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213 Questions
Investors Ask in Meetings
The ultimate list to prepare for better investor meetings.
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What does the company do?
 
Your answer should be clear, concise, well constructed, and most importantly – keep it short! The answer to this questions should be one that you know, and you can provide with certainty and authentic conviction. Make use of the elevator pitch, excite the investor with an engaging answer that sparks their curiosity to learn more.
Why did you pick this idea to work on?
 
Again, keep your questions short and to the point during investor meetings. This is a great opportunity to explain your motivation as to why you are working on this. Make sure to convey clear reasons and back them up with some domain expertise or background experience that makes you the perfect team to work on this idea. don’t forget to express your enthusiasm and excitement your cary within to be bring this idea to life. Investors like to hear that you are passionate about what you do.
How are you different?
 
The investor likes to know if you can prove that you have a truly unique value proposition. You have been working on this idea for a while now and did your research, you should definitely be able to explain properly how you differ from others in the market. First of all, express how you and your team are different than any other team to execute on this. Explain the in-house expertise, motivation, and amazing team collaboration to achieve results. Second, you found a unique solution to the customer’s problem through innovative (proprietary) technology, product development, or service offering unlike anything in the market today.
What big problem do you solve?
 
When an investor asks you this question, get ready to emphasize clearly that the problem your solving is HUGE! You are on a mission to solve a problem that will change the way people do certain things and it will have a tremendous impact. Make sure to state some short key facts why this true so you’re not just blowing this up. The reason why you want to answer it in this way, is because the bigger the problem, the more likely people are willing to pay.
What is unique about the company?
 
Although this question ties in closely with “how are you different?” they are not entirely the same question. This is your opportunity to really focus on what makes your company unique. It might be your proprietary innovative technology that makes your company unique. It could be that your team has amazing set of skills unlike any other team. Or, it could be that your company strategized towards problems and opportunities just a bit different than others. Focus, focus, focus – let them know that you know what is unique about your company.
Why is your business defensible?
 
The investor is looking for some reassurance that your business and product/service is not one that will be copied easily. You defensibility could be your go-to-market strategy or scaling strategy. Defensibility could also come from the team you assemble or the technology you are building. Explain how your business is one that can’t be easily copied and executed. Even if the idea can be copied by another company, they will not have the team you have to execute successfully. There is and should always be a clear confident answer to this question.
What do you understand that others don’t?
 
You certainly did your market research, spoke to customers, or have a background in a certain industry or field that gave you an understanding of the problem or opportunity you are working on. Hone in on all of them and incorporate them into the core of your story as to why you understand what other’s do not.
Who do you want to be like?
 
You don’t want to be like anyone else. You’re unique, different, and will do things better. However, this is great moment to give an example of a company you admire (wether in your field or not). It shows that you have a vision for a certain strategy, company culture, or execution. While explaining your likes about the other company, make sure to incorporate some clear examples of what you will adopt and do differently.
Who do you least want to be like?
 
Don’t answer this question by badmouthing another company. Answer short and concise, you are not focussing on who you don’t want to be, you’re focussing on who you are going to be – a company destined for greatness.
Where are you headquartered?
 
Are company is headquartered in [insert city, country state].
Are you profitable?
 
The answer is either Yes, or, No. If you’re profitable you share an exact figure of profit you made. If you’re not profitable, don’t turn this answer into a defensive statement as to why not. Instead, give a short answer as to when you expect to become profitable and why (letters of intent, speaking with clients that will convert soon etc…). However, do not lie or give vague answers as to when you expect profits. This will only complicate things later and will make you look like you failed when you don’t reach those conversions. It’s okay to mention some positive expectations, but, try to stay realistic.
How do you define success for you and your company?
 
Investors want to invest in founders who are focused on a disruptive, game-changing products/services/ideas. Some founders are more than happy to exit early and cash-in. Other founders want to push their business to the absolute limit and become the next Bill Gates, Steven Jobs, or Elon Musk. Make sure to think about this question carefully before answering. You should know your vision and dream – don’t be afraid to dream big (but stay realistic).
What’s an impressive thing you have done?
 
Use this as an opportunity to hone in on an achievement that that may wow the investor. This could be a technological breakthrough your team accomplished, a partnership that will change the course
What’s the worst thing that has happened?
 
Don’t lead this down a negative path with your answer. We all make mistakes, we live, and we learn. Use this as an opportunity to explain how lessons learned were translated into actions. Maybe you had a hit and miss with a product feature or communication failure with a client. Give a clear short example of what happened, how you overcame the “worst thing”, and put those learnings back into your team, product, or management.
How is the company currently organized?
 
Do you have a corporate pyramid hierarchy? Or are you running your business a bit more flat? This should be a simple answer in which you explain the structure of your management, team, and/or advisors. Maybe you can even give a short example of how communication works in the company and the culture of collaboration. Don’t forget to mention how decisions are made, who is involved in the decision making process, and why you chose this approach. Finally, are you all working from the same office or do you have a remote team. Simply give a short summary of how your company is organized.
What does the cap-table look like?
 
The cleaner the better. Share your screen during your meeting to visualize if possible. Always have a cap-table overview ready and make sure you know exactly how to present and explain the cap-table. You should always be on top of the company ownership.
What is the distribution of equity between founders?
 
Explain clear who owns what percentage of the company and why. Did one person bring in more experience, money, or a valuable network that lead to a higher percentage? Do you have a founders agreement that covers your equity distribution and vesting? And often forgotten, do you have any follow-up agreements that may change the equity distribution among founders when certain milestones are reached. It is not always said that once equity is distributed between founders that it remains that way (tip to look into if you’re just starting).
Who filed the company?
 
Who registered the company? Is held privately, on your holding, or did someone else register it for you? Often this question is asked to see if you are the legal founder of the company to avoid any issues later. You know exaclty who registered the company so this should be an easy question to answer.
Where is the company registered?
 
This question is often asked to determine under which law you operate. Sometimes investors ask this question because they get certain tax benefits by investing in companies within their own country. No need to have a full elaborate answer, just say we are registered in [insert country].
Have you incorporated, or formed any legal entity (like an LLC) yet?
 
If you have not yet established a legal entity for your organization, better get on it before your investor meeting. You need a legal entity to engage in business, bank transfers, and taxes. No entity, often no deal.
Will you reincorporate as a US/EU/ASIA company?
 
Some VCs might not invest in companies in Europe. Other’s might only invest in startups from Asia (taxes/market knowledge). It has to make sense for your company to incorporate in another country. You can always return the question to the investor and ask We have not yet discussed that option internally, but why do you ask?. If the response is “we only invest in companies incorporated in [insert country]” – your follow-up question should be if I hear your correctly, you would be willing to invest in our startup if we are located in [insert country]?. Always confirm if that would tick of one of the criteria boxes.
Is there an existing board or advisors?
 
Pre-seed or seed funded companies often do not have a board. Usually this comes with your Series A or when a bigger VC steps in that really wants a board to have some say into the operations. If you do not have one, you don’t have one – easy answer. As mentioned before, you could use this question as a reverse question to determine if this is a must-have for the investor to be willing to invest. Advisors are often a sign of additional knowledge or expertise that you have within your team. Just share the names and a short background of your advisors, don’t dwell on it. If you do not have any advisors, perhaps you should look into this right after your meeting. Advisors can open up their network and share their expertise to help you move forward faster. Typically, advisors will receive somewhere between 0.1 to 0.5% shares in return. Some early advisors could negotiate up to 1% – this of course depends on what you get for it in return.
What pivots have you already made up until now?
 
The reason this question is asked pretty often, is because it generally happens a lot that a startup pivots. To pivot, is to show adaptability and the ability to turn learnings into a better outcome. A startup pivot occurs when a company shifts its business strategy to accommodate changes in its industry, customer preferences, or any other factor that impacts its bottom line. Don’t be afraid to explain how your experience and gained knowledge led you down a better path (if you have pivoted).
Are you open to changing your idea?
 
This somewhat sounds like a trick question. Are you 100% sure this idea is the billion dollar idea, or are you still open for changes? At the same time, you may have pivoted before, so you know very well markets and customers may change over time. The question may also come up because the investor may have sensed some insecurity in your previous answers. Either ask the investor why do you ask? to follow-up on, or, show absolute confidence in your idea while making clear that it’s not the idea that will make the difference, its the team and execution that will lead to success.
Have you considered various mutations of your idea?
 
When you start working on an idea you’ll soon realize some assumption may have been off, or, just spot on. During this exploration process of (please do this) validating your idea and product market fit you will constantly turn left or right on your decision-making. This means that within the process you may have multiple mutations of your idea. You should use this question as a chance to highlight how you have done your research, made your decisions, and learned from the process. It is expected to have tried various mutations as you have looked for the right fit.
Do you know [insert company]? Why not?
 
If the investor brings up a competitor that is somewhat similar to your business, don’t badmouth the other company. This will only show that you are willing to talk negatively about others behind their back. Instead, answer directly and acknowledge even something they do very well. Then, quickly focus on your strengths and how you are different. Hone in on the key elements that really set you aside and steer the conversation towards your the greatness of your company.
Will the business model comply with applicable laws, including expanding privacy protections?
 
Don’t go into full legal details here, there is no point. Summarize the key points (you should know them) that apply to your company, product, and service. For example – we are fully GDPR compliant and our data is end-to-end encrypted stored on servers owned by our company. Since we are operating in healthcare we made absolute sure we are HIPAA compliant and are able to run on premise as well. It is of high importance to us to guarantee the safety and privacy of our user data.. If follow-up questions arise, tell them you will share with them some documentation on this after the call. If you don’t know anything about the technicalities of storing and/or processing data, don’t give vague answers, tell them you will get back to them on this.
What are the key risks in your business?
 
VCs do interviews all the time, and most of them are really good at what they do. They will try to figure out what secret your holding back on. It could be that your strategy is poor, your CTO is non-technical, or you only have 10 users instead of 1000. Do make sure to practice on these “poking questions” to make sure you know how to answer correctly. You don’t have to dodge the question or provide a vague answer. It is important to know your weaknesses just as well as you know your strengths, if not better. Make sure that you can deflect hole poking questions with confident answers that shifts the focus back to your strenghts.
Is there anything else we should know about your company?
 
Sometimes this question is asked at the end of your meeting as a conclusion to your conversation. Use this moment to recap bullet-point wise the strengths of your team, what makes you unique, and why the time is now. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team about.
Who are the founders?
 
It’s time to introduce you, and who knows you better than…well you? Build this up like you would any other pitch – concise and well constructed. Investors don’t care too much about how old you are, or how many kids you have. This moment should be about you building up your story from a relevant starting point in time when you gained knowledge, bulked up on experience, learned enough about what you do best, and how you are now putting it together to build this amazing company. Excite the investor with a clear understanding of who you are, what you stand for, and what you do best.
Who holds which titles?
 
Most investors do not care a whole lot about titles, but, sometimes this question is asked to define the roles of founders. You probably had a talk with your cofounder (if you have one) already about who is responsible for what. If you are the technical guy or girl, you might be the CTO. If you are managing the overall strategy and direction, you’re most likely the CEO. Define your titles before your investor calls to give a simple solid answer.
Who is “the boss”?
 
In other words, this question addresses, how good is this company’s management team? It could be that there is no “boss” and decisions are made between the founders at all times, or the entire team, that’s fine. The investor wants to know how decisions are made, how people are managed, how problems are solved. Make sure you can tell with confidence how management works and why.
What experience do you have in this industry?
 
Explain your background and gained knowledge that makes you and your team the perfect group of people to tackle the problem/opportunity. Focus on your strengths as a whole, don’t go into the details of you as an individual. Provide clear examples how you and your team have been working in the industry, have a close connection to the problem/opportunity, or, how you formed your team to compliment skillsets and industry experience. The investor likes to know if you bring the right knowledge to the table.
What motivates you as a founder?
 
The investor likes to know how passionate you are. You might have experienced something in your life that made you pursue this dream. Perhaps you are on a mission to change the world for the better. We all have our own personal motivation that drives us. If you are thinking just about the money you like to earn, maybe you should not become an entrepreneur as money should never be the core motivation (or at all) that drives you. Answer the investor in a way that reflects your excitement, drive, and passion that in return excites the investor to want to be part of your journey.
Why are you the right person to bet on to achieve this?
 
This is an important question to prepare. The investor is basically asking “why should I invest my money in you?” We all know there is no I in teamwork but this question is directed to question you. Don’t go into a full-blown detailed defense mode about your product, team, and market potential. Instead explain in a calm, confident, structured manner why you are the right person to pull this off. You have the knowledge, the expertise, the drive, an amazing way with people, and you’re beyond passionate about this idea.
What unique skills and talents does each owner contribute?
 
The investor wants to know what each founder is bringing into the company as a special skill or expertise, and more importantly how that came about? Explain about your background experience and gained knowledge and how that has led to you and your cofounders now possessing unique qualities and skills. If you won awards or have special achievements accomplished now is the time to mentioned them. Wow the investor again with good reasons why you and your team are the ones to pull this off.
How did you meet your co-founders?
 
If you have a cool story to share, feel free to share it now. Just don’t go into too many details or turn it into too long of a story. The investor wants to know how well you are connected as founders and what the foundation is of your collaboration.
How big is your team?
 
We have X number of team members. X people working on Biz Dev, X working on marketing, X working on the product development. – sometimes a single number is enough without an explanation on who’s working on what.
Who are some of your key team members?
 
Everyone is a key team member in your startup, keep that in mind. Yes, you could replace someone in sales, but, you also got that person on board for their specific skillset and knowledge. Everyone in your team should feel like a key team member and in a startup everyone should be.
What relevant domain experience does the team have?
 
Has your team worked in the industry before? Has your team build a similar product/service before? Keep emphasizing why your team is the best team to pull this off. You can have the best timing, the best idea, and all the money in the world – without a solid team you will achieve very little success. If there is no relevant domain experience, focus on the strengths you do have in the team.
Why did your team get together?
 
The investor likes to know how everyone got together. Did you look for a team on Reddit? Is your team outsourced? Perhaps you know your team from a previous project? Explain in a short and simple answer how they team came about. If the entire team shares a similar motivation – emphasize on that.
What else have you created together?
 
The investor is looking for confirmation of achievement within your team. You may have launched a product before or even sold a previous business. If so, great! Make sure to mention how you have worked on projects before and what came from it. No need for glorious success stories (although awesome if there is one) just focus on telling how well you worked together. If there is no previous experience of creating something together, just tell it as it is. You can always follow up by explaining how you are currently working as a strong team.
Why is the team uniquely capable to execute the company’s business plan?
 
The investor is asking why your team is the one to pull of the plan you just pitched. It is extremely important to answer this question well. You can have the perfect idea, timing, and cash in the bank, without the right team you will not achieve success. People are the very core of your business and it is important to keep emphasizing on the uniqueness of your team. Keep repeating the strengths of your team, the experience and skillsets they bring, the drive etc etc… If the investor is not convinced about the team – they will most likely not invest.
Will your team stick at this?
 
Absolutely! We are driving and motivated to bring this idea to life and change the way people do X using our product/service. Our team is dedicated to make this work and stick by the highs and lows that may come our way!
Who in your team does what?
 
No need to go into the nitty gritty details of individual tasks. The investor likes to know if you have established a level of responsibility amongst your team members. Does everyone know what they are doing and why they are doing it? Explain how certain areas of operations are divided and who is responsible for what parts of it. Keep it simple so the investor understands your structure.
What key additions to the team are needed in the short term?
 
This ties in with your overall business strategy. The investor likes to know who you need to hire in order to achieve certain goals and key results. If you are trying to sell an X amount of products by [insert date], you will need to hire people in Biz Dev / Sales. If your goal is to bulk up on the technology you will most likely need to hire more developers or data scientists. You should know your OKRs for your quarters and thus know who you need to hire by when to achieve your OKRs.
How do you plan to scale the team in the next 12 months?
 
This question is similar to the previous question (see question above). Always plan ahead and show the investor that you know what direction you are heading. OKRs are the best way to plan for objectives, measured by key results, achieved by initiatives you take. If you set this up for four quarters to cover your next 12-months of operations, the investor will love your for it. You will find through your OKRs that you need to hire specific people to take on the initiatives (tasks) that will help you achieve your key results and objectives. This means that if you plan well, you will be able to answer with ease how you are planning to grow your team.
Any existing board members?
 
Do you have any people as a board of members that have a say into what decisions are made in your company? Usually board members won’t be part of your company until a VC joins (if requested) around the time of your Series A. This is the time when the company is (hopefully) scaling and growing fast and lots of decisions have to be made. Often board members are the investors that joined your company and one of the founders.
Who in this organization is most replaceable?
 
Again, no one in your team is replaceable, everyone is a key member, and all of them are brining unique skills into the company which makes this the best team to achieve success.
Is there anything else we should know about your team?
 
Sometimes this question is asked at the end of your meeting as a conclusion to the team topic. Use this moment to recap bullet-point wise the strengths of your team and what makes your team unique. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team about.
What is your product/service?
 
You are offering solutions and outcomes, NOT features and capabilities. Of course, it is okay to mention you are building a platform, App or setting up shop to offer a service. But, please remember to let the investor know what value your product or service offers and how it is going to help people in certain way. Keep it focussed on the core value followed by some additional benefits in a bullet-point style pitch. Intrigue the investor on how you are going to help your customers in way they truly need.
How is your product/service different?
 
You could answer this question by giving an example of a competitor or similar product/service in the market followed by your differentiators. This often helps to shape a visual for the investor on what kind of product or service you are working on. Mention technical or strategical differences that stand out and do not forget to elaborate on the value and customers need those differences address.
Can you provide a demonstration of the product or service now?
 
Absolutely! If you do not have a fully working product, make sure to have some sort of MVP ready (even if it’s just clickable) and screen-share it during your meeting. This will always lead to a better understanding and provides opportunities to elaborate on how value points are being met through the product. Try not to go into every button click or explain each feature in detail as this will only bore and confuse the investor. Stick to the main flow, key features, and keep it simple to understand.
Why do users care about your product or service?
 
You may have elaborated on this at the beginning when you did your intro-pitch that should have included the problem you’re solving. The investor is asking why people need a product or service like the one you’re offering? What is the problem you identified and how is your product offering a solution to that problem? Hone in on the problem of the user, connect the solution you are offering, and end with the value outcome they will receive. This answers as to why users care about your product of service.
What are the top things users want?
 
The investor is checking in to see if you have spoken to your customers. Are you building your product or service based on assumptions, or, do you really know what your users want because they told you so? If you have done customer research (please do) explain the process of how you set up your interviews or questionnaires and what valuable feedback came out of it. Clearly explain that you’re aware of what your customers are looking for. If you are still in the process of verifying certain assumptions – perfect. Explain the assumptions you are still testing and how you are monitoring them to confirm or dismiss them. The investor is really just checking to see if you know what your users need and if you are taking the right actions to make sure you do.
What does your roadmap look like?
 
This question ties in with you overall business strategy. Product or service enhancements and upgrades should be decisions that are linked to your commercial strategy. For example, introducing support for a new language probably means you want to look into expanding into a different market. Every decision on your roadmap should be a well thought out decision that links to your strategy. Of course, a roadmap can be flexible, and things may move forward or pushed backwards. But, overall, the investor likes to know if your roadmap decision-making is one that is based on a strategy. Having a visual roadmap with a Gantt Chart often helps to visualize your plans to the investor.
Are there any similar products and or services like this in the market already?
 
The investor usually asks this question to gauge wether or not someone has executed on the idea already (proof of feasibility) and if not, how are you so sure you are going to be successful? – why is no one doing this?. The answer should always be “No, there is no product or service like ours out there”. However, if somewhat similar products are in the market, you can give examples of them and explain how you are different and offer a better value to your users. If no one in the market is doing what you are doing, make sure to back that answer up with some unique insights, knowledge, or technology you and your team have as reasons why you are the first.
How do your features differ?
 
Never compete on features with your competitors, it’s a race that will never end and you will never really win. It is easy to copy a good set of features from other solutions and so can competitors learn from your product. You can of course mention how you have one or two features that are pretty unique. But, it should be your core technology, team execution, company strategy that will set you aside from the rest.
How differentiated is the company’s technology?
 
The investor is trying to find out if the company has unique technology that can’t be reproduced easily. If this is the case, the investment opportunity becomes more valuable as it can truly set a company aside from others in the market. Of course this would only apply if you have differentiation technology to others. When it comes to a developed platform or App it’s not a real differentiator as it can easily be copied by others. However, if you are dealing with unique data to train for example Artificial Intelligence or Speech Recognition Technology that is part of of your App or platform, this is definitely a differentiator. Data is commonly unique and can’t be copied or reproduced by others. Developed hardware that uses proprietary technology that was build in-house can also a big differentiator as it’s being produced with non-market available components. Or complex build API solutions that connect in various ways unlike any other solution in the market. If you filed any patents or own them already, definitely mention them now.
How easy will it be to replicate the technology?
 
As mentioned in the previous questions, the investor is trying to find out if the company has unique technology that can’t be reproduced easily. If this is the case, the investment opportunity becomes more valuable as it can truly set a company aside from others in the market. Unique data, hardware components, APIs, and filed/owned technology patents should be mentioned now.
What competitive advantages will there be over existing technology?
 
Go a bit more into detail how your unique datasets, API, or hardware components are different that existing options in the market. Try to focus on the value it brings rather than the technological differences. If you have a unique speech dataset for example that is capable of outperforming Google’s speech engine (like us) you offer a better value in terms of voice automation to serve customers better or support teams more efficiently. The competitive edge should be clearly explained to the investor so he/she knows that it will be hard (or impossible) to replicate and offers a a greater value than others.
What technology risks do you have?
 
The investor is trying to find out if the investment opportunity also brings some risks to the table. For example, your system or servers might be not meet the compliance for GDPR, or, your hardware might not get the technical approvals and labels to be sold in certain markets. At the same time you may also have technical risks like not underestimating the time it takes to develop your technology, or, the dependency on technical improvements over time that may not be available. Explain how you foresee your technical risks, or, why you don’t foresee any technical risks.
What are the major product milestones?
 
Mention a max of three key milestones for each upcoming quarter. Releasing a new feature is not a major milestone. But, the release of a feature might result in reaching 2000 active users and 50% more engagement – that is your milestone. Having OKRs makes it super easy to define this and explain it to the investor. You set your objectives for each quarter, add the key results you want to achieve, and add your initiatives to get there. You can explain that your objective is to grow your user base, your milestone (or key result for your OKRs) is to reach 2000 active users and 50% more product engagement. You can support your milestone by the initiatives your taking (like your new feature release) to make that milestone happen.
What have you learned from early versions of the product or service?
 
The investor likes to know if you can turn learnings into action and if you are actively monitoring how you can improve your product or service. You may have released an early MVP or on-boarded some beta users at the start of your journey. Often, this will lead to early feedback that can be used to improve your product or service. Don’t go into how you changed the colors of your buttons or position of your labels (unless this made a huge impact). Focus on key improvements that came from your learnings and explain how you got to those learnings. Mention how you conducted surveys, did calls, or monitored users using certain tracking software.
What is your tech stack?
 
This question may not come up too often but it’s good to have a clear answer on. Sometimes the investor asks this because they want to know, if you know, how you’re building your product and why? The investor may also be from a technical background and has a genuine interest in the technology or follow-up tech questions. Whatever they case is, make sure you know what you and your team use to build your product (Java, C++, React, Python etc…) and why. If you don’t really know why you went for a certain tech stack, just let the investor know you will check with the team and get back to them on it.
How often do you envision enhancing or updating the product or service?
 
The investor might want to know your development cycles. You can use a waterfall approach and update once every 3 to 6 months. You might use a more agile method with scrum and have weekly or biweekly sprint and release of updates. Explain your method of development and why you chose for that approach. There is no wrong or right answer here, it’s just a matter of how you and your team work. However, in fast-changing environments and early stages of your product you might want update and improve more frequently as you learn from your users.
Someone just showed us a product/service like this right before you guys. I don’t like it. What else do you have?
 
Really? I am pretty sure the product/service was not close to anything that we are working on. What did you dislike about the product/service? Please make sure to first verify what the investor did not like about the product or service someone else showed them. And verify for yourself if it was really similar to what you are working. Only with that information you will be able to defend your proposition. Use their negative opinion about the other product or service to shine light on how you are positively different. It sometimes might not even be the product they disliked, it could be the team or strategy that was poor. Keep asking questions, collect the info, reply with clear answers on how you are better.
Is there anything else we should know about your product or service?
 
Sometimes this question is asked when the investor can’t come up with any further questions during the meeting. Use this moment to recap bullet-point wise the strengths of your product/service and what makes your product/service unique. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team about.
Who exactly is your customer/user?
 
The investor likes to know if you have already identified your customer persona and segment. Remeber, you don’t want to be everything for everyone. Do you truly understand who is buying your product/service and more importantly, why? If you have identified your customers make sure to explain what kind of user/customer it is. Support your answer with the process you have gone through in order to come to that conclusion. If you do not know who your actual customer/user is, you should at least have an assumption of who it is. Explain to the investor how you are working on confirming these assumptions. It is okay to not know exactly who your customer is at the start of your business. However, you should have some idea as to who your product/service is for.
How many users do you have?
 
Don’t go into a full elaborate story, just give the number first. It sounds bad, but it is okay to make this number a bit higher than it actually is. In the end, you’re selling your company to the investor, make it sound like it’s worth their money. We’re saying it’s okay to make 10 users, 20 users. Or say you have 1000 users when it is actually 800. Only do this if you can project this outcome to be true by the time the due diligence process begins.
Do you have any paying customers?
 
Keep it to a simple yes or no first. Don’t defend the answer by how you expect [insert company name] to pay you $X , or, how this one client said he would pay $X. You either have paying customers or you don’t. Best to support your answer with a clear explanation when you expect to convert some of your users and why you expect that to happen then.
How are you getting your customers?
 
The investor likes to know where your customers are coming from. Mention how you are using specific marketing strategies, channels, and outreach approaches to communicate to your potential customers. Elaborate on what channels convert best and what kind of customer comes from what channel. Let the investor know that you understand where your customers are coming from and how your efforts are the drive behind that.
Why do users care about your product or service?
 
The investor likes to find out if you know the true value you are offering to your customers. Why do your customers need your product or service? It’s always good practice to explain this in a story format. Introduce an example customer and the need he/she has. Go into how that need is now resulting in problems or missed opportunities. Follow up by clearly explaining how your product was introduced to the customer and fulfilled their need above and beyond. Excite the investor with the excitement your customer has for your product or service.
How much feedback have you received so far?
 
The investor is trying to find out if you actually speak to your customers. Do you even know how they feel or think about your product/service. Explain to the investor how you have conducted customer research and what key feedback you have collected. Clearly state how you conducted your research and how many responses you received. You don’t have to go into every little detail of the feedback that was given. The way you can explain this is by giving an example flow such as one positive feedback point, one constructive, and conclude with a positive outcome. The investor just wants to know what customers are saying about your product.
What changes have you made based on that feedback?
 
The investor likes to know if you are able to turn your learnings into value. Explain how some key feedback points have led to changes in your product or service. Make sure to support your answer with reasons as to why it made sense to make those changes. Over time you will receive a lot of feedback on your product/service, and you just can’t please everyone. However, some feedback comes back more frequently or just clicks with what you were looking for in terms of feedback, and requires more immediate action. Perhaps try explaining this in a story format on how the user starter using your product or service and how they came to their feedback.
Have you identified your buying persona and customer segments?
 
“Customer segmentation is a process of dividing your market into segments based on certain parameters like geographic, demographic, psychographic, and behavioral. In order to create a representative sample of that segmented audience, personas are based on the analysis and research of real customers. This helps to build a much more detailed picture of the (potential) customer. Explain to the investor how you came about your segmentation (research process) and if you have established an ideal customer profile to target. If you have not done so yet, this is a great exercise for you and your team to have. It will help you to have a better understanding of how your product/service is for.
What do you understand about your users that others may not?
 
The investor likes to know if there is any unique insight that you and your team have about users that will lead to a competitive advantage in the market. Perhaps you have done extensive research and spoke to hundreds of people that led to an unknown insight. Or, maybe you worked in an industry where you interacted with a lot of people that helped you form a better product/service. Explain to the investor what it is that you know that could take this company to commercial success.
How do you know people want this?
 
Basically, the investor is trying to figure out if you have actually spoken to potential buyers of your product/service. We all have great ideas once in a while, but, do people really need your idea to become a product/service. Explain to the investor how you have done your research to come to the conclusion that “people need your product/service. Don’t make this about wanting, it is about a real need for your solution.
How are you understanding customer needs?
 
Are you speaking to your customers regularly? Do you have some sort of feedback system in place to collect thoughts? The investor likes to know how you are understanding your customer’s needs and translate that into product/service value. You could explain how you collect feedback through a Typeform or Google form. Perhaps you have a built-in feedback loop for your product. Or, elaborate in short on how you monitor your competitors on their customer’s improvements. Make sure to let the investor know that you are constantly improving on your offering for your customers because you understand their needs.
What makes new users try you?
 
The investor likes to know if you have an understanding as to why new users come to you. If there are more options in the market to choose from, why would they go for your product/service. For example, why would people use Uber over Lyft (both vehicle hiring services)? Well, Uber is richer in features and available in more cities. Yet Lyft is more transparent in its receipts about the details of a trip, which can help consumers understand when prices increase. So when Lyft entered the market, they probably explained to their investors how Lyft is more transparent about their pricing which makes new users choose them over Uber. What makes new users choose your product/service?
Why do the reluctant ones hold back?
 
The investor is trying to figure out if there is anything about your product/service that makes people not want to use it. For example, your product offers a speech-to-text solution and you are using the Google Speech API to process their data. New users might be reluctant to try your solution since their data goes to Google. But, it is also a problem that can be fixed by developing your own speech engine or switching to a more private API. It can also be that your pricing is a bit higher than the market average. But, you might offer a better service or deliver a higher quality product than others to justify that. So if people are reluctant to buy, they are not the right customer for you. Try to give an example of why people are reluctant to try your product/service in a way that can be either solved in the near future or is justified with your strategy.
How long do users stay on average?
 
Just give the numbers of your customer lifetime value (CLV). The investor likes to know how long users continue to use/pay for your product/service and how sticky it is. If you have been around for a while you know exactly when new users joined and when they left. Explain to the investor in a simple straight answer how many weeks, months, or years they continue to use your service. If you just started, you can simply say you don’t have an exact answer to this yet, but expect it to be [insert assumption].
What’s the conversion rate?
 
If 10 people start using your service, for free how many of them end up paying for the product after the free period is over? Or, if you speak to 10 people about your service and the value, how many sign up to become a paying user? The investor likes to know how valuable your product or service really is. If you know your conversion rate just give a range of conversions to the investor. Don’t just throw assumptions out there if you don’t know, do some research before making assumptions. (for example, did you know the average SaaS conversion rates range between 3-5%?).
What will be your MoM growth in customers?
 
The investor is asking you what your projections are on growing your customer base every month. This is a tough question to answer because it will be a projection that is based on certain assumptions. Explain to the investor how much you are expecting to grow your customer base each month. However, make sure to also explain the assumptions you have that supports this projection so the investor also understands why you expect this growth. This MoM growth number can always change so make sure to not overestimate. Remember, it is always better to underpromise and overdeliver, than to overestimate and fail on the delivery.
Can you tell me a story about how a customer has decided to choose you and their experience with your product?
 
Absolutely! Everyone loves a good story, especially with a happy ending. Explain an example of your ideal customer and how the customer was facing some major problems or missed opportunities. Go into how the customer got introduced to your product and started using it. Excite the investor on how excited the customer got after realizing how the need was met or how opportunities were captured. Give examples of feedback you got and how the customer was amazed by it. Finally, end with how now the customer does not face any issues or missed opportunities anymore due to your product/service. Make sure to always excited the investor with this story and keep it short, sweet, and simple to understand. (Keep in mind that this story can be made up as it is to excite the investor).
What has surprised you about user behavior?
 
Sometimes users can surprise you when they start using your product/service. If you already have an active user base you can give an example of how you expected your users to use your product in one way, and how it was different from your expectations. We often have assumptions and expectations which need confirmation to be true or false. The investor likes to know if there has already been some unexpected behavior that led to assumptions to be confirmed or changed to be made.
Are you looking at any customers in different verticals?
 
Vertical markets, or “verticals,” are niches where businesses focus on serving a specific audience and their set of needs. When you start out your business you often focus on one vertical to prove the need and improve your product/service. Focussing on too many verticle will make it difficult to develop your offering to meet the right needs. The investor likes to know if there are any additional verticals you can grow into in the near future for commercial growth. For example, you can start in a Legal vertical and grow into a Banking vertical. This future potential often excites the investor as the investment will lead to more opportunities in the future.
Is there anything else we should know about your product or service?
 
Sometimes this question is asked when the investor can’t come up with any further questions during the meeting. Use this moment to recap bullet-point wise what the investor should remember about your customers. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team.
What is your business model?
 
The term business model refers to a company’s plan for making a profit and he investor is asking you “how are we gonna make money with this?”. Now, value is not just about the money you earn. In some cases, you can build an amazing product first, get user traction, and figure out the best business model to earn revenue later. However, you do need to have somewhat of an idea of how you’re planning to make money. If you are telling the investor they need to put money into your business so you can spend it, they would like to know how that spending will be turned into earnings. Your business model could be a subscription-based product, a pay-per-use service, or a one-off transaction business. For some products and services, you can even combine multiple models.
What other streams of revenue can be added to this?
 
As mentioned in the previous question, you can sometimes combine business models within your product or service. The investor likes to know if there are other monetization opportunities that can be added to your product or service. For example, LinkedIn has a premium subscription that offers you about 15 “InMail Credits” per month to reach out to people on their platform. However, once your credits are depleted you can buy more credits through a one-off payment. This is a great example of adding a smart additional revenue stream to your product or service. Explain to the investor what your ideas are on adding additional revenue streams. It is okay if you do not have an answer to this question yet. Often, additional streams of revenue are discovered at a later stage in your business.
Why hasn’t this product/service worked before?
 
The investor is trying to figure out why the product/service is not in the market yet. Or, why your version and approach has not been executed already? This question is not only asked to determine the feasibility of your business. It is also asked to challenge you on explaining why are you doing this now and what makes you think you can pull it off if it hasn’t been done yet? There are multiple reasons why a product/service hasn’t worked before. For starters, the timing was never right. This can relate to technological advances that now offer opportunities. Or, it could be that the market offers a window of opportunity due to economical or political changes. Explain to the investor why the time is NOW, give clear reasons, and always add to your reasoning that your team is the perfect team to make this work now.
What are your milestones for the next 12 months?
 
Having OKRs makes it super easy to define your 12-month plan and explain it to the investor. You set your objectives for each quarter, add the key results you want to achieve, and add your initiatives to get there. Always make sure to know where you want to be in 12-months from now. As a team, you need a clear path, a vision, and be in the same boat for the journey. By presenting a 12-month plan to the investor you show confidence in what you are doing and where you are going. Present 3 clear milestones/objectives for each quarter and explain three key results for each objective. Keep it short and clear and don’t go into too many details until the investor specifically asks for it.
What is your plan to grow?
 
The reality is, creating a business is relatively easy, but, creating a long-term sustainable business that investors want to back requires forward planning and a vision.This question is closely related to the question above. The investor likes to know how you are planning to grow as a business. Having OKRs makes it super easy to define your 12-month plan and explain it to the investor. If you set clear objectives per quarter you will also know what resources you need to get there. This means that if your goal is to grow your MRR to $10.000 in Q1 of next year. You will most likely need some additional sales team members to help you get there. Or, you might need people on your team to work on your marketing efforts or product development. Make sure to have a 12-month plan ready with milestones you want to achieve and explain how you are planning to grow the team and business in that period.
Why won’t a huge corporation build something like this?
 
This is one of those questions that is asked to check if your business has any defensibility. Sure, in theory, Google or Amazon could pull in some people and set aside a big budget to start working on your idea. But, there are also various reasons why they won’t or why they can’t. Don’t answer this question by saying it is not in the corporation’s interest or focus, because the truth is that you don’t know that 100% sure. Instead, make sure that you answer this question with a defensibility element of your business. It could be that you have gained a unique insight into your industry and customers that the big corporation is missing. Or, it could be that you developed technology unlike anything in the market.
How do you compete on price?
 
What is your strategy to compete on price in the market? The best way to answer this question is to make sure beforehand that you have done some benchmarking in the market. You should know what pricing your competitors in the market are offering. Only then, can you truly answer this question. The investor likes to know if you have done proper research and if there is anything backing your pricing strategy or if you just randomly decided on it. Explain how you got to your pricing and how it compares to the market average.
How do you compete on service?
 
What is your strategy to compete on service in the market? Again, the best way to answer this question is to make sure beforehand that you have done some benchmarking in the market. You should know what service your competitors in the market are offering. Only then, can you truly answer this question. The investor likes to know if you have done proper research and if there is anything backing your competitiveness on service or if you’re just guessing you are competing on some levels. Explain in short what you know about other players in the market and how you compete on service with them.
How do you compete on customer satisfaction?
 
Do some research on review websites like G2 where actual users are providing feedback about your competitors. Learn from what is not going well within the business of your competitor. Think about how you would improve this and how you could use this to compete in the market. Explain to the investor how you know others are lacking in certain aspects of customer satisfaction and how you are planning to do it better.
What competition do you fear most?
 
The investor likes to know if you have identified your biggest competitor that may overrule you in the market. Try to change the question a bit by removing the word fear (sounds weak). Rather explain how you have researched the competitive landscape and see [insert name] or [insert name] as your strongest competitors. You say this because they are good at XYZ. However, you are planning to do XYZ that will put in your company in a very good market position and less worried about [insert name]. The market opportunity is HUGE and there is room for several players.
What are the barriers to entry?
 
In general, there are four main types of barriers to entry – legal (patents/licenses), technical (high start-up costs/monopoly/technical knowledge), strategic (predatory pricing/first mover), and brand loyalty. You should know as a company what barriers you may face. More importantly, you should be able to explain how you will deal with these possible barriers. The investor likes to know if anything might stop you from continuing or even starting your market entry.
What is the one main competitive advantage?
 
The investor is trying to find out what that Secret Sauce is that your startup and product has that will allow you to compete with an advantage. It could be that your team is extraordinary to execute on the idea (which should always be the case) cause they have very specific knowledge or expertise. Or, it could be that you developed proprietary technology that can outperform the market standard. You should know and be able to explain what your main competitive advantage is.
What part of your project are you going to build first?
 
The investor likes to know what the next steps are for your project and startup. What are the things you need to work on first in order to get to your next milestone? As mentioned before in previous questions, it is super important to be able to explain where you are going, how you are getting there, and why you are taking this path. Set up a 12-month plan using clear OKRs in an excel sheet and present in a clear overview where you are now, what you will be working on and towards which objective next, and what actions are you taking to get there?
What are the key metrics that the management team focuses on?
 
You should definitely track your metrics (KPIs) within your company to make sure that you are improving on your performance as a team, product, and company. You can track various business metrics like: sales revenue, cost of customer acquisition, or churn rate. At the same time you can look at product metrics like: usage frequency, adoptability rate, feature usage. Or, you focus on your teams performance such as: team productivity, output performance, team satisfaction. Get familiar with KPIs and metrics to track in order to keep improving as a business and team. Explain to the investor what you tracking, why you’re tracking it, and how you’re keeping track of your metrics.
What milestones will the financing get you to?
 
This is an important question to answer clearly. The investor is asking, “if I give you this money now, where will it take us?”. When you are setting up a 12-month plan with clear objectives you know where you’re going. It’s just a matter of resources you need in order to get there. Always make sure to draft up an initial financial plan to not only explain to which milestone you will get with the investment, but, to also show to the investor how their investment will be spend to get to that milestone. Hone in on the parts the investor would like to know in terms of objectives. For example, generating X amount of revenue, or, it will help us to build enough traction for our next investment round. Let the investor know that you are raising this money to reach specific milestones to continue to grow.
How does the company market or plan to market its products or services?
 
How are you going to put yourself out there in the market? Or how are you already positioning yourself in the market? The investor likes to know what your overall strategy is to reach your customers. If you know your customer segment, buying persona, and overall group to target, you must also know how to market your product to them. Outline your marketing plans whether its advertising, referrals, trials, freemium tiers etc. Or, are you planning to use a sales team or affiliates – in-house or outsourced to market your product/service.
What is your distribution strategy?
 
The investor likes to know how are you selling your product or service to your customers? Implementing the most efficient distribution method for your business is key to obtaining revenue and retaining customer loyalty. There are four main options for your distribution strategy: Direct Sales, Sales through a retailer, Sales through a Wholesaler, and Sales through an agent/partner. You should decide on the right strategy depending on what your offering. It is not uncommon to combine several of these strategies for your business. You can for example start with direct sales and as you grow as a business onboard agents around the world to sell for you. Or, you might start with sales from your own website and local inventory, but as you grow, start using global distribution points to ship more efficiently. Make sure to think about the strategy that works best for your business now, and later on.
What marketing efforts will you be doing?
 
The investor likes to know what kind of marketing activities will be initiated over time. You can drive inbound marketing with valuable content on your website, you can be extremely communicative on social media channels or online communities like Reddit. You could plan on attending various conferences, or, host your own online webinars/podcasts on your business and product related topics. Explain to the investor what you plan is for your key marketing activities, what you expect from that effort, and how you will monitor the effectiveness.
Are you planning on strategic partnerships?
 
Strategic partnerships can be extremely helpful as you’re able to tap into the user base of your partner and their marketing channels. You could look into certain technical integration partners or commercial market partners that align with your business and product. Let the investor know that you have thought about strategic partnerships and let them know who that could be and why. It is not always necessary to set up strategic partnerships but it can definitely help to grow as a business.
Are you using any external sales agents?
 
This question aligns with your distribution strategy. The investor likes to know if you are planning on doing all the sales directly or if you are using sales agents. The reason why companies decide on using sales agents is because they know the market they’re in, have a network to reach out to, and know the cultural aspects of that market. A percentage of the total sold amount of products/services is given in return for the sales efforts of the agent. Using external agents allows you to expand your sales efforts globally without having to set up an office. Keep in mind though, you will have to manage sales agents and need someone in charge to follow up with them and the leads they bring in. If you are planning on using external sales agents let the investor know why, how you will manage them, and what you expect from their efforts.
If your startup succeeds, what additional areas might you be able to expand into?
 
Even though you’re starting your business in one vertical it does not mean you can’t expand to other areas. It’s extremely important to have a clear focus at the start of your business. But, also think about the opportunities that lie ahead if you are starting to grow. The investor is interested to see if the company is able to become more successful over time by tapping into new verticals and start serving a bigger market. It could be that you are focussed on one area and one are only regardless of your success.
What is your exit goal? (i.e. IPO, M&A)
 
Where does the journey end? Are you planning on building and building until you are able to go public? Or, are you looking to work extremely hard for the next five years so you can sell the company to a bigger player in the market? Investors are always interested in your game plan. There is no right or wrong answer. Of course you can keep building your company and become more profitable over time with high dividends for your investors. However, often investors like to know when their ROI will go 5x, 10x, 20x. Make sure you know how to answer this question and discuss with your fellow cofounders and team what their thoughts are on this as it is a decision that impacts all.
What is your expected time frame for an exit?
 
This is a tough question to answer because you’re putting a timeframe on the growth and success of the company. The investor is trying to gauge when his return on investment could be expected. Be realistic in your answer and really think about the time that is needed to build enough value to even exit. It’s a good exercise to determine your exit as your North Star and work you way back from the moment you want to exit, to where you are now. This will give you a feeling of what you need to do and undertake in order to get to your exit. Explain to the investor when you’d like to make an exit, and why you think that would be the best time for it.
Who do you imagine to exit to?
 
Usually you have somewhat of an idea of who might be an acquirer of your business. You know your market and you know the top players in that market. Give the investor up to three names and give short bullet-point answers why you think they would be interested in your company. Be confident in why you think they will show interest over time and excite the investor for such a possible outcome in the future.
Six months from now, what’s going to be your biggest problem?
 
The investor is trying to find out if you are good at identifying and managing the risks that may lie ahead. Every business has its problems and there is nothing wrong with letting the investor know what problem you might foresee. However, support the presentation of that problem with measures to overcome, prevent, or move away from them. Be clear where you might encounter a problem 6 months down the line from now and how you intend to manage it. You can also turn it into a positive and say we may gain more traction than expected and might run the risk of not having enough resources to support the additional stream of new users we did not count for.. This is of course a big problem, but, it’s a good problem to have.
In what ways are you resourceful?
 
The investor is trying to find out if you can be resourceful when needed. Let’s use the (happy) problem mentioned in the previous question: “we may gain more traction than expected and might run the risk of not having enough resources to support the additional stream of new users we did not count for. The investor would like to know if you are resourceful enough to either still onboard these users, or, are clever enough to keep the momentum going without on-boarding them. You’re missing resources, how are you going to solve this in a clever way? It is good to give one clear example of a situation where your resourcefulness was proven when this question is asked.
Would you relocate to X?
 
Before answering the question, make sure you understand why the question is asked. Simply return the question to the investor “why do you ask?”. Sometimes, VCs only invest in startups that are registered within their operating country. This mostly has to do with tax benefits that they receive by investing in local startups. However, it could also be that the investor sees a better market opportunity for you. Or, maybe they like the entire team to be in one place, in one country, to be managed by them. Make sure you understand why the question was asked.
What will you do if we don’t fund you?
 
Never ever say, I don’t know or we won’t make it. It is extremely important to let the investor know that you do not need their money in order to continue. The reason why you are looking for funding is to get additional resources so you can grow faster. Make it clear that you are still going to chase the same objectives and goals, it might just take a bit longer. Also, always make sure the investor knows you are talking to other parties (and you should always speak to multiple investors) and that there is an interest in your company. The fear of missing out is something a lot of founders underestimate. Just to repeat, you do not need their money in order to continue business.
What problems/hurdles are you anticipating?
 
The investor is trying to find out if you are good at anticipating and managing the problems/hurdles that may lie ahead. Every business has its struggles and issues and there is nothing wrong with letting the investor know what problems you might foresee. However, support the presentation of your problems with measures to overcome, prevent, or move away from them.
How do you measure your growth?
 
Make sure to have a system in place to track your metrics, objectives, and overall growth. No company will successfully scale and grow if it’s not learning from its failures and successes. You can use online tools that are available or set up a Google Sheet to track your growth. The investor likes to know if you are managing your business in a structured way. Explain to the investor how you are tracking your KPIs, Objectives, and Key Results.
How did you come up with your pricing?
 
The best way to answer this question is to make sure beforehand you have done some benchmarking in the market. You should know what pricing your competitors in the market are offering. In the early stages, you can also speak to beta-users or potential customers that show an interest in your product or service. Simply ask them to give an indication of a price range they are willing to pay for your product or service. Perhaps you have changed your pricing over time and know exactly what the sweet spot is for your customers. Explain to the investor how you got to your pricing so they are reassured it’s not just a random decision.
What is your go-to-market strategy?
 
Explain to the investor what your marketing plans are. How will you position yourself as a brand, how will you approach advertising, are you working with referral offers, user trials, etc. Perhaps you intend to use a sales team or make use of affiliate networks to reach your audience. The investor likes to know how are you planning to go to market and why did you decide on this strategy?
Why now?
 
The time is NOW! Explain very clear why now is the perfect time for your product/service whatever the reason may be. It could be due to technological advances that now allow you to offer your product/service. It could be that the market has changed now due to political or economical changes. It could even be that there has never been an assembled team as amazing as yours. The investor is trying to find out why he should invest now – what changed or happened?
What is your vision, your true North?
 
Metaphorically speaking, your North Star is your mission statement. It’s a fixed destination that you can depend on as the world changes around you. What is the dream and mission you and your team are working towards. Having a North Start also helps to set a future goal for the entire team to work towards and creates purpose for everyone working towards this goal. The investor likes to know your North Star.
What milestones will you achieve with this financing?
 
The investor is asking, “if I give you this money now, where will it take us?”. When you are setting up a 12-month plan with clear objectives you know where you’re going. It’s just a matter of resources you need in order to get there. Always make sure to draft up an initial financial plan to not only explain to which milestone you will get with the investment, but, to also show to the investor how their investment will be spent to get to that milestone. Hone in on the parts the investor would like to know in terms of objectives. For example, generating X amount of revenue, or, the investment will help us to build enough traction for our next investment round. Let the investor know that you are raising this money to reach specific milestones to continue to grow.
When will you be profitable?
 
If you are already profitable just say so and give your MRR number. If you are not yet profitable, do not go into a full explanation of why not and that perhaps you are expecting at least $X from this or that client. Just say that you are not profitable yet, but, expect to be so by [insert date].
What kind of companies are natural acquirers for your business?
 
Your business will fall under a certain category or industry in which bigger players might show an interest in acquiring your company. You know your market and you know the top players in that market. Give the investor an idea of what kind of companies are natural acquirers for your business. You could give some names supported by examples of how they perhaps acquired similar businesses like yours. Be confident in why you think they will show interest over time and excite the investor for such a possible outcome in the future.
What advantages does your competition have over you?
 
If you’re just starting out with your business the biggest advantage your competitors might have over you is that the competitor is already established in the market. They have customers, they have brand recognition, and they probably learned a lot in the process of growing their business. Explain to the investor how you do identify some advantages the competition may have, but, make sure they don’t sound too threatening. Also, let the investor know that your competitive advantage (secret sauce) makes you confident you don’t have to worry about the competition too much. You are going to gain traction and grow regardless of the advantage the competitor may have.
What is the company’s social media strategy?
 
How are you going to target your customers/users on social media? Will you be automating posts every week? Will you be publishing engaging videos? Will you use ads or host live webinars? There are many different strategies you can implement for your social media channels. Fact is, it is a valuable channel to reach your customers as a lot of time is spent on social media. However, there is also a lot of noise on social media, so how will you make sure to stand out? Explain to the investor what your strategy is, why you decided on this, and how you plan to monitor it.
What kind of advertising will you be doing?
 
What channels will you use for your advertising? Will it be on LinkedIn, Facebook, or Reddit? Or will you use more traditional advertisements like newspapers or radio? Will you use any retargeting ad strategies for your website visitors? The investor likes to know how you are planning to use some of the funds for reaching your customers. There are many different ways to set up your ad strategy so make sure you find the right one for your business. Explain to the investor what your ad strategy is and why you chose it.
What are the company’s three-year projections?
 
It can be difficult to project a three-year plan as you’re not sure what will happen in the future. However, the investor likes to know if you have a clear vision for where you want to be in three years from now? You don’t have to go into full details on how much revenue you will have or how many customers. But, you can explain to the investor how you project the growth of your company, the marketshare you hope to have, and the position you will be in to take some next big steps. Keep it short and clear and don’t go into too many details until the investor specifically asks for it.
What are the key assumptions underlying your projections?
 
The investor likes to know what assumptions you have for your projections. If you planning to make X amount of revenue, you probably have some assumptions about the market potential you have. You can’t have projections based on guestimated assumptions so make sure to do your due diligence and have some data to back this up. Explain to the investor what your key assumptions are and how you came to those assumptions.
What are the key metrics your team is focused on?
 
Every team (department) should have key metrics to track. For Biz Dev it can revenue, churn rate, or conversion rate. For marketing teams, it can be ad conversions, website visitors, or post impressions. You should have at least three key metrics to track per team (Biz Dev, Marketing, Product Development, etc.). You can explain that as a team you have three key metrics to track which are a combined outcome of all teams. Also, make sure to explain to the investor how you are tracking these metrics.
What are the key metrics that the management team focuses on?
 
Management should focus on almost all metrics within the business to monitor growth and productivity. The management team should not only track commercial metrics, or technological metrics, but also operational metrics. Think about team satisfaction KPIs, working capital metrics, or income sources. Make sure that you can explain to the investor exactly what metrics you are tracking as a management team, why, and how you are monitoring them.”
How do you track your metrics?
 
First of all, explain to the investor what goals you have defined for which you are measuring your KPIs. You should have an understanding of leading and lagging indicators and decide on what KPIs to set. Don’t try to measure every little detail but do make sure to have clear performance indicators to measure. You can measure your KPIs in your OKR tracking sheet (if you set one up) and define them as Key Results. Or you can have a separate file in which you track and update your results. Don’t explain how you are going to achieve your results as this is not what is being asked. The investor likes to know how you are tracking your metrics.
How do you track your objectives?
 
Set up an OKR tracking sheet and make sure you define clear objectives, key results to meet the objectives, and initiatives to take in order to reach your key results. The investor likes to know if you are capable of planning and managing your business according to a defined planning/strategy. Make sure to set up a concrete plan and share your key objectives with the investor for your upcoming quarters.
Is there anything else we should know about your strategy?
 
Sometimes this question is asked when the investor can’t come up with any further questions during the meeting. Use this moment to recap bullet-point wise the strengths of your strategy and what makes your business unique. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team.
Have you raised funding?
 
How much money have you raised so far? If this is your first time raising the answer is easy. However, you may have raised some funds from friends and family, through a startup program, or angel investors that signed a convertible note. The investor likes to know in what stage the company is raising funding.
Who participated in earlier rounds of fundraising?
 
The investor likes to know who participated in your last investment rounds. Are they angels or VC’s? Are the local or abroad? Explain in a short clear answer who participated in your last funding round.
What round are you raising?
 
There are various rounds for which you can raise capital. The strucuture is pre-seed, seed, series A, Series B, Series C, etc... If you just started out and have not raised any funding, you are pre-seed. If you got an early angel on board and need some more capital to prove your scalbility, you are in your seed stage. Let the investor know what round you are currently raising.
How much are you trying to raise now?
 
Don’t go into a whole explanation – just give the number we are looking to raise [insert amount].
How much is your company valued at?
 
If you don’t know exactly how valuations work make sure to read up on this. When this quesiton is asked the investor typically refers to your “pre-money valuation”. Don’t just throw an exact number out there because investors will remember and stick to it. Give a range, an indication that lies between $X and $Y. It is up to you to later on negotiate on the investment terms which includes the valuation. Since the valuation of your company defines how many shares the investors are getting, they will try to get a lower valuation, while you are trying to get a higher on to hold on to your precious shares.
How much of a stock option pool is being set aside for employees?
 
The ESOP is something that typically will not be introduced until your Series A. The ESOP is used to attract talent that usually expect a higher salary but by offering share options they now show interest. Some professionals will work for a startup with a lower salary if they are able to enjoy the fruits of labor when the company IPOs or exits. Usually 10% shares are set aside each round starting from your series A and are to be offered to key team members to attract and retain them. The investor likes to know if shares are set aside already or if this still needs to happen.
Do you prefer debt or equity?
 
Explain to the investor if you are looking for a debt or equity investment. Debt refers to a convertible (or SAFE) note, which is basically a loan you take. The note will be offered with a conversion price, meaning that once your company reaches a certain valuation, the loan is converted into equity. Convertibles are often offered with a discount on the conversion price so the loan provider gains more shares once the note converts to equity. Notes are typically faster to be drafted and agreed upon as there are no in-depth additional shareholder agreements to be made. It involves no lawyer or a notary to be part of the process, and the investor has no ownership of shares until the note converts. When you offer equity in return for an investment, you are directly offering shares and company ownership to the investor. This means that additional terms need to be discussed, agreements need to be documented, and a laywer and notary needs to be part of the process. Giving equity is a longer process which will take a lot of your time and focus. If you are in a pre-seed/seed stage a convertible would make most sense. If you are planning to raise a few million in your series A/B/C, expect the investor to want equity straight away. There are always expections where the VC might accept a convertible note as they want to move forward fast and make sure your startup keeps its momentum. Or when an investor likes to aquire a bit more shares at a lower price right before a new financing round, IPO, or M&A.
Will existing investors participate in the round?
 
The investor is trying to figure out if your current investors are willing to put in more money this round. The reason why this get’s asked is to verify how many investors will be part of this round. But, it also clarifies if the current investors see the potential in your company to invest even more of their money into it. Let the investor you are speaking with know if your current investors are willing to follow-up on their investment or not. If one of your investors is willing to even take the lead in this round, even better, make sure to communicate this.
What are your terms for raising this round?
 
Don’t go into term discussions until you have an official confirmation that the investor is willing to particiapte. Good practice is to ask multiple investors for their terms sheets and compare. You can use the terms sheet of others to negotiate a better deal. If possible, always get multiple investors to show interest so you are in a position to negotiate for the best terms.
How does the cap-table look?
 
You should have a cap-table available to share with your potential investor. You don’t have to send this over, but, you can screen share for example and explain who owns what. Sometimes a verbal explanation that is clean and clear works fine too. The investor just wants to know who owns equity already, who has right to any future equity, and how much room is left for future investors to come on board.
What assets will be invested in with this capital?
 
This is as much of an funding question as a strategy question. Don’t go into an investment meeting with investors if you do not know how you’re planning to use the investment you’re raising. You should know exactly how much you are going to spend on what resources in order to reach your quarterly milestones. You don’t always have to go into full details. Simply saying X% will be spend on sales, X% on product development, and X% on marketing will do. You are raising capital to get to the next level of your business so you should be able to explain how the funding will be used to get there.
What if you don’t get all the money you are asking for?
 
Never ever say, I don’t know or we won’t make it. It is extremely important to let the investor know that you do not need their money in order to continue. The reason why you are looking for funding is to get additional resources so you can grow faster. Make it clear that you are still going to chase the same objectives and goals, it might just take a bit longer.
What are the biggest risks to my investment?
 
In 2019, the failure rate of startups was around 90%. So how big is the risk they are taking to invest in your startup….pretty big. So its good to make the investor feel at ease with your answer. You can explain how you surely anticipate some hurdles to overcome, but, you and your team are the right people to overcome this and become successful. You can even reply in a lighthearted way by saying the biggest risk to your investment is that you did not invest more now and won’t realize it until we become the next unicorn startup [insert laugh].
When do you expect you will be conducting a follow up round of fundraising?
 
The investor is interested to know when you are expecting to grow in company valuation. Every time you raise money the valuation of your company goes up, and so does the price per share (unless there is down-round – not good). The investor might also want to set aside funding to follow-up in any planned future rounds. You should think about when you would be ready to raise another round of funding and where that funding needs to get you. If you are not sure yet when you are planning to raise your next round, simple say so or give a range indication.
What milestones will the financing get you to?
 
This is an important question to answer clearly. The investor is asking, “if I give you this money now, where will it take us?”. When you are setting up a 12-month plan with clear objectives you know where you’re going. It’s just a matter of resources you need in order to get there. Always make sure to draft up an initial financial plan to not only explain to which milestone you will get with the investment, but, to also show to the investor how their investment will be spend to get to that milestone. Hone in on the parts the investor would like to know in terms of objectives. For example, generating X amount of revenue, or, it will help us to build enough traction for our next investment round. Let the investor know that you are raising this money to reach specific milestones to continue to grow.
How else do you hope an investor will help beyond money?
 
Investors can bring a lot more to the table than just a bag of money. Think about how you could use the investors global network to aquire new customers. Or, could you be introduced to their portfolio companies for strategic partnerships. Usually investors have a big strong network that could be of great value, don’t be hesitant to ask. The investor gets the opportunity to be part of your journey, they should put in some work to help you turn it into a success.
How long can you go before funding?
 
The reason why you are looking for funding is to get additional resources so you can grow faster. But, the reality is that money is needed to pay for the resources needed to move forward. The investor likes to know how much money is in your bank and what your runway is. This basically sets a deadline on when you would either need to make enough revenue to keep the lights on, or, this is the time you need to have the investors money in your bank account.
What is the company’s desired pre-money valuation?
 
As mentioned in the previous answer, don’t give an exact number! Instead, give a range between $X and $Y so you leave room for negotiations later on when you are discussing your investment terms. You can use benchmark (compare) to other players in the market to let the investor know how you got to that range.
Will existing investors participate in the round?
 
So, this depends on if you have existing investors already? If you do, it would be good to know for yourself as well if they will follow up on their investment. Make sure to speak to your existing investors about their interest first since they are already invested in your company. Once you know their position you can communicate it to the other investors you’re speaking with. If one of the existing investors is willing to take the lead in this upcoming round make sure to mention that clearly. Often investors will look for confirmation that there is a strong interest from other investment parties.
What is the planned use of proceeds from this round?
 
The investor is asking, “if I give you this money now, what will do you do with it?”. When you are setting up a 12-month plan with clear objectives you know where you’re going. It’s just a matter of resources you need in order to get there. Resources will costs money so you need to figure out where you are going to allocate the funding. Always make sure to have a financial plan ready to explain how you got to your figures. However, you don’t have to go into the full details of your spending yet. You can simply state what percentage will be allocated to what resources. For example, we will allocate a budget of X% of the total investment for marketing, X% for technical development, and X% for business development. Let the investor know that you have a clear understanding of your finances.
When are you looking to close your round?
 
The investor is trying to understand when you are planning to raise another round of capital for possibly three reasons. They like to know when the company’s value will increase, what your growth strategy is to take the company to the next stage, or when to expect a follow-up investment from their end. . Again, don’t pin yourself to a data but give a range of when you would like to close another round. You could also say that you are planning to open your round once you reach your XYZ objective.
Do you have a lead investor?
 
A Lead Investor is usually a VC or Angel who is leading a funding round, while not necessarily being the one investing the most money but, often the one who can contribute the most to the company in terms of time and experience. The investor likes to know if you have found an investor already that is willing to take the lead in this round so they can follow.
Is there anything else we should know about your funding?
 
Sometimes this question is asked when the investor can’t come up with any further questions during the meeting. Use this moment to recap bullet-point wise the plans of your next raise and what you’re planning in terms of fudning. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team.
How much traction has there been on sales?
 
Traction refers to the speed of growing numbers for your business. The investor likes to know how sales have increased over time to get an understanding of the need/interest in your product or service. If you have growing sales figures now is the time to share this information. Simply give a growth rate in percentage and revenue growth number for each month. If you do not have any sales yet you should shift the focus to what has been getting traction (users, usage, etc..). Always talk about positive growth.
What is the annual growth rate in terms of sales?
 
If you have growing sales figures now is the time to share this information. Simply give a growth rate in percentage and revenue growth number year on year. If you do not have any sales yet you should shift the focus to what has been getting traction (users, usage, etc..). Always talk about positive growth.
Total rate of growth for sales?
 
If you have growing sales figures now is the time to share this information. Simply give a growth rate in percentage and revenue growth number since the beginning of your business till now. If you do not have any sales yet you should shift the focus to what has been getting traction (users, usage, etc..). Always talk about positive growth.
Has growth been linear and consistent?
 
Linear growth is constant. Exponential growth is proportional to the current value that is growing, so the larger the value is, the faster it grows. The investor likes to know if the need/interest in your product or service has been growing consistently or if there has been some ups and downs. Explain to the investor how your growth has been over time. Growth can be focussed on sales, user base, development, or any other positive number you can elaborate on.
What has held back your growth?
 
The investor likes to know what it is you are currently missing that could have led to faster growth. Often this leads to a lack of resources, but, it could also be that you are still trying to find the right customer or market fit for your product or service. If you have experienced some slower growth explain to the investor why this has happened (or why you think this has happened). There is no right or wrong answer here, but, do make sure that whatever reason you give is one that can be solved. If growth has not occurred because the need for your product is just not there, neither money nor time will solve that.
Why haven’t you gotten traction?
 
What is wrong with your team, product, or execution? The investor is trying to find out if there is something wrong within the business that led to not having any traction. It could be that your product is not meeting the right needs, or, that your team is not able to sell to the customer. But, it could also be that you spend your time on your technical development or the market strategy and not your commercial growth. Tell the investor what the internal or external reasons there are for not have gotten traction. However, shift focus on the traction or positive numbers within your business that will impress the investor. Major technical developments or an extremely well thought out strategy is time well spent to make sure you will get the traction you need.
What is your user growth rate?
 
This has to do with your user base so don’t take it as a sales question. Give the growth rate of your user base each month or quarter. Support your answer as to why this has been growing due to certain efforts. Also, let the investor know what kind of users grow faster than others. This shows the investor that you track your user metrics and know how to use this information for better targeting.
How did you team scale?
 
This is a strategy question as much as a traction question. You probably scaled your team based on the resources needed to reach certain objectives. The investor likes to know whom you hired and why you had to hire them. If you hired more development team members than sales, your strategy is probably to work on product/service development first. If it is the other way around you probably planned to grow commercially. Explain to the investor how your team has scaled over time.
What early traction has the company gotten (sales, traffic to the company’s website, app downloads, etc., as relevant).
 
Only mention the traction that you can support with positive answers. So, don’t say: we don’t have a lot of paying customers, but, we did onboard a lot of new users. Just say you have a lot of traction on new users. Use this opportunity to sell the company to the investor and excite them on the idea of being part of this. Wow, them with traction that shows a big potential for growth.
Why does your company have high growth potential?
 
Attribute this to a great product, a great team, great customer service, great culture, and the willingness to reinvest profits in innovation, technology, and long term growth. Elaborate on all reasons why your business is the one that has high growth potential, but, do not go into too many details. The investor is looking to get an overvall answer that justifies why they should invest.
How can the early traction be accelerated?
 
The investor is trying to find out what it is you need to gain more traction early on. This can vary from connecting with the right network of people, money for resources, or adopting the right marketing strategy. Don’t always say it is just money you need to get more traction as this shows a weakness in your product/service and team. Explain a combination of things you need to accelerate your traction.
What has been the principal reasons for the early traction?
 
The investor is trying to find out what it is that has led to your traction. Is it your team, product, or marketing strategy? Always starts your answer with having the right team (the team is key), followed by meeting the exact needs of your customers through your product/service that were targeted by applying the right marketing strategy. If you gained traction through a viral post, network connections you have, or any other reason, explain this of course as well.
What are the factors that limit faster traction?
 
The investor likes to know what it is that is missing within your business to gain more traction. Often this answers to a lack of resources, but, it could also be that you are still trying to find the right customer or market fit for your product or service. There is no right or wrong answer here, but, do make sure that whatever reason you give is one that can be solved. If traction is just slow because the need for your product is just not there, neither money nor time will solve that.
Did you participate in any startup programs?
 
Techstars, YCombinator, or 500 Startups offer amazing acceleration programs for your startup. You will receive some early investment and get the support your need to accelerate your startup through available knowledge, mentorship, and valuable workshops. Less than 1% of the thousands of startup applications each year get accepted into these programs, so if you got accepted, they must see some good potential. Let the investor know you have participated in any of these programs.
Is there anything else we should know about your traction?
 
Sometimes this question is asked when the investor can’t come up with any further questions during the meeting. Use this moment to recap bullet-point wise the traction you have gotten. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team.
How big is the market opportunity?
 
The opportunity is HUGE and you are planning on getting a good portion of that market. Make sure to excite the investor with the potential in the market. With your answer you are not selling your business idea, you are selling the potential of such an idea in the market. You really need to let the investor know that if they do not invest they will be missing out on enormous potential returns.
What is the actual addressable market?
 
So the market opportunity is huge, how much of the huge market potential can you realistically capture? Again, it is just a confirmation of understanding how big the market opportunity actually is. Explain some market figures of the addressable market and hone in on how you will grow your market share over time. Make sure to support your answers with reasons as to why you believe this will be true. You need to excite the investor with not just the potential but also the confidence you have in capturing a big market share.
What percentage of the market share do you hope to get?
 
Give a simple straight answer but keep it as a range between X and Y. Support your answer with reasons why you believe your business will capture such a market share.
Why is this the right time for this product or service?
 
The time is NOW! There has never been a better time to do this and we are seizing the opportunity. Explain very clear why now is the perfect time for your product/service whatever the reason may be. It could be due to technological advances that now allow you to offer your product/service. It could be that the market has changed now due to political or economical changes. It could even be that there has never been an assembled team as amazing as yours. The investor is trying to find out why he should invest now – what changed or happened?
Who are your competitors?
 
Make sure to have done some research on your competitive landscape and identify at least three of your main competitors (direct/indirect). The investor likes to know who else is in the market that competes with your business. Explain clearly whom you are competing with but also how you are going to compete with them. What are their weaknesses and where lie your strengths to be able to compete with them in the market?
What are your strengths and advantages over your competitors?
 
Make sure to have done some research on your competitive landscape and identify at least three of your main competitors (direct/indirect). The investor likes to know who else is in the market that competes with your business. Explain clearly whom you are competing with but also how you are going to compete with them. What are their weaknesses and where lie your strengths to be able to compete with them in the market?
What are your weaknesses or disadvantages in the market?
 
Every business has it’s weakness, but, don’t make the investor think that you have a weakness that may threaten the business growth. You can say that one weakness is having to establish brand recognition (but we will cover this by doing XYZ). Or, that competitors have an established user base already (but we will gain more traction through XYZ). Make sure that whatever answer you give there is a solution to overcome it.
What barriers to entry or scale are there for you?
 
There are various barriers that your business can encounter such as access to distribution channels, government policies, or capital requirements. The investor is trying to find out if there will be anything that could prevent the company from entering the market or growing within the market. Explain to the investor what barriers you may foresee (if any) and how you are planning to overcome them.
Where is the competition letting down customers?
 
Using review sites you learn a lot about how customers feel about a certain company or product. By studying the feedback of customers about your competitor’s product you will create insight into where there could be room for improvement. For example, customers might complain about the response time of their service, or, the complete lack of it. They might mention how certain aspects of the products/service is not functioning properly, or, not as advertised. By reading through competitor reviews you will know only know where they are letting down customers. It will also provide you with information on how to strengthen those points for your business. Explain to the investor how the competition is letting down their customers and how you know. Also, let the investor know how you are going to better on those negative points.
Why haven’t your competitors done this yet?
 
Because they don’t know what you know. Or, because your product has proprietary technology that makes it possible. Or, the time was never right and you are seizing the moment. Let the investor know why your competitors have not jumped on your idea yet. And, if they have, let the investor know how it is different from what you will offer. Reassure the investor that you have something the competitor does not, and that’s why they are not doing it yet.
How much money could you make in one year (in 5 years)?
 
How much of the market are you going to capture and how will that result in revenue? The investor likes to know if you have projected your financial future for the business and how you envision your growth. At least for the first 12 months, you should be able to make a solid projection. After that, you are making a projection, backed by assumptions and a lot of guesswork. However, if you know how to answer this properly, structured, and clear, the investor will have more confidence in your business. Just give a clear short answer on projected annual growth in percentage and the expected revenue that comes with it.
Who might become competitors?
 
Some companies may not be your competitors just yet, but, as the industry evolves so do the businesses within it. It might be that some businesses will evolve into direct/indirect competitors over time. It is of course a difficult to question to answer because it requires some projected thinking. However, it is always good to think about how your market will evolve and what to expect from the business within that market. For example, a lot of businesses adjusted to the COVID-19 situation. Restaurants that did not deliver food at first, now deliver food to people. Where some companies delivered in-room hardware equipment for meetings and communication, are now selling primarily video conferencing software. Of course, a scenario like COVID-19 is impossible to predict. But, it does make you think about how businesses can become competitors as the market changes.
Are you focussing on a global or specific market?
 
Bigger isn’t always better. Especially if your startup just started and you still have a lot of discovering to do. The investor likes to know how you are approaching your market. If you are selling SaaS, you can focus on the global market since it can be sold online. However, this does not mean you should target the world straight away. Often it’s better to focus on just one specific market and grow into more markets after. If you have to ship products it might be best to not try and serve a global market as it brings additional distribution, tax, regulations, and other challenges. Let the investor know what your plans are for entering the market and approaching markets globally.
What are your plans for market expansion?
 
Similar to the question above, how are you planning to enter the market and expand into it. The investor likes to know what your starting point is going to be and how you are planning to grow. Bigger isn’t always better. Especially if your startup just started and you still have a lot of discovering to do. Often it’s better to focus on just one specific market and grow into more markets after. Whatever your plan is, make sure to let the investor know you have a clear strategy.
How did COVID-19 affect the market you operate in?
 
Sometimes this question is asked when the investor can’t come up with any further questions during the meeting. Use this moment to recap bullet-point wise how the market looks and how you are planning to approach it. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team.
What intellectual property do you own?
 
Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The most well-known types are copyrights, patents, trademarks, and trade secrets. The investor likes to know if there are any resources uniquely obtained or developed by your business that only you own the rights to. Let the investor know if you have any proprietary technology, trade secrets (without sharing them of course), or copyrights to your product/service.
Who developed any intellectual property owned?
 
This is important for the investor to know because it also defines who might want to claim rights to it. Sometimes, a team member can create an IP but it ultimately is owned by the business. In other cases, the business never legally and officially claimed the ownership which may cause issues later. Let the investor know who developed the IP, but, also let them know who owns it. If you do not own it legally yet, make sure to inform the investor of your plans to do so as soon as possible.
Have any employees or partners have left who may challenge these rights?
 
This is important for the investor to know because it defines if there will be any legal battles to fight in the future if employees or partners want to claim rights to their IP. Let the investor know who developed the IP, but, also let them know who owns it. If you do not own it legally yet, make sure to inform the investor of your plans to do so as soon as possible.
Are there any additional patents pending or planned?
 
The investor is trying to figure out if there is an IP in the making or processing that might be of great value to the company. A patent is a form of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of years in exchange for publishing an enabling public disclosure of the invention. Let the investor know if this is the case without going into much detail on what it is. Just explain what kind of patents you have filed and the purpose of them.
How are any current intellectual assets owned?
 
Are your IPs formalized with documentation in order to defend the rights to them as a business? Let the investor know how your IPs are documented and agreed upon to own full rights to.
What comfort is there that the company’s intellectual property does not violate the rights of a third party?
 
Always make sure to look into the rights of open source technology and how you can use it to create your own technology to which you claim IP. The investor likes to know for sure if you are not getting into any legal trouble down the line if open source technology was used to create your IP. Explain to the investor how you have done your proper research and reassure that this will not be an issue.
How was the company’s intellectual property developed?
 
Explain the process of developing your IP and how you formalized the registration and documentation of the IP. The investor likes to know what the process was for developing the IP. Often this is asked as a double-check to see if you truly developed the property.
Is the intellectual property properly owned by the company, and have all employees and consultants assigned the intellectual property over to the company?
 
Sometimes, a team member can create an IP but it ultimately is owned by the business. In order to formalize this the team members that developed the IP need to sign off the intellectual property to the company. You can draft up an agreement and formalize it between the team member and the company. If you want to make sure you are covered for any future legal issues you should formalize the agreement through a notary/lawyer. If you file a patent, make sure it is filed under the company name in order to claim the rights to it. The patent can state the names of the IP developers, but, the ownership is with the company.
If the intellectual property was developed with open source technology, how does the company have the right to use the technology?
 
The investor is trying to find out if the company has unique technology that can’t be reproduced easily. If this is the case, the investment opportunity becomes more valuable as it can truly set a company aside from others in the market. Of course this would only apply if you have differentiation technology to others. When it comes to a developed platform or App it’s not a real differentiator as it can easily be copied by others. However, if you are dealing with unique data to train for example Artificial Intelligence or Speech Recognition Technology that is part of of your App or platform, this is definitely a differentiator. Data is commonly unique and can’t be copied or reproduced by others. Developed hardware that uses proprietary technology that was build in-house can also a big differentiator as it’s being produced with non-market available components. Or complex build API solutions that connect in various ways unlike any other solution in the market. If you filed any patents or own them already, definitely mention them now.
Are any of the founders covered by noncompetes or intellectual property agreements that overlap with your project?
 
Always make sure to look into the rights of open source technology and how you can use it to create your own technology to which you claim IP. The investor likes to know for sure if you are not getting into any legal trouble down the line if open source technology was used to create your IP. Explain to the investor how you have done your proper research and reassure that this will not be an issue.
Is there anything else we should know about your intellectual property?
 
Sometimes this question is asked when the investor can’t come up with any further questions during the meeting. Use this moment to recap bullet-point wise what IP you own and how you covered the documentation for it. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team.
How much revenue have you made so far?
 
The investor likes to know how much revenue has been generated to date. This can be answered with a simple figure on how much was made. If you do not have any revenue simply say “none”. Don’t try to defend your answer with reasons why it is low, high, or missing. The investor will follow-up on your answer with questions anyway.
What is your burn rate?
 
Your burn rate refers to the costs per month you have for your operations. This includes your office, salaries, etc.. and is an indication of the investment or revenue you need to continue operations. Always make sure that you are able to say exactly what your burn rate is and know where the costs are coming from. Nothing raises more red flags for an investor than a founder asking for an investment, but not knowing how he spends it.
What are you spending most money on?
 
You should know this answer and be able to answer straight away when asked. Let the investor know if you are spending most on salaries, marketing, your office, or whatever it is that is most costly. This gives an indication of how you run your operations. If you are spending most of your burn rate on your own salary, this is a problem. If you are trying to grow commercially but not enough money is spent on sales efforts, this needs to be adjusted. Give a clear answer and support it with reasons as to why most money is spent on this resource.
How long will it take to become profitable?
 
The investor likes to know when you are planning on making some profits. You should have financial planning in which you determine your runway, break-even point, and point of becoming profitable. Let the investor know how long it will take before you start making profits. It could be that you won’t make any profits with the current investment round. But, you should still know when you are planning to make profits even if it is after the second round of investment. The investor is trying to understand if you know when your business is going to become a profitable business.
How will these funds be allocated?
 
Always make sure to answer this question directly with a clear projection on how the investor’s money will be spent. If you were giving someone your money, you probably also like to know what it is being spent on, and why? So please make sure to have this answer ready. You don’t have to go into the financial details of it all, but, at say we will spend X% on Biz Dev, X% on Development, and X% on Marketing. Just know where you will be spending your money before getting on a call with the investor.
How much will be spent on overhead versus expansion?
 
The investor is trying to figure out how you will allocate the funds in the best way possible. Will most of the money be used to just keep the lights on and continue operations? Or, will you allocate funds to expand the business into new markets and grow commercially? If you have done some financial planning (please do) you should be able to let the investor know how much money is spent on overhead VS expansion.
How much will be spent on founders’ salaries?
 
Sometimes founders like to reward themselves graciously with a high salary if they raise investment. However, every penny is needed within the business to make it grow. Don’t benchmark Silicon Valley CEO startup salaries to your salary if you are raising funds from investors in Europe or Asia. Stay realistic on what you need in order to not worry about your private monthly costs and keep the focus on the business. Your business needs to grow, you need the resources to grow it, and nothing should be more important than that. In the long run, you are better off taking less salary now, so you can reap the fruits of your hard labor later. Let the investor know what your salaries are and why you came to this amount based on your research or needs to keep full focus on the business without additional worries from your private financial situation.
How much is your marketing budget?
 
Again, your financial planning should show exactly how much money is being spent on marketing. Your marketing efforts are needed to grow commercially so this should align with your overall strategy. You can start with a lower budget and grow over time. However, you should be able to explain to the investor exactly how much you’re planing to allocate to marketing, and why. Never just throw numbers without having any support to back up those numbers. Let the investor know how you plan for your marketing efforts and the budget you need for that.
What profit margins are you operating on?
 
The investor is trying to figure out if you know what your margins are on the products/services you sell. This gives an indication of how many products/services you need to sell in order to become and stay profitable. Make sure you understand your margins clearly and know how your margins are determined. Give the investor a clear figure and explain exactly how you came to that number.
What are your unit economics?
 
The unit economics for your startup is as the breakeven analysis is to the traditional businesses. It is reflected in the direct revenue and the cost associated with your business model but expressed on a per-unit basis. Let the investor know exactly what costs are involved for each product sold and the revenue that come from it. You should be able to explain to the investor what costs and revenue are involved for each unit sold.
Who handles accounting?
 
Your startup will most likely be managed by someone internally for the accounting activities. This could be you as a founder, or, someone who has strong skills in financials. Some startups prefer to use an external accountant or hire someone to do the accounting. Whoever it is, let the investor know who is handling the account and why you chose this option.
How will scaling impact profit margins?
 
It could be that by scaling you diminish or increase your profit margins. There is always a direct impact from scaling your business to your profit margins. You should know how your profits are impacted by scaling. Will your profits increase in the margin as you distribute at scale? Or, will your profits diminish by having more customers since you have to allocate more resources to serve them? Explain to the investor that you know exactly what will happen to your financials once you scale.
How much are your personal expenses each month?
 
The investor likes to know how many personal expenses are being paid for by the company. For example, during the COVID-19 situation, a lot of people are working from home. So, in order to accommodate the expenses that are being incurred by the team at home, the company could cover phone expenses, internet subscriptions, or equipment to work from home. What the investor does not approve of is private dinners, personal purchases, or any expenses that are not directly related to the company’s benefit. Let the investor know how you are planning on, or are currently, covering personal expenses.
How much burn will occur until the company gets to profitability?
 
The investor is trying to figure out the timeline to reach profitability. In your financial planning, you should know when you are planning to reach this point. Let the investor know how long it will take, why, and how you are planning to get there. Make sure you can clearly explain this timeline as it is important for the investor to make a decision on whether or not to invest.
What are the key assumptions underlying your financial projections?
 
Primarily, future financial projections are based on assumptions. Assumptions are usually based on previous experiences, market evidence, or available data by third-parties. The investor likes to know how you have developed your financial planning and what the numbers are based on. You are being tested knowing your numbers and being able to defend them with assumptions you have researched. Of course, your financial planning will most likely adjust over time, but, your first projection was based on assumptions. Simply explain to the investor the main milestones of your financial planning and the assumptions these figures are based on.
What are your per customer acquisition costs?
 
How much does it cost to attract a new customer to become a paying user? It should generally include things like advertising costs, the salary of your marketers, the costs of your salespeople, etc. This can be difficult to answer if you are just starting out your business and are still exploring these costs. If you do not have an answer yet, just tell the investor you are still gathering data on this. If you do know, give a number to the investor and explain how you got to this number.
Is there anything else we should know about your financials?
 
Sometimes this question is asked when the investor can’t come up with any further questions during the meeting. Use this moment to recap bullet-point wise the important financials for the investor rememeber. Elaborate on some points you may have forgotten to highlight, but, don’t go back to the start again. Just make sure you end the conversation with a clear overview that excites the investor to speak with his/her team.
 
 
 

 

 

 

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