Every entrepreneur has a different pitching style, and the start-up’s business model and maturity will affect what exactly the pitch looks like. Likewise, every investor will ask different questions. But, there are similarities around what investors will want entrepreneurs to cover:
Traction so far
- A good idea will typically not be enough for investors to put money into a start-up. They want to see what your start-up has achieved. Has anyone parted with their money for your product or service? is how one investor put it. If you are not there yet, get letters of interest from interested businesses. Or show how many active users you have. Simply put, investors want to see positive signals from the market that your product or service is in demand and solves a true need.
- How many units have you sold?
- How many sign-ups do you have?
What makes your team special?
- Investors often look at the entrepreneur more closely than the businesses those entrepreneurs started. After all, investing in a company means forming a partnership that will last years. If an investor is not sold on your team, they will not invest in your business no matter how much potential the idea has.
- Why is your team uniquely-positioned to solve this market problem?
- What is the team’s experience in this field?
Know your market well
- Investors will ask about your market, why you are focusing on the segment, and potential challenges in the future. You need to be able to answer their questions knowledgably, backing up your assertions with hard data. Importantly, investors are looking not at just how well you know the market, but also how well you know how to make money in the market.
- Has anyone else tried to solve this problem? How is your solution different?
- What are the challenges you foresee in the future, and how will you navigate around them?
Your track record
- If you are a first-time entrepreneur, you will not be able to show what your previous companies have done. But you should be able to talk about what you have done since you graduated from school – how did you do, what companies have you worked for, what problems have you tried to solve? Investors will often do reference checks, so keep up with old contacts who may be asked to vouch for you.
- What have you done in this space already?
- Do you have people who will vouch for you?
Your thinking process is important
- Investors understand that as a start-up, projecting growth numbers is difficult; at best, it is an educated guess. While you should ground your financial projections in reality, the most important thing about the numbers is being able to clearly talk through them, and to explain your hypotheses.
- How do you justify your growth plans?
- How did you evaluate the size of the market?