By Dave Richards, Managing Partner, Unitus Seed Fund
Your first investor pitch will always be missing info that investors will want to know. That’s because you need to deliver your pitch in 20 minutes max. You will want to anticipate the most expected questions and to have concise responses ready. We call this the “internal FAQ”. It is not a document you share with investors, but it helps you think through responses to the tough questions.
Each business will have unique and different questions based on context (e.g. your sector, what’s hot, etc.) You will know what many of these are from your previous conversations with other investors.
Tip: If you don’t know the answer to a question, never provide a B.S. answer. Always just say “I don’t know” and offer to follow-up with a response later. And do it. Take a note so that investor sees you are taking the question seriously.
Here are some more common general questions:
- Why are you raising this amount of money and not more or less?
- Are you missing any key skillsets on your team? If so, what are you planning to do about it?
- What are the biggest risks for the business in next year? Long-term?
- How much capital do you think this business will need before it generates enough internal surplus to fund its own growth? (Note: most entrepreneurs greatly under-estimate this)
- Tell me more about your unit economics. What levels of business unit and corporate profitability do you think this business can ultimately deliver? What are the key drivers for this?
- Which other investors are you talking with? How much are they looking at investing?
- How much would you expect/want me to invest?
- What investment rights and terms are you offering? What valuation?
- When are you targeting to close this funding round?
- What are your recent financials? What did you close the last fiscal year at? What is your last 3 months revenue? Cash burn?
- How much capex does your business require? Have you looked into getting loans for capex or working capital?
- Why do you want to run/build this business? How long are you committed for?
Any other general questions that you recommend entrepreneurs to prepare for?