As an entrepreneur, it can be very intimidating walking into a room full of investors to pitch your business idea. You can prepare as much as you like, but there always seems to be that one question you didn't anticipate them asking and it throws you. Let's try to think like an investor and see if we can anticipate some questions.
You have a new patented product and you are currently selling in one major retail store.
You are seeking $375,000 for 30% equity.
Common questions come to mind:
What do you need the money for?
How many have you sold YTD?
Utility or Design patent?
What barriers to entry do you have?
What's your exit strategy?
What's your go-to-market strategy?
But remember, that an investor is really investing in you and your team as much, if not more, than the product. So don't forget to prepare for some tough personal questions.
How would you handle a disagreement with a co-founder or investors?
Are you willing to give up XXX to commit to this startup 100%?
Are you willing to relocate?
The last thing a startup wants to do in front of investors is fumble around. Have your team prepare and practice. Discuss some of those harder topics you may be avoiding. You never know, maybe the next brilliant idea to build your business develops from one of these conversations.
Let's get into a little more depth with this business idea and see what other questions investors might ask.
How do you track trends in your market?
We often hear entrepreneurs telling us that their product is in a $125 million dollar market and if they get 1% then they are golden. The real question you should be answering in your pitch is how you plan to achieve attaining 1% of the market. This way investors can follow up with asking how you are tracking those trends.
What threats do you consider to be a concern that are out of your control?
Especially because of the current pandemic situation in the world, this question might be one of the important questions moving forward. How have you planned for certain situations? Investors want to see that you are looking realistically at the bigger picture and understand that things don't always go as planned.
Remember that taking on an investor is like getting married. This is a long-term commitment with another individual. You want to make sure that the investor is the right one for your team and vision. So don't forget to prepare questions of your own for the investors.
Do your research on the investors prior to meeting. You should already know the basics such as:
How big is their fund?
What type of industries to they invest in?
What are their personal passions?
Some questions you might consider asking might be:
What metrics are you tracking when considering an investment?
Do you lead financing rounds?
What suggestions would you recommend for our company?
Finally, we have some helpful tips to think about before you pitch to investors. Remember, investors hear an enormous amount of pitches from entrepreneurs every month. You want to make the best first impression as possible.
Tip 1: Be conscious of time. You need to arrive early in order to effectively prepare. If you want to use a projector, you need to be early to set up and avoid the last minute rush. The time for each pitch is normally very short so make sure you practice it ahead of time and keep under the set time limit.
Tip 2: Be confident and audible. You should be audible when putting across the points and say them with a lot of confidence since you believe in them. Always keep your voice interesting.
Tip 3: Maintain eye contact with the audience. It actually helps to calm your nerves and you can more easily gauge their interest in your presentation and adapt accordingly.
Tip 4: Tell stories. Use descriptive words, examples, pictures to keep the audience’s attention. Make it real for them.
Evolution Accelerator teaches the strategies of startup funding to entrepreneurs and supports selected founders during active fundraising.