Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.
30 Questions Angel Investors Will Ask You
When you pitch a startup to angel investors, you want to get questions. If you don’t get questions then your pitch fell flat and nobody is interested. So plan on answering questions—and hope you have some to answer!
Embrace interruptions
Most of the business plan competitions I judge ask the judges to listen quietly for 20 or 30 minutes before asking questions. Don’t expect that when you’re pitching real angels. Expect interruptions.
Right or wrong, most angel investors consider themselves busy, full of insight, and worth listening to as much as they are worth talking to. So few pitches last through a slide deck’s worth without the investors interrupting with questions. In my group, we assume a format of 20 minutes pitching followed by 20 minutes of Q&A, but we break that basic format constantly.
My advice to you, if you’re pitching, is to love the questions that interrupt and answer them eagerly. Do they throw you off pace, out of your planned sequence? Welcome to startups. If having your pitch sequence disturbed bothers you, keep your day job. I’ve seen startup founders roll their eyes or quietly huff and puff as they go out of order, or—even worse—I’ve actually seen them get righteous and indignant with comments like, “If you’ll let me continue I’ll get to that in order” or something like that. Ouch. Sometimes, angels will accept a friendly smiling request like, “Would it be okay if we suspend that one so I can give you some build-up information first?”
The best presenters are able to switch topics on the fly, deal with the question when it is asked, and then find their way back to the structure as planned with a mental note for what’s changed in the order. It happens a lot. Listeners can tell when somebody takes the changes in stride, and that’s a good thing too, because, after all, we’re talking about startups here, and if a startup founder can’t take change in stride, that’s a really bad sign.
Ideally, your main pitch should answer these core questions:
This first list of questions are questions you should answer with your main pitch. If they ask you any of these, then you might be moving too slowly, you might have had an awkward flow, or you might just embrace the spontaneous interest and change the flow accordingly. You should always plan to answer all of these questions with your pitch deck.
- What problem (or want) are you solving?
- What kinds of people, groups, or organizations have that problem? How many are there, where are they, what do they do about it now?
- How are you different?
- Who will you compete with? How are they different?
- How will you make money?
- How will you make money for your investors?
- How fast can you grow your business? Can you scale up volume without proportional scaling up headcount?
- What’s proprietary? What are you going to do to defend that?
- What traction have you made?
- What milestones have you met?
- How are you going to get the word out?
- How are you going to close sales?
- How are you going to get started?
- How are you going to spend investors’ money?
- What makes your team suited for this business?
And please don’t think this list is exhaustive or comprehensive. You have to know your business; you should know what else is appropriate.
Some good follow-up questions:
Some other questions are indications of interest that follow from what you’re presenting. These are questions like:
- How did you come up with this idea?
- Why did you decide to (some marketing, product, or financial decision in the pitch)?
- What about (some objection related to market, competition, financial plans)?
- Who are your investors so far?
- How strong is your patent?
- Could you grow faster with more money?
- Do you realize you’re vastly underestimating your marketing expenses (or sales expense, or margins through channels, or headcount required for direct selling)?
- Do you know comparable numbers for similar businesses?
- Why don’t you do this yourself? (Meaning, why do you think you need investors?)
- What sales have you made so far?
- Have you actually talked to those companies?
- Who else is interested?
- Who else have you shown this to?
- How did you come up with that valuation?
Some questions you don’t want:
You’ll know the bad questions when you get them. They are hard to anticipate. But you’ll know. Here is just one example to give you the idea (and to round out my numbers):
- Why would anybody want this?
Have you ever pitched an angel investor? What questions did you get asked? Anything that came as a surprise, or that you’d warn others they need to be able to answer?
By 
