In my previous article we talked about how to get prepared to face the investors and how to present your self and your company in-front of them.
If you are wondering what kind of questions investors ask entrepreneurs, here is a list:
- What is the company about? What is the problem statement you are trying to solve? Why do users care about your product or service? What makes your company unique? What motivates the founders?
- How big is the market opportunity? Why do you think the company has high growth potential? How big can the company grow? What is the actual market size? What percentage of the market do you plan to grab and what will be the estimated time period for that?
- How will you make money for your self and your investors? How did you arrive at the sales of your industry and its growth rate?
- Who are the founders and key team members? How big is the team? Is your team capable to execute the company’s business plan? What relevant experience does the team have? Will there any major additions to the team, in the short term? How do you plan to scale the team in the next one year?
- What have been the major milestones for your company? What makes your product/service stand out? What have you learned from early versions of the product or service? Provide a demonstration of the product or service. What are the two or three key features that you have in your mind, to be implemented?
- Who are the company’s competitors? What gives your company a competitive advantage? What are the strengths points that you see in your competitor? How do you plan to compete with them with respect to price, features, and performance?
- What is/will be your company’s marketing strategy? What is your company’s PR strategy? What is the company’s social media strategy? What kind of advertising will you be doing?
- What is the cost of customer acquisition for your company? What is the estimated lifetime value of a customer? Describe the sales cycle from initial customer contact to closure of a sale.
- What is the potential principal risks to your business? Is there any legal/ regulatory/product liability risk involved?
- How much early traction has the company received(this includes stats about sales, traffic to the company’s website, app downloads, etc.).Can this traction be increased further? What do you think has been the driving force for this traction?
- How much equity and debt has the company raised. Details about the capitalization structure of the company? What future equity or debt financing will be necessary? How much of a stock option pool is being set aside for employees?
- What is the likely exit – IPO or M&A? In how much time in future do you see the exit happening? How will you determine the valuation of an exit?
- Does the company have any intellectual property like patents, copyrights, trade secrets, trademarks, domain names etc.? Does your company’s intellectual property violate any rights of a third party? Would any prior employers of a team member have a potential claim to the company’s intellectual property?
- What are the company’s 3 to 5-year projections? What are the key assumptions underlying your projections? When will the company get to profitability? How much burn will occur until the company gets to profitability?
- How much is being raised in this round? What is the company’s desired pre-money valuation? Will existing investors participate in the round? What will this funding be used for?
- Why don’t you continue to bootstrap, why do you think you need investors?
Preparing answers to these questions Investors ask Entrepreneurs, will help you a great deal preparing for the interview. We will be glad to know if this helped you and also if there are any other type of questions that were asked to you, so everyone else can benefit from this