Investors typically ask 40 structured due diligence questions across five categories: Problem, Customer, Product, Performance and Product Development. These questions are used by Y Combinator and most venture capital investors to evaluate a startup’s viability before funding.
Y Combinator, the world’s most influential startup accelerator, has distilled its founder evaluation process into 40 structured questions. These questions are not unique to YC. They represent the standard lens through which most venture capital investors assess a startup’s viability before writing a check. For founders navigating a funding round, understanding what these questions are designed to uncover is as important as knowing the answers themselves.
The 40 YC Due Diligence Questions
Category 1. Problem Questions
Before a single line of code or a product feature is discussed, investors want to understand the problem. Questions in this category probe whether the pain is real, whether the founder has experienced it personally, and whether it can be stated with precision.YC evaluators look for founders who can define the problem narrowly and also ask about solvability and early validation signals to understand whether the founder has a realistic theory of change or is still operating on assumptions.
- What problem are you solving?
- What problem will be solved at the end of what you are doing?
- What do we expect the result to be?
- Can you state the problem clearly in two sentences?
- Have you experienced the problem yourself?
- Can you define this problem narrowly?
- Who can you help first?
- What can we address immediately?
- How do we get the first indication that this thing is working?
- Is the problem solvable?
Category 2. Customer questions
Once the problem is established, investors turn their attention to who suffers from it most acutely. Rather than broad demographic profiles, investors want to know who the ideal first customer is, how frequently they experience the problem, and how intense the pain is for them. Founders should enter due diligence with a customer profile anchored in evidence, such as conversations, surveys, or early transactions. You should also be prepared to explain how a customer would know the problem has been solved, since vague success criteria often indicate an unclear value proposition.
- Who is your customer?
- Who is the ideal first customer?
- How will they know if your product has solved the problem?
- How often does your user have the problem?
- How will they know if your product has solved the problem?
- How intense is the problem?
- Are they willing to pay?
- How easy is it for your customer to find your product?
- Which customers should you run away from?
Category 3. Product Questions
Product questions in YC’s framework are less concerned with technical sophistication than with commercial realism. Investors want to know whether the product actually solves the problem, and they expect founders to answer honestly, including acknowledging where and why it falls short. Founders should resist the temptation to oversell product maturity. Identifying the most desperate customer segment and demonstrating direct engagement with them is far more convincing than a polished feature list.
- Does your product actually solve the problem?
- Be truthful. How and why not?
- Which customers should you go after first?
- How do you find people who are willing to use your “bad” first versions of your product?
- Who are the most desperate customers, and how do you talk to them first?
- Whose business is going to go out of business without using you?
- Are you discounting or starting with a super low price?
- Are you considering this approach?
- If so, why?
Category 4. Performance Questions
Performance questions shift the conversation from narrative to measurement. Investors want to know which metrics the startup uses to track user interaction, and they expect founders to have a coherent hierarchy. You must identify a top-level KPI such as revenue or daily active users, and the underlying metrics that drive it, such as new user acquisition, retention, or content creation volume.
What distinguishes sophisticated founders here is the ability to connect product decisions to specific metric movements. For each new feature or iteration, investors expect founders to identify which metric it is designed to improve and which metric the current development cycle is specifically targeting. This reveals whether the team is working with genuine focus or simply building.
- What are you using to measure how users are interacting with your product?
- What 5-10 metrics are you measuring to understand how your product functions?
- Why those metrics?
- What is your top-level KPI?
- What number do you track to show how well your company is doing?
- What are the underlying metrics that contribute to achieving your top-level KPI?
- When you build a new product or feature, what is the metric that will improve because of that feature/product?
- Which of these metrics are you trying to move in this development cycle?
Category 5. Product Development Questions
The final category moves from strategy to operations. YC’s product development questions are about how the company makes decisions day-to-day, not where it is headed in three years. Investors want to understand how long the development cycle is, what is causing it to take that long, and who is responsible for capturing decisions made in product meetings. Founders who demonstrate this level of process discipline signal that execution, not just vision, is a genuine capability.
- How long is your product dev cycle?
- What is causing it to be that long?
- Who is writing down notes at your product dev meeting?
- Which category does each of your brainstormed ideas fit into?
- New features/interactions on existing ones;
- Bug fixes/other maintenance;
- A/B tests?
- How easy/medium/hard are your ideas to execute?
- How can you restate the hard ideas (disaggregate the idea into smaller ideas)?
- What parts of hard ideas are useless or hard? Are there other options?
- Which hard idea will improve the KPI the most?
- Which medium idea will improve the KPI the most? Which easy idea will improve the KPI the most?
- What is the spec for the product/feature we want to build?
Disclaimer: Y Combinator is an accelerator, which is a program that typically focuses on early-stage companies. The nature and intent of questions may change by stage, sector, and investor.
In this article, we will examine each category of investor inquiry, what it is designed to reveal, and how founders can prepare responses that hold up under scrutiny.
What Questions Do Investors Ask About Your Startup’s Problem?
Before a single line of code or a product feature is discussed, investors want to understand the problem. Questions in this category probe whether the pain is real, whether the founder has experienced it personally, and whether it can be stated with precision.
YC evaluators look for founders who can define the problem narrowly. VCs also ask questions about solvability and early validation signals to understand whether the founder has a realistic theory of change or is still operating on assumptions.
Investors also want to know who can be helped first and what part of the problem can be addressed immediately. This tests whether the founder has thought concretely about the priorities rather than trying to solve everything at once.
To address these concerns, founders should state the problem in two sentences, explain how they personally encountered it, and identify the narrowest version still worth solving. They should also define what the first credible signal of success looks like, since investors can be hesitant to back a startup whose thesis cannot be tested in the near term.
How do Investors Evaluate Your Target Customers During Due Diligence?
Once the problem is established, investors turn their attention to who suffers from it most acutely. Rather than broad demographic profiles, investors want to know who the ideal first customer is, how frequently they experience the problem, and how intense the pain is for them.
Two questions in this category are particularly revealing. The first is whether the customer is willing to pay. The second is which customers a startup should actively avoid. Investors recognize that the wrong early customers can distort product development and create a false sense of traction. A founder who has thought carefully about this signals commercial judgment, not just technical expertise.
Founders should enter due diligence with a customer profile anchored in evidence, which can be conversations, surveys, or early transactions. You should also be prepared to explain how a customer would know the problem has been solved, since vague success criteria often indicate an unclear value proposition.
What Product Questions Do VCs Ask in Due Diligence?
Product questions in YC’s framework are less concerned with technical sophistication than with commercial realism. Investors want to know whether the product actually solves the problem, and they expect founders to answer honestly, including acknowledging where and why it falls short. The follow-on questions focus on early adoption: how does a startup find people willing to use an imperfect first version, who are the most desperate potential customers, and whose business would genuinely fail without this solution?
Pricing also receives direct scrutiny. Investors want to understand whether the startup is discounting heavily or launching at a deliberately low price point, and if so, why. Steep discounting can signal either a smart land-and-expand strategy or an early sign that customers do not yet value the product enough to pay full price.
Founders should resist the temptation to oversell product maturity. Identifying the most desperate customer segment and demonstrating direct engagement with them is far more convincing than a polished feature list.
What Investors Want to Know About Your Performance
Performance questions shift the conversation from narrative to measurement. Investors want to know which metrics the startup uses to track user interaction, and they expect founders to have a coherent hierarchy. So, you must identify a top-level KPI such as revenue or daily active users, and the underlying metrics that drive it, such as new user acquisition, retention, or content creation volume.
What distinguishes sophisticated founders here is the ability to connect product decisions to specific metric movements. For each new feature or iteration, investors expect founders to identify which metric it is designed to improve and which metric the current development cycle is specifically targeting. This reveals whether the team is working with genuine focus or simply building.
Founders should prepare a clean metric dashboard, explain the reasoning behind every tracked number, and articulate what each metric reveals about business health.
What Investors Want to Know About Your Product Development Process
The final category moves from strategy to operations. YC’s product development questions are about how the company makes decisions day to day, not where it is headed in three years. Investors want to understand how long the development cycle is, what is causing it to take that long, and who is responsible for capturing decisions made in product meetings.
Idea management also receives structured attention. Founders should be able to categorize their backlog into new features, improvements to existing interactions, bug fixes, and A/B tests, then assess each by difficulty. For harder initiatives, investors want to see whether founders can disaggregate the idea into smaller components, eliminate unnecessary parts, and identify which remaining piece will move the target KPI most meaningfully. Building to a written spec closes the loop.
Founders who demonstrate this level of process discipline signal that execution, not just vision, is a genuine capability.
Eqvista- Anchoring Your Narrative in Numbers That Hold!
Answering these 40 questions with clarity and precision strengthens a founder’s position in every investor conversation. But preparation alone does not resolve one of the most consequential elements of any funding discussion: the valuation.
When founders lack an independent, third-party valuation, the investor’s number tends to anchor the negotiation. This shifts leverage and exposes founders to more dilution than warranted. An objective valuation, grounded in rigorous methodology rather than negotiating posture, gives founders a defensible starting point from which to engage on equal footing.
At Eqvista, we provide 409A valuations, fairness opinions, and equity compensation analyses that equip founders with the data-backed confidence to navigate high-stakes funding conversations. Contact us to ensure your valuation reflects the true strength of your business before your next investor meeting!
