Investor Dating - 40+ Questions Investors Ask Founders
As a founder I have pitched endlessly at demo days and also one-on-one sessions with angel investors and venture capitalists. As much as I prepared, I remember countless meetings I walked out thinking — “I wish I knew that question was coming!” Today, I have the privilege of sitting in the investor’s seat as General Partner of Rebel One Ventures, but I have spent most of my time as a founder and as an ode to the hustlers, I am sharing a list of several initial questions I may ask in a first meeting.
I firmly believe transparency in the selection and due diligence process helps level the playing field for founders, wherever they come from. Some entrepreneurs strive forward because they grow with a parent who was a business owner and learned from peers and privilege. Others learned from the ‘School of Hard Knocks’. Wherever you come from, this ‘starter’ list is meant to help you think about the questions investors may ask as you prepare to seek funding. Most importantly be honest in your responds— integrity above all is most valued. May the odds be in your favor.
Introduction
- Can you describe the company for me in one sentence? More specifically, who is paying who for what?
2. What stage is your startup?
A. Concept (team, idea, initial pitch deck/plan)
B. Prototype (Functional first product, pre-revenue)
C. Pilot (Initial product launch with paying customers or/and active users, and initial revenue)
D. Launch (Public launch with initial revenue)
E. Pre-scale (Evidence of product market fit, signs of repeatable sales process, clear path to growth)
F. Growth (Actively scaling or preparing to scale; clear product; all about expansion)
3. Problem: What is the core problem or need? What is the pain?
4. Solution: What is your solution (product or service)?
5. User: Who is the user? Who is in pain?
6. Customer: Who is the customer? Who is paying? Are they the same as the users? Why? Why not?
7. Timing: When did your company launch? What year did you start?
8. Market: How big is your market? Specifically, what are the total number of potential buyers (typically within the U.S.)? And…
9. How big is the market in USD? (Average price of our product times the total number of potential buyers (typically within the U.S.) in USD)
10. Team (Founder-Market-Fit): Who is on your team? What relevant experience do they have? What industry knowledge, unique skills, leadership, key relationships, prior successes and/or failures?
11. Board & Advisors: Any notable advisors with key relationships, prior successes and/or failures?
12. Traction — Product: How developed is the product? Have you performed any pilot/s? Were any paid pilots? What are the key things you learned? What changed over time? Where can I go to use the product?
13. Traction — Revenue: How much revenue have you made to date? ($, USD)
14. Traction — Revenue (ARR): What is their current Annual Run Rate (ARR)? (Last months revenue (cash received) x 12 months, $USD)
15. Traction — Users: How many total active users are using the product or service? How often are they using the product or service? How many used it in the past month?
16. Traction — Customers: How many customers are paying for the product or service today?
17. Traction — Engagement: Any other key metrics you want to share? Monthly Active Users (MAU)? Revenue growth rate, Month over Month (MoM)? Notable partnerships?
18. Traction — Pipeline (USD): How may customers have SIGNED letters of intent (LOIs), memorandums of understanding (MOUs), or unfulfilled contracts do you have? Who are they? What is the total contract value over the next 12–18 months?
19. Business Model — Price: What is the price for each product or/and service? What is the average price per unit? Is the revenue recurring or one-time?
20. Business Model (USD): What is the average revenue per customer in USD?
21. Business Model — Frequency: How often do customers buy your product on average?
22. Business Model — Strategy: What are your ideas to…increase revenue? Shorten sales of sales cycle? Increase price or volume?
23. Go To Market — What are the primary distribution channels? Who are the primary channel partners? What is the plan of action to grow market share? Obtain and surpass revenue targets?
24. Milestones — Projections: What is the target for total users and ARR for the next 3, 6, and 12 months?
25. Expenses — Product Cost: What is the cost of your product to make per unit for each product and/or service?
26. Expenses — CAC: What is your cost of customer acquisition (CAC) (Cost to acquire) one customer? (average cost in USD)
27. Expenses — Burn rate: What is the average total monthly expenses for the startup? (Use the average over the last few (usually 2–3) months)
28. Expenses — Strategy: Ideas on improving gross margin? What are the biggest expenses? Cost of marketing and sales and expected output over time?
29. Financials — LTV: What is your expected Lifetime Customer Value (LTV)? Total amount a customer spends over their lifetime with the business.
30. Financials — Runway (USD): How much cash is left in the bank now (USD)? (Total cash divided by burn rate gives you the months of ‘runway’ left)
31. Finances — Gross Margin: What is your gross margin? (sales price minus unit cost) divided by sales price as a percentage
32. Finances — Financial Model: Do they have a financial model in Excel with 2–3 years of projections? What are your projections in 12 months, 24 months, and 36 months? What is your plan to reach those goals?
33. Competition: Who are the direct and indirect competitors? What are the barriers to entry? Differentiation?
34. Investment — Raised (USD): How much capital have they previously raised in total to date?
35. Investment Round: What is the current funding round? (Pre-Seed, Seed, Seed+, Series A, Series B, Series C+)
36. Investment — Spent (USD): How much capital has already been spent to date?
35. Investment — Raising: How much are they raising currently?
37. Investment — Committed: How much capital has already been committed in the round?
38. Investment — Valuation (M, USD): What is the current pre-money valuation ($M, USD)? Or Cap on the Convertible Note / SAFE?
39. Investment — Investors: Who are the investors in the previous round? Committed to this round?
40. Investment — Other: Of the previous investors, who is the lead? Who are the new investors? Are the previous investors coming back? Do they have any debt?
41. Exit Opportunity: What is the strategy? IPO? Get acquired? Who are the potential of acquirers? Why would they buy vs. build?
42. Strategic Value: How can we help? What introductions can we make or knowledge can we share?
43. Geography: Where is your Headquarters?
44. Source: What is the person and/or organization that made us aware of this opportunity?
—
Impact related questions:
45. Impact — Focus Areas: What are the startups primary impact focus areas?
A. Zero Disease
B. Zero Pollution
C. Zero Illiteracy
D. Zero Poverty
E. None
46. Impact — Underrepresented Founders: Do any of the founding team members identify as underrepresented? (e.g. Women, Black, Latinx, LGBTQ, Veteran)
47. Impact — Opportunity Zone: Is your startup headquartered in an Opportunity Zone?
48. Pitch Deck: Can you share a pitch deck for your startup? (more on how to make a great pitch deck here.)
Good luck preparing for your coffee chats and pitches with investors! In giving you the ‘questions on the test’ remember to always be honest about where you are in your startup journey. Exaggerations and misrepresentations are deal breakers for myself and most investors. You are in a sense selling your venture, but more importantly building a relationship with someone who will join you on the journey to help accelerate your business.
