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July 10, 2017

Difficult Investor Questions for the Early Startup Founders

I’ve put together a list of question you should have the answers to by the time you meet your investors. You don’t need a PERFECT answer, but you need a logical and well thought one. Even if it’s wrong, at least it shows the investor you thought about it. The list is generated from my own experience talking to lots and lots of investors while raising money for MavenHut, as well as from people I’ve asked here on Linkedin and here on Facebook. Thanks, everyone, for your help.

Of course, the most difficult questions will be the ones you don’t know the answers to, as I say in this video. But you will get the answer and, the next time you hear the question, you will not be surprised anymore.

Here is the list, with the questions organized in some loosely similar categories:

Founders and team:

  • Why are you doing this?
  • Why are you the best person to solve this?
  • Are you sure your team is 100% with you on this?

Product:

  • How are you making money?
  • What are the main milestones you’ll get to with the money you take now?

Company:

  • What’s your valuation? Post money/pre money?
  • What’s your cap table? (post and pre money)
  • If you do have additional shareholders to the founders, why are they there?

Market:

  • What is your addressable/obtainable market?
  • What’s your route to market?
  • Can you scale whatever got you here?
  • How much of your market are you gonna get and in what timeline?

Plans:

  • What’s the first hire you’ll make? Why?
  • How do you become a billion dollar company?
  • How will you spend your money?
  • Do you have an 18 months (at least) business plan?
  • What would you do if you got the double amount of what you are fundraising?

Risks:

  • Is your intelectual property at risk of infringing other company’s IP?
  • What’s the biggest risk of your company and how are you prepared for it?
  • What if X (a big company in the space) clones/reverse-engineers your idea?
  • What will you do in 18-24 months from now, when the money would run out?
  • Since you don’t have your own numbers, where did you find the numbers for the industry? (just to be sure you didn’t really got them out of your ass)

The thing is, there are a lot more questions you should be able to answer, but the ones above are questions that confused me or other startup founders at the time.

Why don’t I try to give some standard answers? Well, I think that you’ll get better at understanding how to explain what your company does if you prepare the answers on your own. This way you will also be much more able to adapt if the questions you get aren’t exactly the ones you prepared for.

Here are some more questions, from other sources online:

65 questions venture capitalists will ask startups
Compendium of over 100 questions investors ask startups when pitching

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Photo: MavenHut’s founder team, including me, on the stage for Startup Bootcamp Dublin Investor Day, 2012.

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