Maximilian Fleitmann, an Entrepreneurs' Organization (EO) member, primarily based in Rhine-Ruhr, Germany, is the CEO of BaseTemplates and Partner at Richmond View Ventures. He has raised venture capital for his startups, helped hundreds of founders craft their pitch decks and fundraising strategy, and invested as a Business Angel. We asked him which questions founders can expect to receive in a pitch-- here is what he shared with us:
As any entrepreneur actively seeking investment will confirm, investors will bombard founders with questions during and after a pitch. It is essential to decide which businesses to invest in. As a founder, it is equally crucial to prepare to answer these questions in a way that's both comprehensible and inspiring.
However, I see founders struggling to answer even basic questions about traction, market growth or their business model. One critical lesson for entrepreneurs is getting accustomed to the back-and-forth rhythm of pitching and answering questions like it's a racquet sport.
I even create a FAQ list of common investor questions and continuously develop my answers throughout the fundraising process. From my experience, here are the 10 most common questions that investors ask founders--so you can prepare your answers in advance.
Why is now the right time to start the company?
Timing is integral to every successful company. If your startup is way ahead of its time, you might not get enough traction. If you lag behind, there might already be an extensive list of competitors.
Some companies were only possible because of a technological or regulatory change. For example, Uber used the game-changing transition to smartphones to build its product. Uber couldn't have existed in the pre-smartphone age.
What trends do you see in the market?
As a founder, you must know the prospective market like the back of your hand. Investors rely on your expertise to anticipate trends and opportunities. Your detailed knowledge builds trust with investors.
Make sure you can accurately estimate market size and are thoroughly familiar with recent trends and competitors.
Why is the team uniquely capable of executing the plan?
Investors invest in people, not businesses. To build confidence, show the investor why you are the best people for the job. If stuck, ask yourself: What previous experiences could help solve the challenges ahead? Think of it as your proven track record.
Why do users care about your product?
Companies grow because they solve real problems for customers. Emphasize your value proposition, and show why people would be excited about your company. Describe specific customer experiences and how you change lives.
How did you come up with your business idea?
Humans love stories. Great ideas often come from founders solving their own problems. Show your thought process to provide more insight into your underlying motivation.
You can also showcase how you have considered the problem and your vision to solve it.
Which competitor is doing the best job and why?
Demonstrate a keen understanding of all market players to illustrate your comprehensive knowledge of the field. Be sure to illustrate how your solution differs from the competition--and why it's better.
What will you do with the money?
Investors understandably want to see a clear strategy for how you'll use their funds. Make sure you can communicate exactly how you will put their money to good use (e.g., hiring new people or marketing) and what milestones you will reach.
It is also essential to answer how long the runway of the funding round would be.
Who exactly is your ideal customer?
You must understand precisely who your ideal customer is. Otherwise, you will waste money on marketing campaigns. Use this question to describe your dream customer in detail and share why you think they will love the product.
How are you marketing your product?
You can create the best product imaginable, but your business will ultimately fail if no one knows about it. Be sure to have a strategy for approaching your dream customer. It could be anything from social media marketing to distribution partners to PR.
When considering these channels, it's critical to express how you differentiate yourself from other companies using them for the same purpose. It is your task to stand out.
What do you expect from an investor besides money?
Picking an investor merely because of money is not a smart move. An investor with a broad network or domain expertise brings infinitely more value. But most founders don't even consider this. Talk about the challenges you need help solving--from fundraising support and connections to experts or other portfolio companies of the investor.