What founders need to know about Venture capital funding process? Part 2We are going to answer the two first questions that startups need to answer: What is the problem you're trying to solve and What is the solution What is the problem you’re trying to solve? This is one of the first questions that run through an investor’s mind. Investors will try to understand what the problem the startup is addressing, and more importantly, whether it's large enough of a problem that people will pay for it. The less guess work you can eliminate for the investors, the better. First, it’s useful to show both a bottoms-up and top-down approach to size the market. Venture capitalists often need to see a startup’s ability to grow to a billion-dollar company down the road, meaning that if your total addressable market (TAM) is less than $1bn, it’s too small for venture investors. That doesn’t mean you should twist your market sizing assumptions to fit the bill, as most often, investors will do their own market sizing exercise anyway. Last but not least, it’s important to demonstrate that people are willing to pay to solve this problem. If your company is addressing an existing market with incumbent players, you can cite the annual consumer/business spending for these existing solutions. It’s also important to show why people are likely to switch from the existing vendors to new vendors (e.g. significant cost savings, ease of implementation, time saving, etc.) If your company is solving a large enough/painful enough problem without an existing solution, you can cite the negative impacts of currently not doing anything and the potential upside for using the new solution (e.g. revenue loss, out-of-pocket expenses, etc.)  What is the solution? You need to be able to help an investor understand quickly what the solution your startup provides. My favorite phrase to say is “Explain to me as if I were a 10 year-old what your business does.” Try this framework: [Your startup] is the “Grab/Tiki/Netflix” of [your industry/country] - e.g. Fonos is the Audible of Vietnam  Our target customers are [small business owners/college-educated millennials/bus operators with at least 10 buses under management…] Our business model is [monthly subscription fees of $xx/transaction fees of xx%] Our solution is [cheaper/better/easier to deploy] and our customers save [$xx/xx% per month/year/transaction] compared to competitor ABC We surveyed xxx potential customers and xx% of them expressed the desire to switch to a solution like ours for 3 reasons… In your pitch deck or during your meeting, it’s useful to show what your product looks like (a video demo is even better sometimes!) Ultimately, you need to give investors the conviction that your solution is better than existing/potential competitors and that you can maintain a competitive advantage over the long run, either through technology differentiation (e.g. Apple), an amazing/sticky product that attracts loyal customer base (e.g. Facebook), or exclusive contracts. Here is the 1st and 3rd parts of this article: Part 1: http://startup.gov.vn/Pages/chi-tiet-tin-tuc.aspx?l=Tintucsukien&ItemID=300 Part 3: http://startup.gov.vn/Pages/chi-tiet-tin-tuc.aspx?l=Tintucsukien&ItemID=304