Are you ready for the questions investors will ask you after reviewing your pitch deck?
A lot of work can be involved in just preparing your pitch deck, the attachments to send along with it, and rehearsing your pitch. Only you can’t stop there. Putting on a great presentation and sales pitch is one thing. It can be another to successfully field and answer inbound questions from investors well. This is where your ask and funding campaign can really succeed or fail.
Here are some of the questions you may not have already answered in your deck and pitch, and which investors are sure to test you on.
How are you different?
Hopefully you have already differentiated yourself from your tagline, through your SWOT analysis, competitor and product slides. Many don’t.
You have to own something that stands out and have a strong USP. Otherwise, why should anyone invest in your startup over the competition?
What is the one thing you can excel at and defend? Not just this week, but between now and through an eventual exit?
Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Tell me about a time when things didn’t go your way, and how you handled the challenge?
What protects an investor’s investment? There are going to be challenges every single day. Things won’t be easy. There will be many days you are tempted to give up, and it will be a lot easier to quit than to continue. Even if it works, you may have to pull off significant pivots. Most people don’t have what it takes to stick with it. Those who can, will find a way to create value and to deliver investors both the return of their capital, and a return on their investment.
So, how can you demonstrate your grit, resilience, and problem solving in a way that will give investors the confidence they should take a risk on you?
Are you willing to move?
When wondering about the questions investors will ask you after reviewing your pitch deck keep in mind that investors are used to being able to operate locally and hands on. They are used to being able to command aspiring entrepreneurs and startups vying for funding to relocate near them. So, decide in advance whether you are willing to make that move. Who on your team will and won’t be willing to go with you, and how much has to be offered to make the move worth it for you?
Why do you want to do this?
Your why is a huge piece of the funding puzzle. It is your why that will keep you going. It is also what will drive your decisions at each fork in the road and influence how you operate on a daily basis.
Is it just for the money? It is out of a deep personal frustration you have been peeved by for years? Is it because you are uniquely qualified and feel it is your duty?
Why do you think you are uniquely best to execute on this idea?
Ideas are cheap and rarely unique. Even if you don’t see any existing competition in this space, investors will likely see more than one pitch similar to yours this month. They are inundated with choices of startups to invest in across many markets and market segments. It really doesn’t matter if you are first, or cheapest. It matters that you have the best team to execute on this idea.
Beyond grit and passion, why is your team the best? What collective experience do you have in this space? What deep experience do you have in this industry? How about business, startups and scaling large companies in general? Who can you point to on your team, between founders, executives and advisors that are the best in each of these areas?
What is your marketing plan?
As part of addressing the questions investors will ask you after reviewing your pitch deck note that it doesn’t matter if you are the smartest, best connected, most educated, and most technical. It doesn’t matter if you are already the most funded or have a fantastic looking and functioning product that everyone needs. Not if you can’t market it well. All of those other things may make up 10% of your success. Marketing is the other 90%. All of the capital they give you will be wasted fast if you don’t have a great handle on marketing.
So, what is your marketing plan? What channels and strategies will you use? What are your customer acquisition costs? What are your plans based on? Who is your marketing genius and what have they accomplished before?
Who absolutely needs and must have your product?
Nice to haves are risky products and ventures to gamble on. Your marketing will be much more successful, and so will your business, if you not only have an urgently needed product, but also have absolute clarity on ecstasy who your customers are.
What feedback have you received so far?
First when looking into questions investors will ask you after reviewing your pitch deck ask yourself how do you know your product is a great fit? How many people have you received feedback from so far? Who are they? What common threads have you seen in the feedback?
How have you funded this business so far?
Can you show credibility by showing notable investors who have backed your startup in previous rounds? Or can you show grit, commitment and great financial sense by telling them how you’ve bootstrapped and self-funded this venture so far?
How many months of runway do you have left?
How long before you run out of money? What is your monthly burn rate? What is your level of desperation or negotiability?
Who else has committed to invest in this round?
What other investors have pledged to invest in this fundraising round? Who is the lead investor?
Hopefully this post provided you with some perspective as you are looking into the questions investors will ask you after reviewing your pitch deck.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
I cover this topic in detail in the video below titles Questions Investors Will Ask You After Reviewing Your Pitch Deck.
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FULL TRANSCRIPTION OF THIS VIDEO:
Hi, everyone. This is Alejandro Cremades, and today we’re going to be talking about questions investors will ask you after reviewing your pitch deck. Before we get started, make sure that you hit that Subscribe button, and this way, you will never miss out on any of the videos that we roll out every week.
There’s a lot of work that goes into putting your pitch deck together. You really want to put the best foot forward. In today’s video, we’re going to be covering every single thing that is really critical when you get in front of investors, when you’re getting asked all these questions, and when you need to address those questions and concerns in the most powerful way. Again, we’re going to give you this actionable, step-by-step process with all the insights, and with that being said, let’s get into it.
How are you different? You need to do that SWOT analysis so that you understand what makes you different and stand out from everyone else because remember: those investors, for the most part, are also meeting with your competitors. They’ve done their research on the market, and there are certain concerns that are separating them from actually placing that investment, or maybe even investing in your company or in a competitor’s business. Here, you want to understand what is making your business different that is going get them excited to actually put their foot forward and make an investment. That’s why a SWOT analysis is very helpful.
They could also ask you about a time where things didn’t pan out the way that you expected them to be. What this means or what they want to see is how you’re able to execute over time because, at the end of the day, you can have the most amazing idea, but an idea counts for 5%. Execution accounts for 95%.
The market is going to be throwing you obstacles, and you’re going to need to be good enough to adapt to those obstacles. For that reason, your skillset, your expertise, and how you’re applying those to execute on your 18 to 24-months roadmap is going to be absolutely everything. Here, you want to know about a previous experience or event that happened, and you can actually walk them through it. How you thought it was going to go, how it ended up going, and how you put a correction in place so that you could get to a positive outcome.
Are you willing to move? This is another one. The investors like to be hands-on. They like to participate. They like to sit on the board so that they can not only represent the investment but also those people that invested in their fund, so that way, they oversee what’s happening on their money. They’re going to want to be on the board. They’re going to want to help you to bring their network, or whatever that is, but help on the strategy that is going to then be executed by the management team and the team.
In this case, you need to show them that you’re coachable, that you’re willing to bring them on, to work with them, and to listen to them. That’s going to be really important for the investors so that they know that they can make an impact, they can make a difference, and they can oversee what’s happening with their own investment.
What do you want to do with this? That’s another one because your why is everything. In the first place, why did you come up with this idea? How did you come across that frustration? How did you think about bringing that frustration to life, and in a world where you could switch it off and switch it back on again, and you were five years ahead of time. What does that world look like?
What does that world look like if your vision was fully realized, and you need to walk the investor through that with the same colors that you’re having in your own mind? Don’t be afraid to walk them through that why, and again, to help them see that future with the same colors that you’re painting in your canvas inside of your own mind.
Why do you think you’re uniquely the best to execute on this idea? That’s another one because it’s all about your expertise; it’s all about your know-how and how you’re able to apply that for the execution of the roadmap that you have in front of you. The investor wants to know because they’re investing in you, they’re investing in your team, and they want to make sure that you have the right people seated on the right seats of the bus because you may not know your direction.
If you have the right people seated on the right seats of the bus, eventually, you’re going to find that direction toward success. And that’s the reason why they want to understand what makes you unique, what makes you the one, you and your team, to execute and to get their money in so that you can take things to the next level? You want to walk them through your experience, your team’s experience, and how that applies to this specific journey where you’re inviting them to be a part of.
What is your marketing plan? This is a tricky one because typically, what people say is, “Well, we’re going to be using Facebook Ads, LinkedIn Ads, Google Ads. That’s the typical thing. Anyone can do that. Even a monkey can actually raise money to deploy it in those types of channels.
You want to be able to show the investor that you have something unique, a unique channel that you have access to. It could be business development deals; maybe you’ve developed an expertise on SEO or content – something that organically is going to attract the customers that are interested in your product or service without having to put a substantial amount of money in order to deploy. They like that organic growth, and you need to identify what your unique advantage is, your unique competitive advantage that is going to give you an edge over those other competitors that perhaps are just thinking about deploying money in Google Ads, Facebook Ads, or LinkedIn Ads. You need to be different.
Who needs and must have your product or service? At the end of the day, as human beings, we only have a certain amount of time and a certain amount of attention to use certain things or buy certain things, so you want to walk the investor through the actual reason why customers need to have either your service or your product for whatever problem that they’re coming across, and you need to walk the investor in a very clear way as to what that looks like, what is your addressable market, and how you’re going to be getting in front of this.
What feedback have you received so far? Many entrepreneurs make the mistake of just having an assumption, having an idea, thinking, “This is going to work. This is going to be beautiful,” and then they put it to market, and then it’s a flop. That’s why you don’t want to build your company based on assumptions. You want to build your company based on data that you’re capturing from either customers or potential customers.
Never think about launching an initiative without capturing those data points, whether it is via a quantitative approach, where it’s data that you’re getting from the usage of your product or your service, or a qualitative approach, which is essentially you getting on the phone with all these people that are customers or potential customers. So, this is your time to shine. This is your time to walk the investor through all the great data points and the feedback that you have been receiving from your customers or potential customers that are waiting to purchase your product or service.
How have you funded your business so far? They want to know how you were able to maintain the lights on. Who financed this thing? Here, ideally, you can tell them that you’ve invested a certain amount. Maybe your family also pitched in a little bit so that they can get to see and feel the commitment that you have for the long-term success of this company.
When they don’t see that you have skin in the game is probably going to be a turn-off, so they want to know that you’re in this for the long-run and not just to make a quick buck and that there’s actually a necessity for you to be able to succeed because your own money is in or your family money is in.
How many months of runway do you have? This is a question they want to know because runway is how much time you have for the business, as a plane to take off before you’re actually running out of runway, and you’re going to go and crash?
Here, typically, you want to give yourself anywhere between six to eight months of runway before you’re actually engaging with investors. When you have less than six months, the clock is ticking; they’re probably going to negotiate you down, pull some tactics that are not really nice. So, the more you have, the better – the better for your conversations.
I think that you never want to hide the runway that you have. You always want to have integrity and honesty and come across authentically with whatever that is, whether it’s three, four, five, whatever amount of time that you have left with money in the bank to cover cost.
Who else has committed to invest in this round? Or who else are you speaking with? They want to know who else is potentially looking at it and who is interested? I always say that investors are like sheep. They go where everyone else is going. You’re going to find that you’re in the sea with all those sharks around you swimming. Then when one bites, everyone wants to bite.
What you want to do is to be smarter than them. You don’t want to disclose names. You want to talk about the interest that you’re getting and some of the ongoing discussions, but without going too deep into it, or perhaps, disclosing the names, or otherwise, they may use that against you. The less information around this, the better so that you can create that sense of urgency, fear of missing out. If I don’t jump in, someone else is going to jump in. The venture world is very small. All of the investors know each other, so you’ve got to be very careful with this.
Hit a Like to this video. Subscribe to the channels so that you don’t miss out on all the videos that we’re rolling out every week. And leave a comment below and let me know what you’re up to and some of the questions that you’re getting from investors, as well. If you’re raising money, shoot me a note at email@example.com. I would love to help you out with your capital raising efforts. Thank you so much for watching.