Pitching to investors and continuously getting hammered with questions is something entrepreneurs need to tackle on a regular basis. It also becomes extremely important to thoroughly understand the psyche of the investor you are going to pitch.
We asked a bunch of Indian entrepreneurs to share some of the most challenging and interesting questions thrown at them by entrepreneurs and how they went about dealing with the same.
Scalability and sustainability
“The conversations that we have with investors for the series-A round we’re looking to raise have more to do with scalability and sustainability of the business – questions are asked about best performing and cost-effective channels, challenges in scaling up operations, customer retention rate etc. Investors look to getting a sense of whether we would have a realistic roadmap for sustained aggressive growth once we receive funding." - Nandit Pathak, Co-Founder, Aermed – a pharmacy and home lab services startup.
Zeroing down on the greatest weakness they forsee
Pankaj Bansal, Co-Founder, Newpatrolling.com said, “The questions that investors ask are very relative to what is the business that one is involved in. For instance, ours is a content based startup that promotes unbiased content. We have been through investor meetings for seeking Series A funds, and have noticed that investors usually zero down on the most obvious or greatest weakness that they can foresee. One should be well prepared to answer some of the most basic questions, such as, market size, strategy, go to market strategy, and how do you plan to use the money. One needs to show that they have a team of knowledgeable employees who can make best use of the funding raised.”
Product market fit
Ridlr’s Paritosh Desai – Director, Product & Growth, said that they were asked for post proof of concept and the initial launch, they were asked as to what is the product market fit and were the numbers indicating that and how big is the overall opportunity.
To this question the executives of the ticket booking app said, “Based on the initial traction on the consumer side and the interest from multiple agencies, there is definitely a product need. The first launch in a small bus agency and subsequently getting to almost 3-5 % of the total transactions per day with high number of repeats is validation of the Product Market Fit.”
According to most entrepreneurs today, investors have stopped looking for an IIT or an IIM tag. Through 2016, investors have become keener on understanding the product market fit and the firm’s path to profitability. Especially in the case of Series A and beyond, questions will gradually get more gruelling for entrepreneurs.