Annoying questions from VC & how to answer them. | How to price your AI product in a post-SaaS world?

Is PE no longer your exit plan in 2026? & More.

👋 Hey, Sahil here — Welcome back to Venture Curator, where we explore how top investors think, how real founders build, and the strategies shaping tomorrow’s companies.

• Annoying questions from VC & how to answer them.

• How to price your AI product in a post-SaaS world?

• Is PE no longer your exit plan in 2026?

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📜 DEEP DIVE

Annoying questions from VC & how to answer them.

If you are fundraising or looking to fundraise for your startup, you will see annoying questions from VC :). Not only this, you will find some other things like - I don’t think this can be a venture scale business, We’d be interested when we see a bit more traction, Come back when you have a lead, etc.… and most founders don’t know how to think on this questions and proceed with it.

So in this post, I will try to answer how you can think about these questions:

1. What if Google Builds It?

You will find a lot of VCs asking this question, where Google substitutes with Amazon, Facebook or any other big company.

It’s a valid question - this shows your startup edge and how you will win. Here are a couple of answers that may help:

• Too big to care: These giants are so huge, your “little” idea might not even catch their eye. They’re busy chasing bigger fish.

• Slow movers: Big companies are like big ships - they turn slowly. You’re a speedboat. You can zip around, change direction fast, and give customers exactly what they want before the big guys even start their engines.

• Proof you’re onto something: If a big company notices your idea, it means you’ve found a real problem to solve. That’s exciting!

• People will pay for better: Even if Google makes a free version, many folks will happily pay for a product that actually answers the phone when there’s a problem. Just look at companies like Mixpanel or Superhuman - they’re doing great against free Google stuff.

• Show off your speed: Can you build things faster than the big company? Can you make your customers super happy? Focus on that. It’s your secret weapon.

Remember, being small and quick can be your superpower. Use it to outmanoeuvre the giants!

2. I don’t think this can be a venture-scale business

Previously, I shared my thought process on how investors think about this particular question. Let me know to share more info here

Not every business needs venture capital (VC) money. It’s like rocket fuel - great if you want to go to the moon, but overkill for a quick trip to the store.

VCs are looking for companies that can grow incredibly fast and become huge. They want to turn their money into a fortune, and fast. We’re talking about businesses that can make $100 million a year in just five years. That’s a wild ride, and it’s not for everyone.

But here’s the funny thing: it’s really hard to predict which ideas will explode like that. VCs often think they know, but they’re wrong all the time. They might ignore a business selling stuff online, thinking it can’t grow big enough. But what if it’s the next big thing, like Stitch Fix?

So, if you’re thinking about chasing VC money, ask yourself: Do I really want to build a massive company? Can I handle hiring tons of people and working like crazy? If that sounds exciting, great! Think about how you’ll grow your business super fast. How will you double or triple your sales each year?

But if that sounds like too much, don’t worry. There are other ways to get money for your business. You could talk to individual investors, try crowdfunding, or look into loans based on your revenue. These options are becoming more popular and might be a better fit for your dreams.

The most important thing is to be honest with yourself about what kind of business you want to build. There’s no shame in staying small or growing slowly if that’s what makes you happy. Just make sure you’re chasing the right kind of money for your goals.

3. We’d be interested when we see a bit more traction

When a VC tells you they want to see “more traction,” it’s like they’re saying, “I’m not sure about your business, but maybe if you grow more, I’ll change my mind.”

The problem is, most VCs can’t really tell you exactly how much growth would convince them. If you suddenly made $100 million, sure, they’d all jump on board. But what if you grow to $100,000 a month in a year? Well... it depends. VCs like to keep their options open, so they’ll always want to “check in later” unless you’re clearly terrible or a scammer.

It’s frustrating, right? But here’s how to handle it: Don’t waste time trying to convince these fence-sitters. Put them in your “not interested” pile.

Keep sending them updates, sure, but focus on finding investors who believe in you right now. You’re better off meeting tons of investors and quickly figuring out who’s actually excited about your idea.

Remember, it’s like dating. You don’t want to spend months trying to convince someone to like you. You want to find someone who’s into you from the start. So get out there, talk to lots of investors, and find the ones who get that spark in their eyes when you explain your business. Those are the folks you want on your team.

Don’t get hung up on the maybes. Keep moving, keep pitching, and the right investors will show up. It’s a numbers game, so play it smart and don’t let the “show me more traction” crowd slow you down.

4. Come back when you have a lead

When a VC says, “I’m in once you have a lead,” they’re basically saying, “I don’t want to take the risk, but I don’t want to miss out either.” It’s like they’re waiting for someone else to give your idea a thumbs up before they jump in.

But here’s the thing - “lead” can mean different things to different VCs. Some want to see most of your money raised. Others just want to know the deal terms. And some are looking for a big investor to take charge and join your board.

So, what do you do? First, get clear on what they mean by “lead.” Don’t be shy - ask them straight up.

If they just want to see most of the money raised, you’ve got options. You could bring together a bunch of smaller investors without a traditional lead. It’s called a party round, and it’s pretty common these days.

If they’re just after the terms, you can set those yourself. Create your own deal on a simple agreement, like a SAFE or convertible note.

But if they want a big-shot lead investor who’ll take a board seat and run the show, that’s a whole different ballgame.

The key is not to get hung up on these “maybe” investors. Keep moving, keep hustling. Build your round in whatever way works for you. Remember, there’s more than one way to skin a cat - or in this case, raise some cash.

Don’t let the “we need a lead” crowd slow you down. If your idea’s good and you keep pushing, you’ll find the right investors who believe in you from the start. That’s who you want on your team anyway.

5. Why hasn’t this been done before?

This might sound like a silly question, and some could say a lazy VC just doesn’t want to do their homework. But really, it’s a smart way to see how you think about trends and changes in your market.

If you believe that markets are efficient, then your opportunity shouldn’t exist. Why? Because if it were that obvious, everyone would have already jumped on it.

So, what’s your special insight? What do you know that others don’t? Is it your deep knowledge of the industry? Is the opportunity sitting at the intersection of two areas that most people don’t understand? Or is it a trend you’ve noticed in a specific group of people that others haven’t picked up on?

Every startup needs to have a solid answer to this. Even investment funds face this question: Why is no one else doing what you’re doing? It might be annoying to hear, but it’s a valid question.

So, if a VC asks you this, don’t get defensive. Use it as an opportunity to explain what makes your idea unique and why you’re the right person to take advantage of it. If you can’t answer this question, it might be time to rethink your approach.

6. Contact us if you like, but we prefer warm introductions.

It’s kind of funny that VCs often want warm introductions, yet many VC analysts still reach out cold to startups,s asking to chat.

My advice? Always aim for a warm referral to a VC if you can. Having a mutual connection really helps in building rapport. However, many newer VCs, especially microVCs, are open to cold emails.

Also for most VC firms, about 20% of deals come from completely cold outreach, andthey see no difference in performance between those and the ones that come through warm introductions.

Looking ahead, I predict that in the coming year, the VC landscape will increasingly accept good cold emails. Sure, most cold emails are poorly written and will be ignored, but if you craft a strong one, you might just catch their attention.

7. What’s the moat? (for a seed stage)

This can be really frustrating for a seed-stage company since, let’s face it, there’s usually no real moat in place yet.

When you think about it simply, the only true way to create a moat is to make your customers love your product so much that they never want to leave and keep coming back. There are many ways to achieve this.

For example, you might offer a better user experience, leverage more data to improve your solution’s accuracy or create strong network effects that enhance your product. The path to building this loyalty will vary depending on your idea.

VCs are particularly interested in understanding how you plan to achieve this on a larger scale. This is especially important for companies with commodity products, like those in finance. Competing on price or better deals isn’t sustainable.

Instead, VCs want to know how you’ll create a smarter, more appealing product. How will you design your business model to encourage customer retention? They’re more focused on how you envision this five years down the line than on your current situation.

8. How can this be a billion-dollar company?

The reason VCs are so fixated on billion-dollar companies is simple - the economics of running a VC fund are brutal. Most of the startups in their portfolio will fail. So any 1 or 2 winners they have need to make up for all those failures, plus a whole lot more, in order to generate the returns their investors expect.

This means VCs are looking for at least a 100x return on a successful investment. If they invest at a $10 million post-money valuation, say at the seed stage, 100x on that is around $1 billion, before accounting for dilution.

So it all comes back to the question you have to ask yourself - do you really want to be raising money from VCs? Is this the type of business you want to build? One that needs to be a unicorn to justify their investment?

There are other paths, like bootstrapping or targeting a smaller but profitable market. Those may not make you a billionaire, but they can still lead to a great business. It’s a very personal decision based on your goals and aspirations as a founder.

The key is to be really honest with yourself about what you want and what you’re willing to do to get there. Don’t just chase the VC money because it’s available. Make sure it aligns with your vision. Because once you take it, you’re locked into their timeline and expectations.

9. “Yes, but what *traction* do you have?” & “Your valuation is so HIGH now!”

It’s like the classic Goldilocks story - sometimes you’re too early, sometimes too late, and it’s rare to be just right.

At first, VCs might say you don’t have enough traction. Then, once you gain some momentum or bring in another investor, suddenly you’re too late - the valuation is too high for them to get in.

As frustrating as this is, it really comes down to luck, timing, and fit. As pre-seed investors, we face this too. We invest super early, before traction even exists. So we rely heavily on gut instinct about the opportunity.

If we’re not fully convinced, we’ll pass. And if a founder later proves us wrong with traction, we still can’t invest because the valuation is out of reach.

It’s a bummer, but VCs who miss out feel the pain too. Look at the Uber IPO - tons of VCs lost out on huge gains because they didn’t believe in the idea early on.

Gut instinct is huge in this business. To be honest, you only need to be right 20-30% of the time to be considered a great VC. It’s like baseball - you strike out most at-bats. Imagine if surgeons only succeeded that rarely - they’d be fired and patients would be dead!

The only exception is multi-stage investors. If they miss your seed round, you can always circle back for a Series A or B. But for early-stage VCs, it’s a constant dance of being too early or too late.

Also, there are a lot of questions that investors ask on your team, market, product & tech, financials and vision, but many founders failed to answer those questions effectively.

So with the partnership with leading founders and investors, we have create a all-in-one practical Q&A prep kit for founders, feel free to check it out.

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📃 QUICK DIVES

How to price your AI product in a post-SaaS world?

Most founders are thinking about AI pricing completely wrong.

They obsess over features, distribution, and even model performance, but treat pricing like a packaging decision. In the AI era, pricing isn’t packaging. It’s a strategy. If you get it wrong, your growth can look impressive while your margins quietly collapse.

This AI pricing playbook from Bessemer Venture Partners lays out something many founders don’t want to admit: AI businesses are structurally different from SaaS, and that changes how you monetise.

AI broke SaaS economics

In classic SaaS, marginal cost was almost zero. Once the software was built, adding one more user barely cost anything. That’s why founders could aggressively chase ARR growth and worry about margins later.

AI changes that equation. Every query carries real costs:

• Inference and computation

• GPU usage

• Model upgrades

• Sometimes human review

• Ongoing support overhead

This means gross margins in AI often sit in the 50-60% range (sometimes lower), compared to 80–90% in SaaS. If your pricing model doesn’t reflect this from day one, scaling only amplifies the problem.

One practical test: if your unit economics don’t work with 10 customers, they won’t magically work with 1,000. Many startups scale into negative margin territory because they never fully modelled their true costs, including founder time and hidden support work.

That’s the first mindset shift: pricing must absorb cost reality while capturing value.

The real strategic choice: what are you charging for?

Most AI founders jump to usage pricing because it mirrors their cost structure. But pricing isn’t about your costs, it’s about how customers perceive value.

Across Bessemer’s research and portfolio companies, three AI-native business models are emerging. Each one changes how value is delivered, and therefore how pricing must work.

Before we go deeper into charge metrics, here’s how the landscape is actually shaping up:

1. Consumption-based (tokens, API calls, usage)
   Clean and predictable for infrastructure companies. Works well for technical buyers who understand granular usage. But non-technical customers don’t think in tokens; they think in outcomes.

2. Workflow-based (per task completed)
   Charging per document drafted, per ticket resolved, per case processed aligns better with how businesses measure work. It reduces translation friction and makes ROI clearer.

3. Outcome-based (per successful result)
   The boldest version. You get paid only when the job is done. Intercom charging per AI resolution is a strong example — not per message, but per resolved ticket.

As you move from consumption → workflow → outcome pricing, you accept more cost variability but gain stronger alignment with customer value.

The best founders don’t choose what’s easiest to implement; they choose what customers emotionally understand and are willing to pay for.

The soft ROI trap

Here’s where many AI companies will struggle in 2026.

Copilots that “assist” but don’t close the loop create soft ROI. They help, suggest, draft, but don’t finish the job. When renewal time comes, customers ask: “Did this actually move the needle?”

Agentic products that fully complete workflows have stronger pricing power because their ROI is measurable.

You can think of AI products across two dimensions:

• Revenue generation vs. cost reduction

• Hard ROI vs. soft ROI

Products sitting in hard ROI territory, clear revenue uplift or measurable cost savings, can justify premium pricing. Soft ROI products will face budget scrutiny once the hype fades.

That’s a practical insight founders should act on now, not later.

Hybrid pricing: the early-stage advantage

For most startups, especially early on, hybrid models are a smart middle ground:

• Base platform fee (predictability for the customer)

• Plus usage or outcome-based expansion (upside capture)

This protects you from unpredictable compute spikes while allowing revenue to scale with value delivered. It also gives enterprise buyers budget clarity, which matters more than founders assume.

Hybrid models are not a compromise; they’re a hedge against uncertainty in both demand and cost structure.

Pricing shapes your entire company

One of the strongest insights: pricing isn’t a finance decision. It determines how your company behaves.

If you charge per outcome:

• Sales sell results, not seats

• Customer success focuses on realised value

• Product optimises for completion and accuracy

• Engineering prioritises reliability

If you charge per seat:

• Teams may optimise adoption over actual impact

• Value conversations get diluted

Pricing becomes your operating system.

How to actually find your price

Most founders undercharge. Not because they lack data, but because asking for more feels uncomfortable.

The playbook recommends something counterintuitive: find your pricing through friction.

• Start with a price.

• If customers immediately say “yes,” you’re likely to be too cheap.

• Raise incrementally until you hear “we need to think about that.”

• Stop just before it becomes a blocker.

That tension zone is often where true willingness-to-pay lives.

And don’t default to cost-plus pricing. If you’re creating $100K in measurable value and charging $12K because it “covers compute,” you’re anchoring to cost instead of value.

The bigger shift is underway

Every major software shift changed monetisation:

• Client-server monetised licenses

• SaaS monetised access

• AI is monetising outcomes

AI isn’t just another feature layer. In many cases, it’s replacing or autonomously completing work. That means charging for access alone underestimates what your product is actually doing.

The founders who win in this era will be the ones who design pricing systems that reflect:

• Real compute economics

• Clear customer ROI

• Scalable expansion logic

• Operational simplicity

AI pricing is not about clever billing mechanics.

It’s about making sure your product earns what it’s worth and that your margins survive long enough to compound.

Is PE no longer your exit plan in 2026?

For years, there was a quiet safety net in B2B SaaS. If you built a decent $20M-$30M ARR company with good retention and okay growth, Private Equity would show up, maybe not at a crazy multiple, but at a respectable one. It wasn’t glamorous, but it was predictable.

That safety net is disappearing.

Jason Lemkin shared this recently, and the data is uncomfortable but important: M&A is booming, megadeals are everywhere, PE firms are active, yet the average $20M-$50M ARR SaaS company is no longer getting rescued.

The Illusion of a Hot Market

On paper, everything looks strong:

• $587B in tech M&A volume, highest in a decade

• Record PE buyout activity

• Massive AI-heavy deals like Wiz ($32B) and Scale AI ($14B+)

• Large funds like Thoma Bravo and Vista are still deploying capital

If you only look at aggregate numbers, you’d assume strong mid-market SaaS companies are still clearing at 5x-8x ARR.

They’re not.

In Q1 alone, five megadeals drove nearly half the transaction value. Strip those out, and average deal sizes dropped 17%. PE hasn’t stopped buying; it has concentrated buying.

That’s the shift founders need to internalise.

The Old PE Formula Is Broken

From roughly 2012 to 2023, there was a mechanical formula that worked:

• $20M+ ARR

• 110%+ NRR

• 20%+ growth

• Controlled burn

You didn’t need to be a category winner. You didn’t need hypergrowth. You just needed solid fundamentals and retention. PE could model compounding returns, merge you into a portfolio, or hold and resell later.

That created an entire generation of “build to $25M ARR and sell” strategies.

In 2026, that floor is gone.

Why PE Stepped Back From “Good”

Three structural changes converged.

1. Higher rates changed the math.

When debt was near zero, a steady 20% grower worked. At 5%+ cost of capital, the hurdle rate jumps dramatically. A stable SaaS business no longer pencils at attractive IRRs.

2. AI reset the growth benchmark.

When PE sees companies growing 100%+ with AI tailwinds, a 20% grower suddenly feels sleepy. The opportunity cost changed. They’re no longer optimising for stability,, they’re optimising for acceleration.

3. Exit paths tightened.

Only six pure-play software IPOs happened in 2025. Strategics are more selective. If PE isn’t confident in a 10x+ exit, they won’t buy at 6x–8x anymore.

The result is bifurcation:

• AI-accelerated growth stories? Still hot.

• Security, infra, fintech with tailwinds? Still interesting.

• $100M+ ARR consolidation targets? Still viable.

• $25M ARR steady SaaS in a neutral category? Silence.

What This Means Practically for Founders

This isn’t theory. It changes how you should build.

First, the “PE exit optionality” strategy is no longer reliable.
You can’t assume that getting to $20M ARR creates a floor valuation. If your growth is flat or modest, buyers may simply wait or ignore you.

Second, growth is currency again.
For a few years, efficiency could substitute for speed. That tradeoff is less compelling now. Buyers want to see trajectory, not just stability.

If you’re growing 18-22% annually with solid margins, that’s a good business. But it may not be an exciting one for financial buyers.

Third, AI narrative matters, even if you’re not “an AI company.” You don’t need to pivot into generative AI overnight. But you must answer:

• How does AI make your customers more successful?

• How does it expand your TAM?

• Does it accelerate usage or retention in measurable ways?

If you can’t articulate that, you look stagnant in a market obsessed with acceleration.

The Strategic Fork in the Road

If you’re running a solid SaaS business today, you likely fall into one of three buckets.

1. Build for independence.

If you’re profitable and steady, accept that you may need to run the company for the long haul. Optimise for cash flow, durability, and capital efficiency — not hypothetical exits.

2. Invest to re-accelerate.

If you want premium multiples, you probably need one of:

• AI-driven acceleration in real metrics

• Category tailwinds

• Scale north of $75M–$100M ARR for consolidation plays

That likely means heavier investment, product expansion, or strategic repositioning.

3. Eliminate the middle.

The hardest place to be now is:

• Too big for a lifestyle outcome

• Too small or slow-growing for PE

• Not differentiated enough for strategic acquisition

The middle used to be monetizable. Now it’s exposed.

The Real Shift

The biggest insight from Jason’s piece isn’t that PE is “gone.” It’s that PE is selective in a way it wasn’t before.

They’re not buying goods. They’re buying great or AI-adjacent.

That forces a mindset shift. You can no longer build with an assumed safety net. The company must either:

• Stand on its own as a durable cash machine, or

• Demonstrate clear acceleration and strategic leverage.

The uncomfortable truth is that M&A is on fire, but the fire is concentrated. The sooner founders accept that, the better they can decide whether to pursue breakout growth or optimise for long-term independence.

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