These 14 Questions cover the key aspects that should be considered when you’re Pitching Investors to help you be prepared.
Pitching Investors Topics: Network, Advantage, Market, Mkt-Plan, Team, Backable? Skin, Model, $$ Use, ROI, Debt, Help.
1st Network with enough people, (“getting their insights”) about your business idea (product/service), until you have a consensus that it’s either right or wrong. Start with family, friends, advisors, mentors, before considering getting Seed or Series A from Pitching Investor – such as Venture Capitalists or Angels.
2nd My Perspective as both an Entrepreneur that has raised capital several times, as well as an Angel Investor follows. I’m also including advice from my previous business partner of Freestyle Capital – focuses on Seed investments. While the questions may be worded more indirect, they cover all the key aspects that should be considered when you’re Pitching Investors
3rd What are your Competitive advantages? Which problem are you solving for your customer? And what is the market need? You should also make a comparison between you and your competitors in a matrix.
4th What is “unique” about your Product or Service? If you have an intellectual property, patent, trademark protection, + perhaps IP strategy, you should also mention that.
5th How BiG is your Market? In terms of market opportunity, big niche is better than a small niche, because it is usually easier to create a more valuable company. In general, bigger markets are more forgiving than smaller markets. Then, investors need to be sold on the risk or opportunity in the market and that what you are building is 10 times a better experience than the status quo. Ideally, what you are building will help your customers save money and time, make money or simply delight them in a whole new way = “Better, Faster, Cheaper”.
6th What is your Go-to-Market plan? Investors like to be sold on your big vision, but also need to understand how you are going to get your product or service used by customers out of the door and into the hands of customer. Be ready to share how you are targeting your audience to begin with (and if you have the data, what your conversion or adoption rates have been, etc). Many founders start with their most obvious target audience and then expand from there. Some start locally and expand after they have proven the model works in that area.
7th Why is your Team uniquely qualified to build this business? Investors love teams who have unfair advantage. The more your background, connections and/or insights into a market give you a leg up on the competition, the better. This is one of the reasons so many successful founders have really experienced the problem they are solving. They understand what they need to build more than anyone else.
8th Are you Backable? Great investors invest in people more than product, so expect questions about you. This will cover not only your functional capabilities or background, [like your degree & work history], but also your work ethic, enthusiasm & passion to make this idea work. They want to know about the abilities of the entrepreneur. The business itself may evolve and even pivot, but they want to know the entrepreneur has the tenacity to make it work. That’s why many investors love people who have overcome adversity. It shows the determination & perseverance that is necessary to get any idea off the ground.
9th Skin In It ??? What have you, your family, friends & fools invested in your Startup? Investors want to know that you have “skin” in the game, which is more than the “sweat equity” you’ve put in from working hard at it. If the people who know and love you aren’t willing to invest their money, that sends a bad signal to investors.
10th Revenue Model / Parameters. Does your Startup have the revenue model to build a big (>$100M annual revenue) business with good margins (gross ~ 50 to 60% / net ~15 to 25%) under reasonable assumptions?
11th What is your Use of Funds to profitability? So, what are you going to do with the money? If it’s going to pay you a big salary or pay for a nice office, early-stage investors aren’t interested. If you are going to use the capital to scale-up the business: to acquire new customers, to raise the value of the company before your next fund raising round, or get the company to profitability. These are all good.
12th Return: What’s in it for us? Investors are looking for a deal that will provide a very large return on their investment in a product/service that fits their investment portfolio. They view this as a transaction, so don’t confuse their enthusiasm with being your friend. They are not. Likely, you will hear many “no” answers before you even get a “maybe.” Develop a thick skin and absorb everything you can from every meeting. Investors love when you can demonstrate that you take their input seriously. They value “coachability”.
13th How much Debt do you have? If your business is funded by money you have to pay back (ie, Loan or another Investment), a new Investor is going to want to know. They’ll likely be wary of helping make someone’s debt payments for them. If there’s a large amount of debt, be able to justify it, and know the terms it’s been borrowed under.
14th How Investors help Startups. a) big Network of contacts to open up more doors than you can, b) bring vast knowledge & experience to the table to help you as a Mentor, c) help you focus on important, d) see the “devil in the details”, & e) assure a higher probability of success.
Comments: Any other Questions that Investors ask?
Compiled from Biz Zines & similar Websites 16 Aug 16 by Peter/CXO Wiz4biz