10 questions investors usually ask entrepreneurs, and how to respond to them
10 questions investors usually ask entrepreneurs, and how to respond to them.
In today’s edition, I want to tackle common questions investors ask and give some guidance on how to respond to them.
- What is the difference between you and your primary competitors?
Highlight unique value propositions, such as better technology, superior customer service, or a more scalable business model.
- When will you break even?
Be ready with a timeline for when the company expects to become profitable based on current financial projections and growth plans.
- How much is the revenue forecast for this year? But for the next year?
Provide the current year’s revenue forecast and next year’s, emphasizing growth rates and the drivers behind them.
- How will you use the money?
Detail specific allocations of the investment, such as product development, market expansion, or sales and marketing efforts.
- What round of financing is this for your startup?
Identify the funding stage (e.g., Pre-Seed, Seed, Series A) and the objectives of raising this round.
- Who is the management team and what is their experience?
Briefly outline the management team’s background, emphasizing relevant experience and successes in related fields.
- What is your burn rate?
Share the current monthly cash expenditure and how the funding will impact the burn rate and runway.
- How long have you been working on this startup?
State the duration of work on the startup, highlighting progress and key milestones achieved.
- How does the business model work?
Explain how the company makes money, including the key revenue streams and customer segments.
- What’s the exit strategy?
Discuss potential exit strategies, such as acquisition, merger, or public offering, and the anticipated timeline for these outcomes.