Questions Investors Are Likely to Ask You

Getting your startup funded is no small challenge. It is even more difficult when your startup is at an early stage when there is no “field” proof that can indicate the chances of your success, such as a working product, satisfied customers, stable income, etc. In the early stage of a startup, founders must demonstrate to investors that the company not only has a great product with a clear fit for the market, but they must also demonstrate that they are capable of guiding the company through the next stages. and ultimately succeed. In preparation for meetings with potential investors, it is not enough just to master the business plan and intimately understand the business model, but also to work hard and prepare for the actual conversation with investors. What does it mean? First, you need to know and understand the potential questions investors might ask, and be prepared to answer them thoroughly, accurately, and impressively. These will include personal questions on your resume, as well as questions about technology, business, and finance. It will most likely be around 20 questions; Here are some examples:

1. How complicated is your technology? How is it protected? Is it easy to copy it?

Especially in a technology company, protection against theft and copying is very important and provides security for investors, who can guarantee that it is a significant technological innovation. In case the specified product requires strong QA testing, software validations, license authorization or regulatory approvals, it is recommended to start these at a very early stage of the project as they are likely to be time consuming due to their nature. Any type of approval of this type will increase the value and prestige of the company for investors.

2. How many months are required for each stage of the development process?

Some of the ideas and projects have a small window of opportunity to penetrate the market. In such cases, it is important to show that the startup can complete the development stages in a fairly short time (months), without contradicting that although the development is quite fast, it will be relatively difficult to copy the product.

3. Who are the competitors?

When there is a need/market size for a certain product, there are probably already some companies trying to fill it. Therefore, it is important to show that there is real competition and not try to avoid or hide this issue.

Showcase your advantages and your unique value proposition compared to your competitors. Don’t say your product is perfect, it’s highly unlikely.

It’s important to show founders that they know how to leverage the unique values ​​of their product or service over those of the competition, and bring it to the right market, the market where the product’s value is highest and the downsides are least noticeable. .

4. What is the addressable market size (AMS)? How did you arrive at those numbers?

Established researchers from leading companies like IDC, Gartner, etc. it costs thousands of dollars. Typically, a new start-up does not have the resources to invest in such market research.

It is recommended to invest a good number of hours in the search engines to find other research, presentation slides and other data that will help calculate the size of the relevant market for your startup. Even if the information you dug up doesn’t exactly match your target market, you can still roughly assess the size of your addressable market.

There are many more questions, such as: how do you plan to penetrate the market? What is the business model? What is the basis for it? What is the business model of your competition? How much cash do you need until the balance of the operation? What are the property rates you are willing to pay for the investment? And more.

Knowing these questions and being prepared for them significantly improves the impact it could leave on investors and their ability to properly assess the founders’ chances of leading the company to success.

Also, most founders come from a tech background (engineers, developers) and lack the business and financial understanding needed to build and scale a company. Terms like operating profit, cash flow, fixed and variable costs, capital and many more, rarely known, will make it difficult to lead and direct the discussion in front of investors. Such a thing could damage investors’ enthusiasm and willingness to invest, even if the product is excellent, with no competition and a large market. After all, even the best ideas could fail without the right business, marketing, and strategic leadership.