10 Questions Investors Ask During Pitches💡
Open to see the hidden questions behind their questions and what to consider in your response
Hi Afro Founder 👋🏾
This is a two-part series, if you haven’t do read the first part HERE!
If this is your first post, welcome! Check out this list of African pre-seed/seed funds, and this post on using ChatGPT as a fundraising assistant. Both resources are FREE to help you supercharge your fundraise. If both are helpful, be sure to like and share this post so we know!
Now, on to the post. Here are a few other questions, investors ask during pitches, and what they really want to know.
Photo by Jon Tyson on Unsplash
Q6. How do you make money?
This one seems obvious, but here you want to demonstrate that there are many different ways to make money with your startup. You also want to share how you intend to start monetising, and how soon (if not already). A sustainable business model is simple, you can make much more money from a customer than what you spend acquiring and serving them.
Show that you can acquire customers easily (scalability)
…and cheaply (low customer acquisition costs; instant user value/high differentiation)
Show that you are likely to (sustainably) serve customers over a long period of time
….and that you are likely to (continuously) make (a lot more) than what you spend to acquire them
Q7: What have you learnt since you started - what thesis have you proven/disproved?
Your initial solution to a problem as a startup, is a hypothesis to the market. The expectation is that as you develop and build your solution, you iterate to gather data to prove/disprove that thesis, and continue to tweak till you find something that is closer to what the market wants, and as you build this, you unlock unique insight.
How do you know the market wants it? When there is an overwhelming market desire to use, and buy your solution by customers, that's a strong sign. It can come across as a bad sign if in the last couple of months of building you haven’t taken a data driven iterative and experimental approach by constantly tweaking, learning, adjusting to discover what the market wants.
After this time you should have some compelling insights to share.
It is very common for founders to try to force their solutions down the market’s throat, refusing to learn to be flexible, but trying to convince the market your solution is great and refusing to receive feedback from the market.
As you respond to this question, demonstrate an iterative approach to incorporating feedback in your solution design, be vulnerable enough to share some of your assumptions that turned out untrue, and surprising customer insights you found across the way.
Q8: In the next 5-10 years, what does your startup look like in the world?
This is the time to be a storyteller. Start with a strong one-liner, then elaborate.
You want to paint a very clear picture of what the world looks like and how your solution fits. Be descriptive. Imagine you had a magic wand and your solution solved the problems you hoped it would. Then say how you dominate the market because of this. It also helps to point to an example of a very successful similar startup in a different market. e.g., Paystack, in 10 years, we will be the “Stripe for Africa
Q9: How did you meet your co-founders?
This might seem like an innocent question but it isn’t. At the early stages, a lot of investors over index on the team. This means, they want to know that the team is cohesive, complementary and works well together.
Bonus points if you’ve both worked together in the past, and have complementary skill sets that match what the business needs. A story that conveys this natural progression to building the startup is what the investor wants to hear.
This question is trying to test how strong the co-founding team relationship and dynamic is. Founder drama and break ups is a leading cause of failure at the early stages, they want to avoid that.
Q10: How is your fundraising going so far?
Another seemingly innocent question. But it isn’t. Here the investor is trying to find out if there is momentum. If the round is filling up quickly, how urgently they should move. This is tough because if you do have momentum, you could just easily say for example; “we set out to raise a $100k and now we are receiving commitments for over that amount, so we are thinking about increasing the round size, but we’d like to close soon - at most a week or two from now and get back to building”
That’s best case scenario. In the case that you do not yet have momentum, my advice is to secure angels first, and get VCs in last. VCs work quicker when there is some competition and an urgency to close.
Bonus: Do you have questions for me?
This is one opportunity to leave a lasting impression. You want to ask thoughtful and considered questions that give you information you need, and also leaves a positively memorable impression. Here are three sample questions. Feel free to use them in your next pitch.
What are your thoughts on our startup, based on all you’ve heard so far?
How do you support your portfolio companies after investment?
What is your investment process and timelines?
In conclusion, it helps to listen to investor questions to decipher what they are asking, but not outrightly asking. With every question is an undertone of expectations of responses that helps them make a decision and sometimes it is not explicit.
Hope this helps, and chat again next time! Tell your friends to tell their friends about AfroPitchPrep, get us to 1k subscribers 🎉
Maria