Everyone has one.
Some people have many
On most things.
Or on everything.
We are talking about opinions.
As you prepare to pitch your startup to investors, you will get advice from all directions. What works, what doesn’t, what can be better, and why you shouldn’t get your hopes up.
We say you should get your hopes up. You have invested your time, effort, and resources into your startup —- it’s only natural you want to succeed.
But for that you must have one thing. Answers.
Investors don’t have opinions. No wait, investors have opinions based on facts.
They unearth the facts by asking you questions. Questions that might make your heart race and you sweat, when you’re not well prepared.
What you need are solid answers.
We suggest one ANSWER for all investor queries when making your pitch deck.
What’s the ANSWER Framework?
Decoding The ANSWER Framework
A – Anticipate: Predicting Investor Questions
This can’t be your reaction to unexpected questions. In other words, you have to expect the unexpected. Don’t let such moments derail your confidence and obscure your pitch’s strengths.
Umm.. Ummm.. I mean…
List Common Investor Questions
Start by reviewing your pitch thoroughly. Identify key points that might trigger questions, such as —
- What is your customer acquisition cost (CAC)?
- How do you plan to scale your operations?
- What is your competitive advantage and how will you maintain it?
- What are your key growth metrics?
Listing these questions helps you prepare precise and compelling answers. Think about the potential concerns investors might have about your business model, market, or financials. Address these proactively.
For example, if you mention a competitive advantage, expect questions about how you’ll maintain it as the market evolves. Be ready to explain your long-term strategy and any barriers to entry you’ve identified.
N – Navigate: Steering the Conversation
Investor questions can sometimes lead the conversation off track. As a founder, you need to guide the discussion back to your key points without evading the questions. Effective navigation during the Q&A session showcases your ability to manage conversations and stay focused on your goals.
Steer Back to Your Main Points
Answer investor questions directly. However, once you’ve addressed their concern, steer the conversation back to your core messages. This approach ensures that the discussion remains productive and highlights your main strengths.
Use Bridging Statements
These statements can keep the discussion centred on your startup’s strengths and strategic plans. Transition smoothly from answering the investor’s question to reinforcing your main points.
For instance, if an investor questions your marketing strategy, you can respond with: That’s a great question about our marketing approach. We’ve focused on data-driven campaigns, which have already reduced our customer acquisition cost by 15% this quarter. To add to that, our unique strategy includes leveraging analytics to optimise future campaigns, aligning perfectly with our growth metrics.
Notice carefully, and you will see how you can use both these ideas to deliver a solid answer.
S – Structure: Organising Your Responses
Try to think of the best interviews you have seen on TV. When you think about there’s an element of commonality among them — the best speakers give structured answers.
A well-structured response can make a significant difference in how investors perceive your competence and clarity. Disorganised or lengthy answers can confuse investors and dilute your key messages.
- Restate the Question: This shows you understood the query and gives you a moment to gather your thoughts.
- Provide the Answer: Deliver your main point directly and confidently.
- Offer a Concise Explanation: Provide a brief rationale or supporting information to back up your answer.
For example, if an investor asks about your path to profitability, you might respond:
- Restate the Question: “You’re asking about our path to profitability.”
- Provide the Answer: “We plan to reach profitability within 18 months.”
- Offer a Concise Explanation: “This will be achieved primarily through scaling our subscription model, which has already shown a 20% monthly growth rate.”
Keep Answers Brief and to the Point
Investors lose their interest when you give long-winded responses. Aim to answer questions succinctly, and be prepared to elaborate if they ask for more details.
W – Wisdom: Sharing Insights and Knowledge
They don’t know that you know what they know and want you to know.
This 14-word sentence explains everything you shouldn’t do. It’s not structured like we discussed above. Neither does it show confidence and depth.
Lacking these can make investors doubt your understanding and capabilities.
Data, Examples, and Industry Knowledge
Investors are more likely to trust your responses if they are supported by concrete data, real-world examples, and a solid understanding of industry trends. Providing quantifiable metrics and citing relevant case studies or industry reports can strengthen your arguments and make your answers more persuasive.
Share Relevant Insights
Use the opportunity to share insights that highlight your deep understanding of the market and your business. This demonstrates your expertise about your industry.
E – Evidence: Supporting Your Claims
Unsubstantiated claims can quickly erode investor confidence. Providing concrete evidence to back up your statements is essential to building trust and demonstrating the validity of your business plan.
Provide Evidence to Back Up Your Statements
Every assertion you make should be supported by tangible proof. Metrics, customer testimonials, and case studies are powerful tools that lend credibility to your claims.
They show investors that your business decisions are grounded in reality and have produced measurable results.
Prepare to Show Relevant Documents
Investors appreciate founders who can provide immediate access to supporting documents or data. Such readiness reinforces your claims, showing that you are thorough and transparent in your business operations.
R – Rehearse: Practising Your Delivery
No matter how well-prepared your answers are, delivering them smoothly and confidently requires practice. Rehearsing your delivery ensures you come across as professional and poised, which can significantly influence investor perception.
Record and review your responses to identify any nervous habits, unclear explanations, or areas where you can be more concise. Pay attention to your body language, tone of voice, and the clarity of your answers.
Standard Questions and Example Answers by Funding Stage
Seed Stage Questions
Q. What is your current burn rate and runway?
Our current burn rate is $50,000 per month, giving us a runway of 12 months. We closely monitor our expenses to ensure we are maximising efficiency while focusing on growth.
Q. How do you plan to achieve product-market fit?
We plan to achieve product-market fit by conducting extensive user testing and gathering feedback from our initial customers. By iterating on our product based on this feedback, we ensure that it meets the needs of our target market.
Pre-Seed Stage Questions
Q. What problem are you solving, and why is your solution unique?
We are solving the problem of inefficient data management in small businesses. Our unique AI-driven platform automates data organisation, saving time and reducing errors. Unlike existing solutions, our platform is tailored specifically for small business needs, offering a user-friendly interface and affordable pricing.
Q. How do you plan to acquire your first customers?
Our go-to-market strategy involves targeted outreach to small business networks and partnerships with industry associations. We will leverage social media campaigns and content marketing to raise awareness and drive interest. Additionally, we plan to offer early adopters a discount to encourage initial sign-ups and generate word-of-mouth referrals.
Series A Questions
Q. What are your key growth metrics?
Our key growth metrics include a 50% increase in monthly active users and a 30% reduction in customer acquisition costs over the last six months. We also track customer lifetime value (CLTV) and churn rate, which have both shown positive trends, indicating strong customer retention and satisfaction.
Q. How do you plan to scale your operations?
We plan to scale operations by expanding our sales team and investing in automated marketing tools to drive efficiency. We are also exploring strategic partnerships to expand our market reach and distribution channels.
ANSWER Your Investors
Contact us today and sweep investors off their feet (chairs or laptops). Equip yourself with this guide and approach each question with confidence.