When you’re raising money for your business, time spent in front of investors is precious. Whether you’re chatting over a cup of coffee or presenting a formal presentation in front of an audience, you need to be prepared at all times to answer important questions about your business. To prepare you for your next pitch, here are four questions you should nail the answer to that you may not expect from investors:
1. A few years from now, what will the market look like as a result of using your product or service?
You want to show your investors that you have a long term vision of the future and can think critically about how the customer and your product will evolve over time. Share your vision on the extended impact your customers will experience from using your product or service over time. This is a great opportunity to paint a bigger picture of your company’s growth plan through the power of storytelling. Show your impact.
2. How do you plan to spend the money raised? Could you scale your company with less?
Of course investors want to know how much money you’re asking for, but more importantly, they want to know how you plan on spending it. Startups need more than just capital to succeed.
Could you scale your company with less? If so, how much less and what would be sacrificed as a result? It’s not a bad idea to have a few different budgets and financial forecasts in your business plan, so that you can address more than one growth model for scaling your business.
3. What happens if a few years down the line we think that you are no longer the right person to run the company – how would you handle it?
It’s not unusual for the founding CEO to step away from their role once the company scales beyond the startup phase, especially when it comes to high growth startups. Investors might directly ask you if you are willing to do what is best for the company and if you would step down as CEO if that’s what the company needs.
Investors want to determine whether or not ego will get in the way of the company’s success. Figure out what kind of entrepreneur you are – the kind that enjoys being the face of a large company or someone who prefers to be behind the scenes. Be prepared to discuss your strengths and weaknesses when it comes to running the company.
4. What mistakes have you made and what have you learned from it?
We all learn from mistakes we make. Investors expect company leaders to be candid about their mistakes and share what they learned from the experience.
You might even be asked directly what your biggest failures are and how you overcame them. Take some time to think about your failures and how those failures have shaped you. How you handled failure in the past is a big indicator for future success of the company.