4 Questions Venture Capital Investors Will Ask in Your Pitch (and How to Answer Them)
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Pitching your startup to a venture capitalist (VC) investor can be intimidating. You’re speaking to exceptionally smart, successful individuals in a competitive market. According to Statista, 2021 set a new record for venture capital investments in the U.S. at approximately $330 billion invested — nearly twice as much as the year before. You’re competing against a crowd of clever founders and amazing ideas. How can you best prepare for success?
Consider the perspective of the VC. With such a wide range of investment opportunities and pitches, VCs typically have a set of criteria they look for to help themselves evaluate an opportunity. Think about what you would want to know as a prospective investor and build your pitch from there.
Even startups with fantastic ideas can fumble the pitch before it even starts. Think of the following questions as you prepare your next pitch.
What problem does your startup solve for consumers?
Investors want to invest in innovative products or services with competitive, long-term potential. Successful pitches share solutions to real-world problems that have yet to be solved by other companies in the market.
Consider who absolutely needs to have or use your product. Are you pitching something that consumers can’t do without? What makes your product different and better from others? Are you providing people with a compelling reason to change their current habits? If consumers are currently using a different product or service why will they switch to your idea instead? Think critically about the answers to these questions and include them clearly in your pitch. Answer the tough questions for investors before they even ask them.
Why is now the best time?
Investors will likely want to know why now is the best time to invest in you, from both a market perspective and the current stage of your startup.
Investors will need to see that your target market is currently substantial enough to generate a large return and be sure that you’ll be able to capture a substantial piece of that market. Why will your idea work now and why hasn’t it worked before? Showing that your business will target an existing market opportunity is crucial for gaining venture capitalists‘ attention.
In relation to timing within your organization, VCs will need to know what growth and revenue milestones you will hit and when you will hit them. They will also want to see proof that the business is a viable one, with traction in your core market.
Be prepared to provide this information in a detailed and realistic timeline to investors.
Related: How a VC Wants to Be Pitched
What makes you the best leader for your idea?
Your story simply has to figure prominently in any successful pitch. At this stage, VCs are mostly investing in the people behind the idea. A strong, determined leader with a clear vision for their idea is imperative.
Include proof of your prior success in your pitch. In addition to a proven track record, VCs want to see confidence in your pitch. Prepare your pitch to showcase your best attributes, including your drive, passion and presence.
Transparency is crucial throughout the entire pitch process but especially now. It’s okay to be vulnerable. No one entrepreneur is strong in every area — it’s better to be honest about your weaknesses and your plan to hire strategically to help fill out those gaps.
Furthermore, demonstrate your coachability in your pitch. Be open to listening to the VCs advising you and your company — they are successful for a reason.
Do you have the team to execute your vision?
In addition to you as a leader, VCs need to see the executive team as a whole. Be ready to share that you not only have a unique idea, but the right team behind you to pull it off.
Be ready to talk about your team’s expertise and share a list of qualified, capable people who will play key roles in the company’s development. If you don’t yet have this team be prepared to share a thorough hiring plan. Furthermore, VCs want to see that your team is determined to get through the challenges ahead, with a shared vision for success.
It’s also crucial to address the balance of your team. Do you have a marketing expert? Product guru? Sales leader? Address any existing imbalances in team expertise and be ready with a plan to fill those gaps. Demonstrate that you are a smart, strategic founder in the way you build out your core team. Remember that VCs aren’t just investing in your business — they’re investing in the people, too.
In the end, perhaps the best way to prepare for a pitch meeting is to step into the shoes of your prospective investor. Think about what you would want to know before investing in a company and answer those questions clearly in your pitch.