You’ve made it, your startup is at the biggest event of its kind in the Nordics, full of investors – and competition. In order to stand out, you need to be prepared to answer any questions investors might ask you. And for that, we’ve collected some of the most common questions and some tricky ones you’d better come up with an answer to.
Know your market.
Investors will most likely be interested in your extensive knowledge of the market you’re targeting. Prepare your numbers and make sure you can back it up with data when it comes to the size of your specific target market, the company’s growth potential, the goals you’ve set (e.g. how big is the market share you are aiming to have and by when?). You need to know your audience inside and out, so the best is to have a customer persona you can immediately present. Scalability will definitely come up, so have an honest answer ready.
Your product or service.
What exactly is it that you are offering? What is the problem and how do you solve it so customers gain value using your product/service? Be ready to demonstrate or describe the distinctive features of your product/service, explain how you got there and what are the next features your team is working on. Do you have an IP or any pending patents? How are these owned? Investors will want to know all the details you can share.
Keep your friends close, but your competition closer – meaning, you should do your research and get to know as much about your competitors as humanly possible. How is the landscape? What are they offering? How do you differentiate yourself from them? How can you offer better solutions for your customers? Be detailed, data-driven and clear. Apart from your existing competitors, what kind of new competition can arise? How are you prepared to handle that? Show that you are forward-thinking and will always be on the move so you can beat your competition even before they appear.
Do you already have users? Then get ready to share the number of active users or subscribers, the customer lifetime value, some clarification on your metrics and your annual growth rate. Is it linear? Is it consistent? What are the key factors affecting your growth?
Your business model.
Be prepared to share in-depth insights on your business model: your margins, your channels of distribution and marketing, your revenue stream. And of course, your financials. How do you acquire clients, how much does it cost, your burn rate, etc.
Your secret sauce: your team.
Investors will want to get to know about your founding team, the competence you have amongst yourselves and how is it distributed. Who are the founders, how many employees do you have, do you have an existing board, advisors in place? What is your corporate structure? How are you planning to scale the team? These are all relevant for someone interested in investing your company and therefore, team.
Plans for the fund & the future.
How will you use the funds? How much will be spent on overhead costs in comparison with expansion? How much money do you spend each month? – Investors will want to know how the money is going to be used, so have an answer for all these questions. And don’t be surprised if they immediately ask you about your exit strategy. It’s best to have one from the very beginning and be honest about your plans.
The most important thing is to always be honest with your potential investors. An investor-startup relationship is a huge commitment on both sides, and as such, it has to be built on mutual respect and trust. You can have the best product in the world, but if there is no trust, there will be no investment.