31 Investor Questions Startups Should Be Prepared to Answer

As an active angel investor, former angel group leader, and the co-founder of MergeLane, an accelerator and fund for high-growth startups with at least one woman in leadership, I’ve heard thousands of investors ask tens of thousands of questions. I’ve also learned that startups’ answers to these questions can be far more insightful than a rehearsed pitch. I’ve written previously about the Key Metrics Every Startup Should Know by Heart. This is an additional list of the most frequently asked investor questions.

Team:

What holes do you have in your team and how do you plan to fill them? Investor Questions Startup Should Be Prepared to Answer by MergeLane

What do you envision your role(s) to be going forward?

Why are you the right CEO (or other role you hold)? Do you plan to continue in that role in the future?

If you could write your own job description, what would it say? What key job functions are you most passionate about?

What makes you and your co-founder(s) good partners? Are there common themes or topics around which you tend to disagree?

How do you balance your personal and working relationship with your co-founder(s)?

Passion and Commitment:

Why do you care about this?

Have you invested your own money? If not, why not?

How much have you been paying yourself and what is your projected salary?

Are you working full-time on this?

Finance and Operations:

Do you have a lead investor?

Can you tell me what other investors have committed or expressed interest?

What affects your margins and how do you expect this to change over time?

What is your exit strategy?

If it is acquisition, who are likely acquirers? What acquisitions have they made recently? Of what kinds of companies? At what multiples?

What kind of a return should I expect on my investment?

If money and resources were not barriers, what are three improvements you would make to your business?

If money and resources were not barriers, what team members would you add?

How do you plan to manage the shift from a small business to a scalable company?

How much demand can you currently handle and what would it take to scale up?

If you raised more money, could you grow faster? Why? How?

Market and Competition:

How big is your addressable market and how did you determine that?

What prevents others from copying you?

Your current competitors have more money and resources. What prevents your current or potential competitors from pivoting and doing the same thing?

Other Frequently Asked Questions:

What questions should I be asking?

If you were an investor considering an investment in your company, what is the biggest hesitation you would need to overcome?

If you were your own mentor, what’s the most important advice you’d give yourself?

What questions do you have for me?

What do you enjoy most about the day-to-day management of the business? What do you enjoy least?

What gets you out of bed in the morning?

What keeps you up at night?

3 Comments

  1. Bill Flynn
    Permalink

    Elizabeth,

    I think these are all great questions but what I have noticed is that investors do not ask the essential questions for a pre product/market fit startup. I believe this is why we waste a lot of money and time early on chasing after and learning things that do not matter….yet. Your questions (except for “why do you care..”) could be interpreted as assuming that the team has either done the hard work or know how to do the hard work to determine how to find a market. I believe that this can be attributed in large part to the fact that too many investors and founders fall in love with the idea and not with the customer. This is proven out by the 75-90% failure rate of startups.

    I think it is a shame that too many good startups fail for reasons that are preventable if we were focused on doing first things first.

    Bill

    Like

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s