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20 Questions that Angel Investors ask Startups

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Business Angel

The time has arrived when you’re required to step on the stage and pitch to the investors. You should realize that investors will ask you questions, and therefore, you’ll not skate through just because of your well-practiced speech or on the strength of your presentation.

Investors won’t give you a coin before they get all the information they want. They want to understand how and why you came up with this business idea or the problem you’re trying to solve. Without a doubt, it’s your chance to impress them by providing an answer to every question they ask you. 

Listen carefully to investors’ questions and write them down so that you can make necessary corrections. This will help you to be successful in future meetings.

The article provides you with a list of questions that will help you understand your weak points because the way you respond will determine the outcome of the entire situation.

1. Tell us about your Background? Investors will ask you this question because they are interested in your expertise and experience.

2. What motivated you to establish this Business? The main ingredient behind the success of any startup is motivation and passion. Thus, every investor is interested in hearing about the driving powers of each entrepreneur.

3. What Makes your Product Unique? You can only get funding when your product and service is superior or different from whatever is available in the market.

4. What is the Problem in the Market that you’re solving? You should ensure that your startup is solving a problem in the market. Investors want to invest in a company making a difference and adding value to the customers.

5. Have you protected your Intellectual Properties like Patents? This question aims to see if you understand IPs and whether you’re ready to protect your idea.

6. Do you have Competition and if Yes, Who are they? Never tell an investor that you don’t have competitors because you have. Know who your rivals are and how you’re going to compete with them with a goal of outrunning them eventually.

7. How do your Sales Look Like? Provide answers that are backed up by numbers. However, ensure that your data is good.

8. What is your Market Share? This is a critical question, and Investors will ask you about your market share since they want to see the potential of your company. They want to know whether there is any room for growth.

9. How are your Costs? The investors are interested in your cost of doing business. These costs include salaries, rent, and marketing, among others.

10. What Other Means have you Used to Raise Money? The aim of this question is to know the early-stage investors, the amount of money you have raised so far, and how you spent it.

11. How do you intend to use the XXX Amount of Money you’re trying to raise now? Investors are interested in your plan and strategy of how you intend to use the money you’ll receive from them.

12. Who is in your Team, and what is their Background? Any angel investor would want to work with a strong team with high qualifications, and relevant domain experience as well as one that can work together effectively.

13. Tell us About the Customer Acquisition Cost? The reason behind this question is to measure the future of this startup. They want to know the cost of acquiring customers.

14. How is your Traction? Investors will be interested in a startup that has excellent traction. Most of these new businesses die early due to slow growth momentum. They want to know how your sales are and whether your customer base is dwindling or growing.

15. What are some of the Biggest Challenges your Business is experiencing? Once again, never tell investors that you don’t have any challenges. You need to articulate your strengths and weaknesses as well as demonstrate how you can turn these threats into opportunities.

16. What is your Business Growth Strategy? It is essential to have a strong growth plan because your priority should be achieving sustainable growth for your startup.

17. How committed are you as founders? Investors want to know whether founders have committed their money in the business. They also want to know whether the business owners have other obligations like daily jobs besides managing this startup. They will not invest in your startup if they sense any sign of lack of dedication and passion because if you aren’t in it, why should they be. 

18. Are you attending any Accelerator Program? Investors are interested in hearing your experience since these programs have various advantages and disadvantages.

19. What is your Exit Strategy? All investors want to know how they will get their money back in case you decide to close the business. For that reason, they want to hear about your exit plan in the event things fail.

20. How can I help you? You’ll be asked this question because angel investors can offer you a lot more than their money.  They can give you advice, expertise, and connections. In view of that, you should let your potential investors know that you’re not only for seeking funds, but you’re also looking for guidance and support.

The above is just a sample of questions that angel investors are likely to ask you. They may also ask you about principal risks, long term value of a customer, and market opportunity. Therefore, ensure that you have covered all areas before you go pitch to investors. 

Conclusion

Investors are full of insight, busy, and worth listening to the same way you want them to listen to you. Thus will always interrupt your presentation to ask questions. Love these questions and answer them eagerly by incorporating their answers in your main pitch.

Learn how to switch between topics and how to get back to your slides after responding to these questions. The skill will help you to get your business in order and improve your future presentations.

I'm a passionate and full-time blogger. I love writing about startups, how they can access key resources, avoid legal mistakes, respond to questions from angel investors as well as the reality check for startups. Continue reading my articles for more insight.