was actually about.
Which part of the product is currently held together by manual work?
Why ask it
Every early company has some: onboarding done by hand, reports assembled in a spreadsheet, a founder personally reviewing every signup. Naming it openly is a good sign of self-knowledge, and the answer tells you where the next hires and the next outages will come from.
What would make you shut this down, and how would you handle it?
Why ask it
Asks for the plan in the bad case while nobody is under pressure. What you are listening for is whether they have thought about paying people out, telling customers, and returning capital, or whether the question has genuinely never occurred to them. Integrity in the wind-down is not something you can assess later.
What is the honest case for getting involved now rather than in a year?
Why ask it
Every stage has a real argument in its favour, more ownership, more influence, a problem you can shape, and a real cost. A founder who can state both is easier to trust than one who only sells. This also flushes out whether they know what they are asking you to give up.
Who should I speak to who will tell me something you would not?
Why ask it
Generous founders answer this well and name a churned customer, a former employee, or a candid investor. The reaction matters more than the name: openness suggests a company with little to hide, while an attempt to steer you toward friendly references tells you to do your own research anyway.
Doing your own diligence
Practical guidance for the conversation itself
Verify outside the room
- Talk to a customer and a former employee. Between them you learn whether the product does what the deck says and whether the company behaves the way the founders describe.
- Check the public record: filings, funding announcements, job postings, and how long roles have stayed open. Slow hiring after a raise, or a sales role open for nine months, are facts worth asking about.
- Ask for the same number twice at different points and see whether it holds. Revenue, headcount and burn are the three that most often move between conversations.
- Get anything about equity in writing and read the actual agreement, not the summary. Vesting, cliff, exercise window after leaving and the strike price all change what the grant is worth to you.
Reading the answers
Ask for the number, then the source
Any figure a founder gives you came from somewhere: a dashboard, an accountant, an estimate. Asking where it comes from is not aggressive and it separates measured businesses from remembered ones.
Prefer questions about the past
Projections are free. What happened last quarter is not. Convert any forward-looking question into a backward-looking one whenever an answer starts to feel unfalsifiable.
Watch how they handle not knowing
The best answer to a question they cannot answer is that they do not know and will find out. Founders who improvise a number instead will improvise other things, including things you are relying on.
Separate the market story from this company
Much of a pitch is about how large the opportunity is, which is often true and tells you nothing about whether this particular team will capture any of it. Judge the two separately.
Common pitfalls
Valuing equity as though it were cash
Most early-stage equity ends up worth nothing, and even good outcomes take years and can be reordered by the preference stack. Decide whether the salary alone is acceptable, then treat the rest as a genuine bet.
Ignoring how the founders behave with each other
Interruptions, corrections, one person answering every question: these are cheap to observe and predict a lot. Ask a question that requires both of them to answer and watch what happens.
Mistaking momentum for traction
Press coverage, awards, a busy office and a large round are not customers paying repeatedly. Ask what changed for customers last quarter, not what changed in the company's profile.
Stopping when the answers get uncomfortable
The point where a founder becomes vague is exactly where the information is. Ask once more, politely, and note what happens rather than smoothing past it to keep the meeting pleasant.
Before you commit
Write down the two facts that would change your mind
Name them before the next conversation: a runway figure, a concentration ratio, a churn reason. Deciding in advance is how you avoid rationalising once an offer and a deadline are in front of you.
Model the middling outcome, not the good one
Work out what your position is worth if the company sells for a modest multiple of the money raised, and what happens if the next round is priced lower than the last. That scenario is far more likely than the one in the pitch.
Agree what happens if the plan slips
Ask directly what changes for you if the next round is late: role, scope, salary, timeline. Getting that answer while everyone is optimistic is much easier than negotiating it during a cash crunch.