The Ultimate List of Every Investor Question You Need to be Able to Answer
This guide was put together to give you tips and best practices for finding and approaching investors to increase your chances of getting a meeting.
If you have any further questions or need help putting together any of the materials, talk to me!
Questions About Your Company Vision:
What have you discovered (ie your fundamental insight) before everyone else?
What do you realize that defies conventional wisdom or understanding?
Are you creating a new category?
What is the historical evolution of your category?
What is your big vision?
What will it take to achieve the big vision?
Questions About the Company:
Where are you headquartered?
Do you have offices anywhere else?
How many employees do you have?
When and where did you incorporate?
Questions About The Problem:
What is the problem you’re solving?
How do you know that it’s a problem?
What are people currently doing to deal with this problem?
How much is this problem worth? (Value? Spend?)
Who is the audience/s that needs the problem solved?
Questions About the Solution:
What is your solution?
What’s unique about it?
How does it work?
Is it live?
Are people using it already?
Can you show me what it looks like?
Do you have a demo?
Can you tell me a user story?
Who loves your product? (Testimonials!)
How can I connect with 5 customers who have used your product or service?
What’s the technology behind your solution?
Who developed it?
Do you have anything proprietary in the technology?
Why do users care about your solution?
What are the major product milestones?
What are the key differentiated features of your solution?
What are the key differentiated benefits of your solution?
What have you learned from early versions of the solution?
What are the two or three key features you plan to add?
What are additional products/offerings you plan to develop?
Questions About Your Unfair Advantage/Secret Sauce:
What’s your secret sauce?
Is there anyone on the team with proprietary insight that made this idea possible?
Is there anything patentable about the solution/technology?
Questions About Your Value Proposition:
Whose lives do you make better?
What are their lives like before use of your product?
What is their fundamental pain without you?
For those who pay you, what budget do you come out of? What spend do you replace?
Why will someone replace an existing spend by spending money with you?
Why will someone spend money with you now, rather than wait?
Questions About Traction:
How far along are you?
What version of the product do you have?
Do you have a proof of concept? (POC)
Is there anything proprietary about it?
Have you filed a patent? When?
Are there any regulatory issues (i.e. FDA, ISO)?
If so, what are you doing to be compliant?
Have you raised any funding so far?
Who’s invested in you?
How much money have you invested yourself?
What traction has the company gotten (whatever is relevant to you).
Traffic to the company’s website
DAU (Daily active users)
MAU (Monthly active users)
Length of session
Returning users/repeat business
Questions About Market Size/Value:
What is your top-down available market? (TAM)
What do you think represents the total served market of today? (SAM)
Who is serving this market right now?
If you define the customer as the person who pays you, what is the customer profile you cater to?
Why does your company have high growth potential?
What will your market look like in five years as a result of using your product or service?
What is the market segment you’re going after? Why are you starting there?
Questions About Market Trends and Opportunities:
Why are you doing this now?
What recent trends make this possible now?
What is the proof of these trends? (Reports, Quotes, Regulations, etc.)
How do you track trends in your market?
Why wasn’t this possible 5 years ago?
Is there an inflection point in the market to leverage?
How will the business unfold over time?
Questions About Go to Market:
What are your Go to Market Strategies?
How are you acquiring customers now?
What is your Customer Acquisition Cost? (CAC)
What’s the Lifetime Value of each client? (LTV)
What is the typical sales cycle between initial customer contact and closing of a sale?
What have you tapped into that is causing so many users to sign up so quickly?
What percentage of the market do you plan to get over what period of time?
How did you arrive at the sales of your industry and its growth rate?
How do you plan to scale in the next 12 months?
What’s your K Factor? (virality)
How are you going to close sales?
Questions About Competition:
What if one of the bigger players, read Google, FB, etc., launched a product/service just like yours, what would you do?
Who will the company’s competitors likely be?
What will your advantages be over them?
What are your most defensible advantages today?
What will contribute to increased defensibility in the next 6 months? 18 months?
Who could be your best partners and complementors in the market? Why might they have an incentive to help us hurt our competitors?
What other companies or organizations benefit most if you are successful?
What are your weakest competitive barriers?
What gives you a unique competitive advantage?
What advantages do your competitors have over you?
Compared to your competition, how do you compete with respect to price, features, and performance?
Questions About the Team:
Who are the founders and key team members?
How long have the team members known each other?
Have team members worked together before?
Do you have a solid Founders’ Agreement in place?
What relevant domain experience does the team have?
What key additions to the team are needed in the short term?
Why is the team uniquely capable to execute the company’s business plan?
How many employees do you have?
What motivates the founders?
How do you plan to scale the team in the next 12 months?
Can you scale up volume without proportional scaling up headcount?
Questions About This Funding Round:
Do you have a lead investor?
How much of the Round have you secured?
Why are you raising money? Why not just bootstrap?
What will you achieve with the money? (Not how will you spend it!!)
What’s your Round Objective? (similar question to the last one)
When will you close your round?
How far will the round get you?
How much runway (months) will you buy?
When do you think you will need to raise more capital?
How much of your future growth can be funded through profitable revenues in the next 18 months rather than raising additional equity?
If you were to raise enough to get to cash flow breakeven, how much would you need?
How do you know how much money you need and could you scale your business with less?
Why don’t you do this yourself without an investment?
Who else is interested?
Who else have you shown this to?
Questions About Next Funding Round:
What are the top three metrics/goals required for you to get to the next round of capital raise?
What key positions do you need to fill as you scale the business and to get to the next round of capital raise?
What would your scaled unit economics look like?
Questions About Financials:
What are the company’s 3 year projections?
What are the key assumptions underlying the projections?
How much equity and debt has the company raised?
What’s the Cap Table Structure?
What future equity or debt financing will be necessary?
How much of a stock option pool is being set aside for employees?
How much burn will occur until the company gets to profitability?
What are the key metrics that the management team focuses on?
Do you realize you’re vastly underestimating your marketing expenses (or sales expense, or margins through channels, or headcount required for direct selling)?
Do you know comparable numbers for similar businesses?
What does the economics at a unit level look like now and at steady state?
What are the “rules of thumb” for margins (gross, unit contribution, EBIDTA) for this sector?
What are the key assumptions underlying your medium-term and steady state projections?
Questions About Product/Market Fit:
What is the one thing above all else you must do to succeed?
Can you deliver only the value-add?
Who is the one competitor to position against in the market?
How will we you get leveraged distribution?
Questions About Risk:
What do you see as the principal risks to the business?
What legal risks do you have?
Do you have any regulatory risks?
Are there any product liability risks?
How do you plan to mitigate these risks?
Questions About Intellectual Property (IP):
What key intellectual property does the company have (patents, patents pending, copyrights, trade secrets, trademarks, domain names)?
What comfort do you have that the company’s intellectual property does not violate the rights of a third party?
How was the company’s intellectual property developed?
Would any prior employers of a team member have a potential claim to the company’s intellectual property?
Tricky Questions (and some answers):
How did you come up with this idea?
If this (the venture being pitched) was to fail, what would you do next? (They actually want you to answer that that’s not an option cause you’re not thinking about failure!)
What does success look like to you?
For women: Do you have a family / want to start a family – how will you focus on this? (Yes I know that question sucks big time and is borderline illegal. But questions like this do come up, have a nice as possible reply ready.)
What are the top hypotheses the team wants to test in the next few months?
What keeps you up at night?
What is the company’s desired pre-money valuation? (This is tricky because you probably shouldn’t answer this right away – too high, you overshoot, too low, you undervalue…)
What is your Exit Strategy? (This is not something you should put on a slide or answer! Your answer should be to the effect of “We are fully focused on building a strong, lasting company. That’s our core mission and passion.” – They really want to hear that you’re not looking for a quick sell!)
Who believes in you and how can I get in touch with them?
What entrepreneurs do you admire and why?
What mistakes have you made thus far in this business and what have you learned? (Failure and mistakes are an integral part of being a Founder! How you dealt with it is what they really want to know about!)
What if 3-5 down the road we think you’re not the right person to continue running this company and we want to bring in an outside CEO —how will you deal with that? (The Founder/CEO is not always the best suited person for the job. They want to know that you have the best interests of the company at heart and you won’t put ego first!)
Have you ever been fired from a job? Tell us about it. (What they really want to know here is how you challenged things, moved and shaked – didn’t stay put. How you dealt with challenges in a workplace says a lot about you
Did I miss any good ones? Need help answering them well? Talk to me!