These days investors look for founders and entrepreneurs who are not simply good with numbers and offer a solution to a problem, but also ask the right questions. Investor meetings can be intimidating, especially when it is your first time. You must do everything in your power to impress the investors. This includes asking the right questions from your side as well. Investors look for a bunch of things and try to tick certain boxes that relate to them. If you do not act up and just answer the questions the investors ask, the meeting is going to be boring, and the investors will think that you are clueless. There are certain questions entrepreneurs should ask investors during meetings. It can save you time, enhance your investor group’s quality, and allow you to make an informed decision.
With that said, we have prepared a list of questions entrepreneurs should ask investors. You should go through it and try to understand why each question in this list matters.
Q1. What do you expect this investment will do to your financial portfolio?
The first thing you should ask the prospective investor is what they will achieve by making an investment in your business or startup. It is essential to get a clear understanding of what the investor thinks of your business and what their strategy is about your business. If you know what they are up to, you can deliver as per the expectations. Please note that you are always free to turn them down if you feel like you and the investor are not on the same page.
Q2. What are your primary concerns?
Try to get into the investor’s mind and determine whether there are any objections. The goal is to let the investor open up a little. Instead of getting a big ‘NO’ in the beginning without any explanation, it is better to know what the investor thinks of your business. Investors have knowledge of pretty much every market. They explore every market, so they have an idea of what your niche is all about the potential it boasts. Talking to them about their concerns is a great way to know about any issues or problems your business may face in the future.
Q3. How often should we expect to meet after funding?
There are two types of investors – those who invest the money and let you do everything and those who are more labour-intensive and prefer mentoring and advising while you handle the operations. It is not just about raising money but adding value as well. You would want to get valuable insights from the investor so that you can spend the money wisely. While it will be you and your team who will be doing all the work to gain and deliver results, an experienced investor can show the right path. So, make it clear in the beginning whether the investor is going to show some interest and interact with you and your team to guide you and provide mentorship.
Q4. Is there anything about my pitch deck that concerns you?
To show that you are open to suggestions and have that learning attitude, you should always ask about your presentation and pitch. Ask the investor about how you could have done it or what you can do to master storytelling. It is all about different perspectives. Some investors may like your pitch, while others don’t. But it is always beneficial if you get to know what the investors think of you and make sure you ask the important questions. This will not only help you to improve but also shows investors that you want to learn.
Q5. What is your timeline?
Before you accept any term sheet, determine where the investor is at with their portfolio. Are they looking for long-term investment and willing to wait? Are they under a lot of pressure to deliver a good investment? Or are they in desperate need to deploy and get working? By understanding their timeline, you get to know what type of investors they are and whether or not you want to work with them.
Q6. What moves have made the biggest difference in your investments being top performers or flops?
Determine what has made the most significant difference among their successful investments. This includes talking about their failed investments and successful investments. And ask what approach did they take in a successful investment. The goal of asking such questions is to compare your business strategy with theirs and determine how things can be improved using due diligence. By doing so, you get to know some essential entrepreneurial traits and strategies for implementation.
Q7. Who else would be interested in funding my business?
One of the most prominent questions entrepreneurs should ask investors is who else is willing to invest in your business. Determine how many funding sources you have in your hand before you end the meeting. This means that even if the potential investors are not interested in your business, ask them who are the right lead investors for your business. On the other hand, if the investors are co-investing, determine who their partners are. Always get a lead on another investor(s) or sources of funding. This will keep you motivated, and you will keep on going until you find the right investors and founders.
Q8. What is the first thing you would like us to do after closing the deal?
If the investor has decided to invest in your portfolio company, things will change for you and your team completely. This also means that the way you are doing business will also be changed to a little extent (not completely). Because the investor is putting their hard-earned money on your business, they will have a say on how the operations should take place. It is better that you go ahead and clear the expectations. The goal is to be on the same page as the investor. If not, make sure they are.
These are some critical questions entrepreneurs should ask investors every time they are in a meeting. These are some basic questions, but you should research a bit to make yourself more presentable.
