Investor Questions for Startups: Everything You Need to Know
There are many investor questions for startups that you should have in mind when beginning the investing phase.3 min read
There are many investor questions for startups that you should have in mind when beginning the investing phase. You'll need to be prepared when you pitch to venture capitalists by knowing what questions they'll ask. Not having reasonable and thoughtful answers to their potential questions will make it unlikely that the business will get funded, as you'll look unprofessional and unprepared.
Questions Venture Capitalists Will Ask Startups
When starting an investor pitch, the capitalists will want a concise and clear overview of how your company operates and what it does. They'll also want to know why it will have a large exit and why it's interesting.
The following are a list of questions that venture capitalists might ask:
- What does your company do?
- Why is your company unique?
- Does it solve a large problem?
- How large is the market opportunity?
- Where is your company headquartered?
- How big will your company get?
You'll also need to show venture capitalists that your market opportunity is growing and large, so you'll need to have the addressable market ready. You should also know over what time period and what percentage of the market you plan to get. Have in mind how you came to the sales of the industry and what the growth rate is. Address why your business has high growth potential.
Founders & Team
Many investors look at the management team as the most crucial part in deciding if they should invest or not. You'll need to show you're dedicated, have domain experience that's relevant, and are passionate. List who the main team members and founders are and describe what experience they have related to the domain. You may not have everyone on your team right now, which is fine, but you'll need to state who else you'll need to add in the future. Express why your team can pull off the business plan, and list the total number of employees.
Let the investors know what is the main motivation of the founders and if there is a possible icon, such as the next Bill Gates or Steve Jobs. You should state how you plan to scale your team over the next year. Would you trust your founders if they had a blank check? This should be based off a credit check and background check that's thorough. Investors don't know your employees or founders, so you need to convince them that your team is dependable and trustworthy.
Let them know if your founders have previously had experience with money and if they're open to any ideas the team has. Are all the members of the founding people currently on board still? Investors will want to know the answers to all of these questions.
Products and Services
As an entrepreneur, you need to articular clearly what your company's service or product is and why you consider it unique. You may be asked why users should pay attention to or care about what you offer. Answer a list of questions about your service or product and list any major milestones for the product. What features of the service or product make it stand out from others? What were the key learnings from the first versions of the service or product? What features have you talked about adding? The investors will also want to see a demonstration of how it works.
Competitors will always be a problem as long as you have a business, and you cannot give the answer that you don't have competitors. This will make it look like your business has a credibility problem. Make sure you have a solid answer for who your competitors are and what it is that gives your company an advantage over the competitors. On the opposite note, you should know what advantages your competitors have over you. How do you compare to other companies when it comes to features, performance, and prices? Are there barriers to entry?
The investors will also want to know how much it costs to get a customer, how you plan to market yourself, and what the long-term value is of a customer. You should know how the company plan involves marketing its services or products. State what the public relations strategy is for the company and if there is a social media strategy in place.
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