How to Respond When You Don’t Know the Answer to an Investor’s Question

I’m often asked by entrepreneurs how to best present to investors, and how to deal with all of their questions. A big fear that most people have before they pitch to an investor is about getting a question they don’t have the answer to. They want to know how to deal with being unprepared in the moment and having to answer on the fly.

Will not having the answer kill an investor’s enthusiasm for a potential deal?

Do your homework

My first piece of advice is to try to never be in this situation. If you do your homework, know your business, and have done the hard work and research to understand your business model, plan your strategy, forecast your numbers, understand your industry and the metrics that people care about in your industry, you should be able to answer all their questions.

This is where doing the work involved to put together a business plan is the most important; it prepares you ahead of time. These days it is not likely that anyone will read a long-form written business plan, but if you have gone through all the research and work it takes to put a business plan together, you should be able to answer every question that comes your way.

That said, if you pitch to investors often enough, there will come the time when you get a question that seems like it came straight out of left field.

Don’t know the answer to a question? Here are 5 do’s and don’ts

Here are five do’s and don’ts for when an investor asks you a question that you don’t know the answer to.

1. Don’t panic.

Your first reaction may be to panic. You may turn bright red, or immediately feel like running out of the room.

Resist the urge. Keep calm, especially on the outside. Your heart might start racing involuntarily; just don’t appear flustered. Breathe deeply.

Be prepared for an unexpected question; even if you don’t know the answer, you know that sometimes investors will ask unusual questions, and it’s not time to freeze up. Be ready for every investor to throw you a curveball.

Sometimes, it is truly something that the investor wants to know. Other times they just want to see how you react under pressure, so try to keep your cool and react graciously.

2. Don’t make things up.

You are going to feel the need to answer every question, and have the perfect answer every time. While your preparation and knowledge of your business idea should put you in a great position to deal with almost any question, you will face questions you don’t have the answer to.

You can not just make up the answer. The investor won’t buy it, and probably is asking the question in the first place because they have knowledge about your business idea or industry. They can spot a flubbed response. You will only dig yourself into a hole if you make up an answer.

3. Do ask a question.

If you think it will help, ask for more information about their question. Make sure you understand exactly what the investor is asking, and if possible, ask questions that will help you understand why they are asking the question.

Sometimes entrepreneurs panic because they think they don’t have the answer, but in reality, the question was just posed differently than they anticipated, or some vocabulary word was used that is familiar to the investor but not the entrepreneur.

4. Do provide relevant, related information.

If you don’t know the answer to their question, but you have some information that you think is relevant, provide it. If you have thoughts surrounding the question, but no real answers, voice those thoughts.

If you have also wondered about the answer to the question, but can’t figure out how to find out the answer, share that with the investor and ask for their help in finding the answer. An investor wants an entrepreneur that is coachable, and is willing to listen and work together.

5. Do admit you do not know.

Come clean, quickly. No one expects you to know everything about every single aspect. If you can understand their question, you asked a few clarifying questions, and you still don’t have an answer, don’t BS your way through it.

Come clean. Tell the investors something to the effect of: “Great questions. I would love to know the answer to that as well, and I will be researching and investigating that as soon as I leave the meeting.”

By being honest, and showing you understand why the question is important, and then giving it more importance by promising to investigate and follow up, you show that you are a true leader, and that you are willing to work with the investor, and find his or her opinions and questions valuable.

Pitching investors is not easy. The more often you do it, the better you will get, and the more calm you will feel when they ask you something you don’t expect.

As you pitch more investors (it is not uncommon for someone to have to pitch hundreds of investors before getting all the money they need) create additional slides for your pitch deck that contain the information asked by previous investors.

Leave those slides in the appendix of your business plan, ready and available for the next time the question gets asked. If there are offshoots of information that you gather from a pitch that make the answer to a question even better, include it in your information so you remember it for next time.

It’s always good to continually improve and refine your pitch and approach. The more you understand your business, the growth levers, the cash levers, and the expenses, the better your conversation with investors will be.

Have you been asked a question during your pitch that you couldn’t answer? How did you handle it?