There’s tons of advice out there on how to pitch investors. But what about what comes next?
After any pitch, investors are likely to ask numerous questions. How do you answer them in the most effective way?
Here are some tips:
One of the biggest mistakes I see founders make is taking too long to answer a question. The answer should be about the same length as the question.
When you take too long answering one question, you run out of time to address others. You’re also more likely to start rambling and lose the investors’ attention.
Investors may have some tough questions for you.
Tough as they may be, you should answer these questions as directly and specifically as possible. If someone asks for your churn figures, give them numbers, not a story.
Whenever I sense a founder isn’t giving me the information I need to make a decision, I start mentally moving on to the next company.
Don’t Get Defensive
For early stage startups, no one is expecting you to have everything dialed in just right. If you had that, you wouldn’t be a startup.
You’d be a Fortune 500 company!
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So when investors ask the tough questions, don’t feel like we’re attacking you. We’re not.
We just need certain info to make a financial decision.
It’s Okay to Not Know
An investor might ask you for some very specific info in a meeting.
It’s perfectly okay to say you don’t have that information in front of you. What’s important is to promptly follow up and get the investor the information they asked for.
Always Be Honest
Many founders have wanted to put a company logo on a slide when that company isn’t really a customer…yet. Or maybe claim a big name investor is in the round when in reality you’re just talking with her.
Don’t give into these temptations. When you make presentations to investors as part of a fundraise, you’re opening yourself up to serious legal liability.
If you make a knowingly false statement, you could go to prison for securities fraud.
Most founders would never cross this line, but for those who might be tempted, I urge you to protect yourself and just give the truth.
Be Glad for the Grilling!
Answering a ton of questions can be really tough! But be glad for each one.
One of the surest signs I’m not interested in a startup is when I don’t ask any questions. I’ve already ruled the company out.
I often ask questions when I’m wondering if there’s any reason not to invest. And I’m not alone.
These investor questions are often the last step before a check.
Keep your answers brief, concise, and factual. When founders crisply answer questions with detailed information, I find it enormously impressive.
Best of luck!
What has it been like for you answering investor questions? What did I miss?
Leave a comment at the bottom and let me know.
Have a great day everyone!
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