Top Five Questions ‘Would-be-Investors’ Will Ask You. And how to answer them.

Let’s face it. You are a startup and you need – MONEY. Investments of course! And what do you get when you set out pitching your dream company? Questions! Yes. Lots of questions from investors. Investors are smart and smell a successful company right at the outset. More than the company’s strategic placement, it’s the preparedness and zeal shown by the founders that get them the much needed capital. Choosing your investors carefully is of utmost importance. Even more important is how well you are prepared to answer your investors. Listed here are the top five questions you might be asked while pitching your startup.

1. How different are you?

You might be one among hundreds of other entrepreneurs and wannabe entrepreneurs that have already tried to sell an idea to the investors. So, what makes you different is naturally one of the foremost considerations your investor will make. How can you prove that your value proposition is truly unique? Can you, with accompanying competitive analysis and due diligence data, make a case supporting that you are different, and in most cases superior than others in the marketplace? Investors wish to see why it is a good idea to invest in your startup rather than inan already successful business.

2. Do you have evidence to offer about previous business success?

You might have a brilliant track record of past entrepreneurial attempts. But one of the biggest mistakes that startup owners make is that they do not focus on the right things while displaying their track record. While answering this question, do not just list out workshops and schools attendedand companies you worked for or started, but instead focus on discussing business-specific achievements. Talk about major clients you got for previous employers, kind of products developed and the amount of revenue you generated. Investors want numbers, not blunt statements. So give them that!

3. Do you have someone who believes in you?

This might sound unconventional. But investors do ask this, although in different ways. Investors would be interested to know if you have any mentors or supporters. Knowing that you can list out people who support your ideas, talents and potential would increase their trust in you. They may also wish to contact these individuals to know more about you and your venture.

4. What was your revenue last month and which is your most profitable product?

This is probably the one question where you might feel a lump forming in your throat! But remember, it is essential to have answers to these questions. This is because investors will use your answers to judge how much you know about your own business. Any good businessman would support his decisions with data. Keeping data accurate and handy is thus a sign of good leadership. So make sure you don’t go blank while answering this!

5. What will you do with the money I may invest?

Okay! This question may be too personal, taken that a business head would just want capital to employ in a number of business operations. One might be tempted to offer a very generic answer, such as I need funds to buckle up my marketing. This, however, is not the answer investors appreciate. What they need to know is that their money will be put to use in very specific operations to reach certain milestones.

If you are gearing up to grasp investments, make sure you are prepared for these questions. Be ready with supporting data as investors like to know how conversant you are with the actual performance and operations of your startup.