7 Questions Angel Investors and Venture Capitalists Will Ask

While raising money from angels or venture capitalists, you will want to meet as many as you can. Obviously, they will not all invest, yet every time you make your pitch, you will get better. Every time you pitch, you’ll get asked various questions, and get differing ideas and opinions. It is worth it to pitch as many proposals as possible, as often as possible. Some questions are going to be asked repeatedly. You will find those patterns rapidly enough and accordingly you will become proficient enough to modify your pitch. If you give a less-than-stellar answer to a question which gets asked more than once, it isn’t a big deal. However, if the weaker answers are given to the most typical investor questions, you have a problem. With this in mind, here include 7 of the more typical questions investors are going to ask:

What is your business about?

The wording of the question is going to change, yet it’s the traditional "elevator pitch" question. In other words: "In the briefest amount of time, get my attention and give me the answers to the customary you-know-whats." Learn to rapidly and reliably sell them with something powerful and simple they’re able to grasp quickly and remember easily; and keep reiterating this message all throughout the presentation.

What is the barrier to entry for your competitors?

This may be tough for Web 2.0 start-ups. The question derives from angels and VCs which may not be as familiar with your overall sector and the ease with which most web applications may be built. They are searching for an actual technological barrier which may not exist. A handful of answers which may assist you in skirting this subject: building a devoted community, launching big, key customers, and/or partnerships, and of course the proverbial, "we are cooler than everybody else," are answers that are not great.

What will stop major monster companies in your arena from copying you?

It’s nearly identical to the second question yet this question is more typically asked because there always is and always will be competition. Plus, your competition is usually from a major brand with tons of money, a lot of market share, a massive staff, and years of expertise. First off, do not say, "What competition? We do not have any." There is always competition. Secondly, though it's a difficult question to answer, it's a valid question. What’s stopping major brands from instantly copying you? Often you may want to argue:

•We’re able to move more rapidly.

•That major brand is too busy managing what it is doing to innovate.

•They will acquire us instead of copying us.

Why are you raising the funds you want to raise? The quantity you are requesting is crucial. Be certain you have done your homework. Do not inform them that your numbers are conservative, merely explain how you arrived at the numbers.

How far will the funds get you?

Have a great answer to this question. Couch your answer in financial and product terms, such as: "We expect to be cash flow positive, and it’ll get us six months past launch." The best method of thinking about question/answer includes calculating how long the funds will last if you make zero revenue. Count backwards by four to six months and this will inform you when you must begin the process of raising more funds. Understand if the cash will only last you 4 to 6 months, you must begin to look for more cash almost instantly.

Have you acquired any customers?

Have you spoken to possible customers? Investors are searching for traction, or at least an inkling of traction. As soon as you can, attempt to get some possible customers to say, "It sounds interesting." You may even use them as a reference. It will raise the comfort level for an investor and help answer their big question, "What is the market for this product?"

What is your strategy for marketing?

For early phase businesses defining and explaining your strategy for marketing may be a very difficult question. Odds are "just getting to launch" is what you are thinking about, and yet that isn’t good enough. Plus, "launch big" is equally uninspiring. Consider presenting a timeline of customer acquisition numbers and events that you are anticipating, tied to marketing. Toss in various strategies that you are going to do or are contemplating and researching. Marketing is important to your success; therefore, you’d better plan for it sooner instead of later. You cannot be prepared for all questions; however, even when you're asked new questions, the more questions you answer and the more comfortable you become at pitching, the better off you'll be.