I was having a conversation with a friend of mine, Matt Heinz, fFounder of HeinzMarketing.com, about the investors I have met and raised money from. We got on the topic of what do investors look for, but also, what are they are not looking for. Matt had some great suggestions that I wanted to make sure everyone else had a chance to learn from as I did.

There are clearly countless strategic and tactical questions and directions you can take, and too often a well-meaning but misguided founder will take you down a rabbit hole that doesn’t necessarily lead to sales and revenue growth.

Matt said he has found that the following seven questions not only uncover gaps in a founding team’s strategy, but also focus and align everyone on what’s most likely going to drive repeatable, scalable, and predictable sales growth moving forward.

1. Show me your model
Request to see a copy of the spreadsheet that outlines how exactly the founders expect to drive sales. This should include basic components such as expected sales each month/quarter, how that breaks down by # of deals and average deal size, plus size of pipeline required to hit that number, volume of leads required to develop that qualified pipeline, and expected sales cycle length. You can make the sales model far more complicated than that, of course, but without these basic elements, it’s difficult to have confidence that the sales numbers can be achieved.

2. What problem are you solving and for whom?
This isn’t about the product. It’s about the outcome. Your founders’ articulation of the problem and how its solved is very close to the sales pitch. What are you enabling for your customers? How well can they speak the customer’s language in describing the problem? If they can’t articulate this without talking about the product directly, they have work to do.

3. Who is your target customer and why?
Your founders should be able to enumerate their early adopters. What type of companies will buy – size, age, make-up, industry. Who are the specific decision makers internally who need to be engaged. Why do these companies need it now? How does this become a need-to-have vs. a nice-to-have?

4. What is your sales process, and how does it align with how your buyers buy?
Few companies know the answer to the second part of this question, but it’s critical. If you can’t align how your customers buy with how you are going to sell, you will be introducing artificial and undue friction into the process. Your founders’ sales process should be a manifestation and response to how the buyers buy.

5. Who is selling for you, and how are you managing/measuring them?
Channel vs direct, field vs inside, a combination of these. A specific scorecard to measure what’s going on, what the leading indicators of success are in each area, how activities lead to conversations that lead to pipeline and closed deals.

6. How are you going to generate leads?
Cold calling isn’t the best answer, but at least it’s an answer. At the top of that model referenced above needs to be an explicit plan for where all of those leads come from. If your founders expect it’ll all magically and quickly appear through inbound marketing, you have a problem.

7. How are you going to decrease acquisition costs over time?
This speaks to making the transition from expensive, short-term pipeline building to long-term relationship management with existing and potential customers & prospects. The better you invest in content and relationships and nurture programs up front, the more cost effective, scalable and cost-effective future sales can become.

This isn’t exhaustive, but the crispness of answers you get from these questions (or not) should give you a level of confidence (or not) as to what the founding team might be able to accomplish in the coming months and quarters.

What other questions would you suggest investors should be asking founders?

Published on: Sep 28, 2015