The 3 Questions You Should Focus on During a Pitch Competition
During pitch competitions, entrepreneurs must go head to head with other ambitious founders to try and win a piece of the funding pie. To prepare for these competitions, entrepreneurs should concentrate on these three questions.
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When competing during a pitch competition, most entrepreneurs make the mistake of solely focusing on their pitch and neglecting to prepare for the Q&A. This is a mistake that can shatter your chances of taking home first place (and more important cash).
Thankfully, to prepare for my pitch competition, I interviewed 15 angel investors about the most common questions I'd be asked and the best ways to format my answers.
As the co-founder of Alumnify, an alumni-engagement platform, I have had my fair share of pitch competitions. To prepare I interviewed 15 angel investors about the most common questions I'd be asked and the best ways to format my answers.
Whether you're the CEO or an intern for your company, understanding the answers to the questions below will not only help you present your company in the best way possible, but it will also help you understand where your company is today and what you need to do to improve for the future.
Related: 3 Ways Entrepreneurs Swing and Miss at a Funding Pitch
Here are some of the most asked questions investors have asked me during a pitch competition (sorted by the most common first).
Prepare and practice for these questions, and you will blow your competition away.
1. Who is on your team?
What to focus on: Start off by talking about your team's experience in your market, what key skills each member brings, and why your team is the right one for the job. If you're a software company, pay special attention to your developer team, as a lot of investors want to know you have the abilities to build your product in house.
How to separate yourself: Most contestants will talk about how they have a "rock-star" team and then list some impressive accomplishments (Ivy league graduates, proven track record, worked at Google, etc.). To stand out, list the additional team members you're going to need in year two and three of your venture. It makes you seem honest and mature to admit that when your startup grows to a certain point, you've already thought of your next three to four hires.
2. What's your traction do date?
What to focus on: Start with revenue if you have it -- paying clients will always be a gold mine for this question. If you're pre-revenue, beta customers are the next best thing, and if you're earlier than that bring in how many signups you've had on your landing page. The key to answering this question is to mitigate as much risk as possible by convincing the judges that you are building something that someone wants, and you need the judges' funding to help serve your customers who are dying for your product or service.
Related: Steer Clear of These 5 Pitch Mistakes
How to separate yourself: Apart from the money or interest your customers are giving you, this is a perfect question to tie in what you've been learning from customers. Since a key the point of the traction question is about reducing risk, talk about what traction you've made learning about what your customers want. When you can say that initially you thought X but through talking with users and tracking feedback you actually learned your users want Y and Z, you demonstrate that you've been making strides in refining your business. There's many ways to describe your traction to date, so don't underestimate the importance of all those customer interviews.
3. What's your revenue model?
What to focus on: Have hard numbers for these questions. While it may seem obvious, many teams say they are going to have annual fees, transaction fees or premium features, but don't haven't decided on the pricing yet. Also, depending on your company, be extremely careful about just listing data or advertisements as your primary revenue source. Many entrepreneurs don't understand when their data becomes valuable enough to sell, and they don't realize how many users your software needs to be able to be self-sustaining with just advertisements.
How to separate yourself: Guy Kawasaki gave a piece of advice to leave one of your most obvious revenue options out of your answer to this question. While at first I was extremely cautious about this, I have tried it myself and have seen amazing results. When you leave an obvious future revenue source out of your answer, many times an investor will respond with "Well have you thought about…." This not only makes your company seem like it has even more potential than you thought of, but it gets the investor to start thinking that they are contributing to your team. This gets them to buy in more to your company, encourages them to keep thinking about ways to help, and by thanking them for their suggestion makes you seem coachable.
Related: 3 Ways To Perfect Your Pitch