60 Questions Investors Will Ask You About Your Startup

60 Questions Investors Will Ask You About Your Startup

If you want someone else to invest in your business or your idea, you have to be PREPARED to answer their questions. Otherwise, getting an investment will be a LONG SHOT.

I know how fast Pakistan’s business startup culture is skyrocketing these days. With this being true, a lot of entrepreneurs will need seed funding for their projects. However, I see a huge problem as most of the Pakistani entrepreneurs, that have pitched their startups to me, do not know how to sell their themselves as potentially great business partners. They also don’t know how to answer most of my questions.

As always, I am here to help young budding Pakistani entrepreneurs become more prepared to face the tough questions they will receive from any potential business investor. If you want someone to invest in you and your idea, you have to be prepared and ready to dazzle them with an excellent presentation and performance. You can start by having an answer for all of the questions these investors will likely throw at you. If you do NOT have an answer to these questions, then you will look profoundly unprepared and therefore significantly diminish your chances of getting funded.

Before you even get to speak with an investor, they will want to see your investment pitch deck. The investment pitch deck is all of the following.

  1. Cover Page
  2. Company Overview
  3. Mission/Vision of the Company
  4. The Team
  5. The Industry Problem
  6. The Solution
  7. The Market Opportunity
  8. The Product
  9. The Customers
  10. The Technology
  11. The Competition
  12. Business Model
  13. The Marketing Plan
  14. Financials
  15. The Ask

See Article: How To Create A Great Investor Pitch Deck For Startups Seeking Funding

Ready for the list of 60 questions? Here they are!

60 Questions Investors Will You About Your Startup.

Your Company Overview

Even after you give the investors the investment pitch deck, they will still want to hear you describe the following:

  1. What is the company and what does it do?
  2. What unique service or product does the company have?
  3. Does the company solve a problem and what is it?
  4. What is the market size and what is the opportunity?
  5. Is the company scalable and how big can we expect it to get?
Market Size And Opportunity

Investors will want to dive deeply into the market opportunity for growth, competition and opportunity.

Expect the following questions:

  1. What is the size of the realistic market for the company?
  2. What market share percentage will your company feasibly be able to capture?
  3. How fast will it take your company to gain the market share you claim?
  4. Where did you get the sales and growth rate data for your industry?
  5. Why do you feel your company has high growth potential?
Founders and Team

For me and many other investors, your company’s management team is the most important factor of our decision to invest or not. You will need to convince investors that you are passionate, highly dedicated and have ample experience in the domain of the business.

You can expect the following questions:

  1. Who founded the company?
  2. Who are the key management team members?
  3. What experience and domain knowledge does each team member bring to the company?
  4. What additions will be needed on the team?
  5. Why will your team be able to uniquely execute the company’s business model?
  6. How many employees does the company have?
  7. What is the motivation for founding the business?
  8. What are the 12 month scale-up plans?
Products and Services

You must be able to clearly demonstrate what makes your company’s product or service unique and what it entails.

Expect these following questions:

  1. Why will users want to use your product or service?
  2. What makes your product or service different from others?
  3. What are some of the lessons learned from early prototypes of the product or service?
  4. Do you have future additions planed, if so what are they?
Competition

You must know who are your competitors are and be ready to name them. You will also need to be able to clearly demonstrate how you will compete with or overtake your competitors. Every business has competition, so be sure to know yours.

Be prepared for the following questions:

  1. Who is the company’s main competition?
  2. What is the competitive advantage of your company?
  3. Does your competition have a competitive advantage over your company?
  4. What are all the comparisons between your company and your competition. How are your priced compared to them? How do you perform compared to them? What are your features compared theirs?
Customer Acquisitions / Marketing

As an investor, I would want to know how you plan to market your company. Investors will want to know how much it costs to acquire a new customer, and what will the long-term value of each customer be.

Here are questions you can anticipate on this subject:

  1. How is the marketing strategy for the company to market its product or services?
  2. Do you have a public relations strategy and what is it?
  3. Which social media channels will you use and what is your strategy for social media?
  4. What do you anticipate the cost of acquiring a new customer to be?
  5. Will the customers be on a recurring revenue model, or a one time purchase model? Lifetime value?
  6. What advertising strategy will you utilize?
  7. How long is the average sales cycle from first contact to closing the sale?
Traction Area

If you have gotten some early traction or sales, this will be a tremendous advantage for you. Investors like to see early traction as a proof of concept that your product or service works.

Have you answer ready for these questions:

  1. Has your company gotten any traction yet? If so, what forms? website traffic, sales, product downloads, etc).
  2. What are your plans to accelerate this early traction?
  3. What are the reasons for gaining this early traction?
  4. What has been the reaction of the early customers?
Risks

Every business has risks and your potential investors will want to know them. They will especially want to know if you know the risks and have a solution for them.

So plan to answer these questions:

  1. What are the core risks to the business model?
  2. Are there any legal risks?
  3. Any governmental regulatory risks?
  4. Any liability risks associated with your product or service?
End Game

This is the part the investors are most curious about. What is in it for them? Investors will want to know how long it will take to earn their money back (Return On Investment (ROI)) and how much return they can expect.

Have an answer for these:

  1. What do you foresee as the exit strategy? Sale, IPO?
  2. How long do you foresee holding the company, until the exit strategy kicks in?
  3. Who will likely want to acquire your company?
  4. How will takeover companies value the company? What type of sales multiples does your industry generate?
Intellectual Property

Intellectual Property is a big concern for investors as well. Anything such as copyrights, patents, trade secrets hold a lot of value. The fear of someone else easily copying what you’ve done and entering the market will drive away most investors.

Be sure to think deeply on how to answer these, and do try to get patents, copyrights, trademarks before you pitch your idea to anyone:

  1. What are the intellectual property assets of the company? (domain names, trade secrets, existing copyrights, existing trademarks or patents, patents)?
  2. Does your intellectual property violate the intellectual property rights of another company?
  3. How did you develop the company’s intellectual property rights?
Financials

All potential investors will be very curious about the company’s financial picture and future financial needs.

Have an answer ready for the following:

  1. Do you have the company’s three to five year projections? If so, be prepared to show them.
  2. Have you already raised any capital, what are your debts?
  3. Will you need future financing or capital investments?
  4. When do you expect the company to become profitable?
  5. How much money will the company have to “burn” through to become profitable?
  6. What will be limiting growth factors?
Financing Round

Investors need to know how much money is being raised in this financial round and how much equity they can expect to receive in return for their capital injection.

Have a great answer for the following:

  1. How much capital are you trying to raise in this round of investments?
  2. What valuation are you placing on your company, and how did you reach that valuation?
  3. What other investors will be in this investment round?
  4. How will you use the proceeds from this investment?
  5. What company goals and milestones will these proceeds help your company accomplish?
  6. How much equity are you offering against the amount of money required?

Conclusion

There you have it, these are all excellent questions that any savvy investor will ask you during your presentation. Trust me, if you stumble or don’t know any of these questions, then you will look unprepared and not very knowledgeable. I certainly would not feel comfortable giving you any money and neither would any other investor. So you absolutely need to study all of these questions before hand, have the answers ready to roll off the tip of your tongue and present your answers with confidence. I highly recommend that you read How To Create a Great Investor Pitch Deck For Startups Seeking Funding and do all the steps in it first before even thinking about talking to an investor. They will want to see your investor pitch deck first and foremost.

See Related Article: How Does Series A, B, C Funding Work For Startups?

About me

authorGoPakistan is the brainchild of American Randall Agee. Randall Agee has worked side by side with Pakistanis for ten years and has had many successful experiences. His goal is to share those experiences with other Pakistanis so we can build a strong Pakistan.

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