Preparing to pitch to investors can feel like a daunting task. You’ll want to create a cohesive pitch, develop an eye catching deck, and rehearse your pitch over and over again. From there, you may think you’re ready to start reaching out to investors, but don’t forget the most important part – the Q&A.
Being prepared to answer questions about your business is just as important as creating a great pitch deck. It shows investors that you know your business and can think on your toes, allowing them to dive into the parts of the company that they care most about. Often during a pitch meeting, investors will skip over the pitch and dive right into Q&A.
Before pitching to investors, it’s a good idea to list the possible questions you might get asked and think about how you would answer each of them. While the type of questions you get asked will depend on your business model and stage of the business, these are some of my favorites that you should always be prepared to answer.
- What is your revenue? MRR? ARR? Churn? CAC? Margins? LTV? CAC to LTV? Payback period? # of customers? 📊
Know all your metrics today, and know how they will change as you scale. If you’re prelaunch, you’ll still want to understand expectations for all key metrics.
- What is the TAM or market opportunity? 🚀
This should likely be a slide in your deck, but be prepared to answer it.
- Who are your competitors? 🔥
…and what’s your edge over them?
- How are you acquiring (or will you acquire) customers? 🧑🏿🤝🧑🏾
Will you use paid marketing strategies? PR? Sell into corporations?
- Who is your target customer? 🧑🏭
Who are your early adopters? How will this change over time? Be prepared to describe customer demographics and psychographics.
- Who is on your team, and what are your hiring plans? 👩🔬
Investors invest in the team, especially at the earliest stages. Don’t be shy here – sell yourself and your team. And be prepared to talk through your key hires for the next year.
- What is your revenue model? 🌱
Talk through your monetization strategy. Are you charging a subscription fee? Transaction fee? Focused on ad-based revenue? Affiliate revenue? If you aren’t monetizing today, how will you in the future, and how have you validated customer willingness to pay?
- What will be the BIGGEST challenge or risk in the next phase of the business? 🚩
This is one of my favorite questions to ask. It shows that you really understand your company and the challenges you will face and helps me think through where I should focus my diligence.
- What are your key KPIs to get to your next raise? 📈
Focus here on the KPIs that are most important to success – your North Star metrics ⭐ . If you’re a subscription business, this might include improving retention to X%. If you’re launching a product, you may be focused on hitting $X in ARR and getting into X retail stores. If you’re building …engagement
- Tell me more about this fundraising round. 💰
How much are you raising? Do you have any capital committed? What structure (SAFE, note, priced)? What is your expected valuation?
When it comes to expected valuation – unless you have a strong sense of what your company should be valued at or already have investors who set a valuation, I wouldn’t provide a specific number. Provide a range or simply say you are optimizing for the right investors and will let those partners decide. Why? Setting a too low valuation will undervalue the business, and setting a too high valuation may scare off potential investors.
- How will you use the funds? 🔮
Make sure you can justify why you are raising the amount you are raising. What portion will go towards marketing vs. payroll vs. operations and so on?
- What is your exit goal? 🥅
Ultimately you should be focused on building a great business. But it’s still important to be able to articulate possible exit strategies. Is this the type of company that can IPO? Alternatively, who might buy your company?
- Do you have any questions for us? 📘
Do your research on the investor and be prepared to ask them questions of your own...How do you work with founders? What are the next steps?
The above list should give you a good place to start, but it will never be all encompassing. Be prepared for the unexpected, and if you are asked a question that you really don’t know the answer to, don’t make something up. It’s okay to tell an investor that you’ll follow up with them after the meeting.
While preparing for a pitch can feel overwhelming, it’s also an important exercise. It forces you to get out of the weeds of the day to day to really think about your business model, your goals and potential challenges you’ll come up against.
If you’re building something awesome and looking for help, we want to hear about it. Get your pitch ready and then reach out here.
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