__”The 10 Questions I Didn’t Expect to be Asked by Investors”
“If you’re raising money for your company and you want to pitch to angel investors or venture capitalists, then there are a few important things to know that savvy investors care about…” Today I am going to share parts of a long article written by an angel investor/entrepreneur who gave me permission to share with you here. The title is “The 10 Questions I didn’t expect to be asked by investors.” I know most of you will find it very interesting, and the #SeniorClass will say “Wow!”
After you read it, let’s talk. Here goes:
“I’ve raised close to $1 million for my previous startups and the following questions were not what I had expected to hear from the investors I was pitching to. I was expecting to be asked about my team, market segments, financial projections, go-to market strategy, exit strategy, etc. Don’t get me wrong, I was asked these questions—many of them—but it was the questions below that I wasn’t expecting.
It’s also important to note that the investors who asked the following questions are the ones that I ended up having the best relationships with.
You may never get asked these questions, or maybe not as directly as they are asked below, but you should be prepared and have answers to these questions as well as questions like these:
#1: Who believes in you and how can I get in touch with them?
What the investor are looking for here is who are your mentors and advisers. They like to know that there are people who believe in you, your ideas, your potential, and abilities.
#2: What entrepreneurs do you admire and why?
This is a fun question. Even if you’re not asked this question, work it into your pitch because you can tell a lot about people by who they admire.
#3: How do you track trends in your market?
Investors want to know that you are aware of your industry, as well as where you go to find data to stay on top of industry trends. Things change very quickly today, particularly if you’re in the technology business, so be prepared to share how you find data about your customers and industry, as well as how you apply those findings to your business.
#4: Can you tell me a story about a customer using your product?
This should automatically be included in your pitch presentation anyway. The best pitches are the ones that open with a story about how your product or service is helping your customer. . .
#5: How do you know how much money you need and could you scale your business with less?
All investors, of course, want to know how much money you need to scale your business, but you had better know: (a) what you’re going to spend it on (also called “use of funds”) and (b) whether you could scale your business with less money. . .
#6: How can I connect with 5 customers who have used your product or service?
If investors find your pitch interesting, they will want to begin what’s called the due diligence process. During due diligence they will ask a lot about your customers: who they are, how you know who they are, how you find them, what they think of your product, how they are using it, whether that matches your usage intentions, how you interact with them, etc. . .
#7: What will your market look like in five years as a result of using your product or service?
This is another opportunity to tell the growth of your company through sharing a compelling story. Paint the picture of your customers’ future as a result of using your product or service for five years. . .
#8: What mistakes have you made thus far in this business and what have you learned?
I’ve also been asked, “tell me about your biggest failure and what did you learn from it.” Either way, the investors expect business leaders to experience failure. Failure is part of the equation of growth and it’s where all of the great learnings come from. I’ve had two startups—one failed and one I sold. I learned far more from the one that failed—and I was able to take those learnings into my second venture. . .
#9: What if three or five years down the road we think you’re not the right person to continue running this company—how will you address that?
Often times—particularly with high-growth startups—the founding CEO does not remain the CEO who scales the company beyond the startup phase and investors ask this question to make sure you don’t have “founderitis.” Founderitis is when a founder’s ego gets in the way of the company’s growth and the founder refuses to (or makes it hard to) step down/step out of the position they hold. . .
#10: Have you ever been fired from a job? Tell us about it.
This is probably my favorite question—so much so that I now ask this to people I’m interviewing. It’s one of those questions that makes people feel uncomfortable, but that’s not the intention of asking it. Rather, it’s to see how you respond to a challenging question, as well as learn more about some challenges you’ve experienced in previous jobs and how you communicate those challenges.
I had one investor tell me that he only invests in CEOs who have been fired from previous jobs. . .At the end of the day, investors want to invest in leaders who are movers, shakers, creators, and have the ability to inspire others. . .”
Here’s a link to Caroline Cummings full article:
Strive Masiyiwa is the founder and Executive Chairman of the Econet Group. He serves on several international boards including Unilever, and the Global Advisory boards of the Council on Foreign Relations and Stanford University. A board member of the Rockefeller Foundation for 15 years, he also serves as Chairman of the Alliance for a Green Revolution in Africa (AGRA). He is a co-founder of the Carbon War Room, Pathways for Prosperity, and the Global Business Coalition on Education. He and his wife, Tsitsi, co-founded the Higherlife Foundation and are signators of the Giving Pledge.View all posts by Strive Masiyiwa