How to find startup investors
How to find startup investors… one of the most common questions we get asked at SeedLegals. So, here’s the c...
You’ve nailed your pitch and you’re finally on the ‘thank you’ slide. Now what? What questions will investors ask you after your pitch?
We’ve spoken to venture capitalists and angel investors to gather the top ten questions to prepare for when you pitch and when you have your first meeting with investors. We’ve also explained why investors ask these questions and how best to answer to make a good impression.
In this article:
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The questions investors ask when you pitch will vary, so we’ve listed the most common questions along with some more unusual questions. As part of your preparation, it will be helpful for you to think about the answers to all of these:
You know what you do (hopefully) but how good are you at communicating it simply and concisely? It’s common for investors to still feel unclear about what problem a company solves by the end of their pitch. They end up having to ask for a more straightforward explanation after the pitch. That’s because a lot of founders talk about what they’re doing more than the problem they’re solving.
Save your investors’ time and make sure you explain what you’re offering during your pitch as if you’re talking to your potential customers.
From the start, explain your company simply: We are X and we solve X problem. And then make it super clear why your customer will want your product. I want to see a pitch presented as if I was a consumer of the product rather than an investor. If I can see you have a compelling consumer proposition then I want in. If you can’t explain it as a consumer might want it then I won’t want to invest because if you can’t explain it to me, you can’t explain it to anyone and no-one will want it. Explaining things easily to a mass audience is very important to make sales.
CEO & co-founder,
Some of the questions investors ask are aimed at gaining a better understanding of who you are, what your mindset is like and how well you understand your market. Make sure you know what your challenges are and how you plan to solve them.
I like to ask this question because I’m looking for a founder to demonstrate self-awareness and their ability to assess the market they’re operating in. If someone doesn’t think they will have challenges, it usually isn’t a good sign. The best way to answer is to outline some clear issues, and describe, step by step, how you’ll solve them.
This is a pre-seed stage question. When you raise your first round, you’re probably still at the idea stage so you won’t have much proof from the market yet. Investors want to understand what you’ll prove and test with the capital and resources from the raise.
For example, before Airbnb existed, there wasn’t proof that people would rent a room in someone’s house short term (or that owners would agree to host guests in their home). Airbnb needed to test their product in the market to prove that it would be adopted and become lucrative.
Hopefully, once you’ve proven that you’re solving a large and lucrative pain point, the company can raise more capital to bring the product to market. This isn’t achieving product-market fit but is instead proving the business premise. When you’ve proven this, you can raise more money from later-stage investors.
This is a common question and a tough one to answer because it’s difficult to judge where you’ll be in five to seven years. Things change. You can never be sure. But from the investor’s point of view, it’s not about being sure – it’s about demonstrating that you have a clear vision and goals, understanding that things might shift but you know what you’re trying to achieve.
Your personal objective is the seed of your company. If you’re fully committed, clear and believe in your solution to a defined problem, it will drive the success of your entire company. Use a question like this as an opportunity to inspire your investors.
When they ask about your biggest weakness, the investor wants to know more about who you are and explore whether your values align with theirs. In your answer to this question, think about how you can express self-awareness, humility, who you are and what you value.
This is a common question because the people you hire have a massive impact on your company’s success (or failure). Investors want to know they can trust you to hire the right people.
Investors want to know that they can trust your leadership team to execute your ambitions successfully, especially during early-stage raises before your company has plenty of achievements to show. Make sure you’re prepared to explain the experience, industry knowledge and expertise of your team members. You can also talk about your advisors and mentors and how they are helping you.
I always ask about the team because I want to have a good understanding of the industry knowledge they have. I’m looking for them to demonstrate that the people behind the idea understand their industry and market. It’s important for me to trust a startup’s leadership team to achieve success before I make angel investments, and I know it’s the same for other investors I speak to daily.
Investor Partnerships Manager,
It’s important to understand potential risks before you pursue your venture. Investors might want to know about:
Make sure you understand all the risks your business might face and be prepared to explain how you’d mitigate those risks.
Investors might not ask about this when you initially pitch, but by the first meeting, you should be prepared for investors to ask about the following:
Investors will also ask targeted questions about your business. They want to understand if you know your business in fine detail. They’ll ask precise questions about aspects of your business model and question your assumptions. They want to know that you’ve truly thought things through and that you have a deep understanding of your venture. At the pitch or during the first meeting, investors might ask about:
Getting ready to pitch? We’ve listed our top five tips below. For more detail and unique insights from investors, read our article How to pitch to investors and download our free pitch deck template, which includes tips from experts and step-by-step guidance.
Our top 5 tips to nail your pitch:
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