137 Top Investor Questions Founders Should Prepare To

Updated

Founders should prepare to pitch a business idea and be ready to answer relevant investor questions.

If you fail in these areas, it is unlikely for you to obtain funding sources.

Below you can see some key questions investors ask during your meeting. 

All founders need an understanding of this information.

The Core Elements Of Every Investor Meeting

When seeking investment for a startup, founders should be ready to answer questions about the core elements of their business.

The most crucial aspect for investors is the team.

They will want to know if the founders are trustworthy and capable of executing their plans and if they have relevant experience.

The market size is also essential; investors will want to know if there is potential for high returns on their investment.

They will also assess the product, looking for evidence of a product-market fit and assessing the level of innovation.

Finally, financials are crucial; investors will want to see that the founders understand their numbers and are in control of their finances.

By being prepared to answer questions about these core elements, founders can increase their chances of securing investment.

Investor Questions About TEAM

  1. What is the founder’s background?
  2. What unique skills and talents does each founder contribute?
  3. What are the roles and responsibilities of each founder?
  4. Do you have any prior experience in this field?
  5. Did the founders work together in the past?
  6. Does anybody have startup experience?
  7. Who are the key team members?
  8. Where are your offices located?
  9. How many employees do you have?
  10. Are there any board members or notable advisors?
  11. What additional roles do you foresee that might be necessary for the foreseeable future?
  12. What makes you the right person to lead this startup?
  13. What keeps you motivated as a founder?
  14. Are any of the founders thinking of retiring soon?
  15. Is there a reverse vesting agreement between the founders?
  16. Do you have a non-compete agreement with your current/previous employers?
  17. What are the biggest challenges that your team is facing right now?
  18. Can you share your Org Chart?
  19. Who are your contractors?
  20. Which consultants do you use?
  21. Are any of the founders related?
  22. Do any of the founders have side projects?
  23. What other companies or organizations do you have a role in?
  24. Do you have any personal guarantees on debts?
  25. Who in this organization is most replaceable?

Investor Questions About MARKET

General

  1. What is your total addressable market (TAM)?
  1. What is your serviceable available market (SAM)?
  2. What is your serviceable obtainable market (SOM)?
  3. What market share would you like to achieve?
  4. Who is your ideal customer?
  5. How do you plan to penetrate your target market?
  6. How long would it take to gain a significant market share?
  7. Why is this the right time for this product or service?
  8. What are the main trends affecting your industry?

Competition

  1. How many competitors do you have?
  2. What is the competitive landscape?
  3. Name the three most significant competitors.
  4. What differentiates you from your competitors?
  5. What are the drawbacks or hurdles you are facing?
  6. Do you have any economic moats or barriers to entry?
  7. Where does the competition fail?
  8. Is your market share bigger than your competitors?
  9. Is your pricing model different?
  10. What are the critical success factors in this industry?

Business Model

  1. What are the main KPIs your team is measuring?
  2. Which specific marketing channels are you using?
  3. Why are you using these marketing channels?
  4. How are you marketing your product or services?
  5. What are your primary marketing activities?
  6. What is your go-to-market strategy?
  7. How long will it take you to break even?
  8. What is your plan B if these sales channels are interrupted?
  9. What profit margins are you operating on?
  10. How will scale impact profit margins?
  11. What pivots have you already made up until now?
  12. What other streams of revenue can be added to your business?

Customers

  1. How many paying customers do you have?
  2. What is your CAC (Customer Acquisition Costs)?
  3. What is your LTV? (customer lifetime value)
  4. What is your revenue model?
  5. How do you measure growth?
  6. How much did you grow in the past 12 months?
  7. How much did you grow in the last quarter?
  8. What are the three main reasons that hold your growth even faster?
  9. Do you have a demo to present?
  10. What is your retention rate?
  11. What is the typical feedback you get from customers?
  12. Did you consider the feedback? If so, in what way?
  13. Do you have any viral growth components in place?
  14. Did you get any media coverage? By whom?
  15. Do you have any testimonials or reviews from customers?
  16. Do you offer a free trial?

Investor Questions About PRODUCT

  1. Why is your product unique?
  2. What pain does it solve?
  3. What is the development status of your product?
  4. Is it ready for launch?
  5. What are the next steps in terms of development?
  6. What is the roadmap for your product?
  7. What is your product development process?
  8. What features are currently available?
  9. Are there any inherent legal exposures while using the product?
  10. Are there any potential risks to customers?
  11. Do you need to comply with specific regulations?
  12. Did you file for patents? What is the current status?
  13. Who is your IP attorney?
  14. Who is the owner of your IP?
  15. Are there any prior employees or founders who may challenge these rights?
  16. Any future patent filing plan?
  17. Did you sign any former employee or contractor on the IP Right Transfer agreement?
  18. What unique features are you working on?

Investor Questions About FINANCIALS

Company Incorporation

  1. What is the company’s incorporation structure?
  2. Where was the company incorporated?
  3. Do you have any subsidiaries?
  4. In which countries do you operate?
  5. Do you have any employees there?
  6. Who are the key shareholders?
  7. What are the current holdings of the founders?
  8. Are there existing board members or advisors?
  9. Who handles your accounting and payroll?
  10. Who is your auditor?
  11. Who handles your legal matters?

Fundraising Round

  1. Who participated in earlier rounds? Any lead investors?
  2. How much equity and debt has been raised so far?
  3. What is the round’s pre-money valuation? How did you get to this number?
  4. How much would you like to raise? How did you get to this number?
  5. What is your current burn rate?
  6. What is your current financial runway?
  7. What was the previous pre-money valuation? When was it?
  8. What was your previous investment amount?
  9. What is your exit strategy?
  10. What is the expected timeline for the exit?
  11. Will current investors take part in this round?
  12. What do you expect from your investors?
  13. What other offers have you received?
  14. What are the terms of those offers?
  15. What is the expected timeframe to close this round?
  16. Who else have you spoken to about this deal?
  17. When will they make a decision?
  18. Have you ever done dilutive financing rounds before?
  19. What was the reaction of your shareholders to that event?
  20. Can you introduce me to your lead investor?
  21. Do you have an "ESOP" in place?
  22. What is the current pool percentage out of the total number of shares?

Use Of Proceeds

  1. How are you going to use the round funds?
  2. How will this round extend your current runway?
  3. What is the next big goal you plan to achieve?
  4. Do you plan any salary raises?
  5. What is the budget breakdown between R&D, S&M, and G&A?
  6. Do you have a plan B in case you won’t succeed in raising the full amount?
  7. Do you plan any CAPEX investments?
  8. Did you try other forms of financing?
  9. Did you raise funding from F&F?
  10. Did you put your own money into the company?
  11. Do you use investment bankers? Finders?
  12. Is there anything else you would like to share with us?

Additional Questions

  1. What are the company’s long-term goals?
  2. What challenges or obstacles do you anticipate facing in the future?

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About the author: Oran Yehiel

Oran Yehiel is the founder of Startup Geek, with an MBA specializing in financial management and a background in Deloitte. As a Certified Public Accountant and Digital Marketing Professional, he writes about venture capital, marketing, entrepreneurship, and more, bringing a wealth of experience to businesses seeking growth and success.

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