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7 Questions Investors ask from Entrepreneurs

Investment is a way to business growth and finding a suitable investor for business is essential for entrepreneur, so be prepared to answer investors questions while pitching your business.
BY Akshay Arora
Feature Writer, BusinessEx
Aug 31,2017

Raising funds for a startup is not an easy task. An entrepreneur must be prepared to answer all the queries that investors have in order to convince them to invest their time and money. It will take efforts and time before raising a good investment for your business. You will need to pitch your startup in many conferences and meet investors, angel investors, VC firms because not everyone will be willing to invest in you. But always remember the more you pitch the better you get.

If you are a startup then yes you have to answer a lot of questions but also keep in mind that investors are more interested to invest in startups because they offer high returns in less time with their new innovations. It surely is difficult to find investors and convince them but BusinessEx has simplified the problem by helping you find suitable investors, VC firms for your business or startup.

Current Trends

In 2016, $4 billion funding amount raised by Indian startups from around 1,040 angel and VC/PE deals, as per funding report by yourstory. In Q1, 2017 there is a 122% increase in total funding and 25% rise in a number of deals take place as compared to Q4 of 2016. More than 214 tech based startups in India has raised about $1.46 billion in the first quarter this year. Especially fin-tech startups rose over 99% more funding and Healthcare startups raised 7 times the funding as compared to Q4 of last year, as per the Inc. funding report.

7 major questions that investors would like to know before investing in your business:

  • What market problem you aim to solve and How?

Its a common fact that entrepreneurs start business based on their dream or on the problem that they face in their life and thinks that others may also be facing the same issue. So investors are keen to know whether your business is solving an actual problem existing in present ecosystem or not. You must do market research to check the precision of the problem and find a feasible solution. After doing the same then only you must pitch your business in front of investors.

  • What is the market size for your product?

It is essential that you know what the market size for your product offering is and who your target market is. Investors would be interested to know whether there is customer demand for your business and will need some specifics about your target market like age, geographic, psychographics, etc. You should be able to speak credibly about the size of the market and show them the demographics of your target market.

  • Showcase your Business Model?

An investor will ask you this question to know how you are solving the need of consumers, what are your plans to grow operations, what more innovations that you will be going bring in the time to come, what are your sources of revenue, product offering, and cost that needs to be incurred. So, you must be prepared with a good presentation of a well-planned business model if you are thinking to impress investors in the first meeting.

  • What is your go to market strategy?

A go to market strategy helps to build confidence in investors. This strategy tells them that how your business will reach to customers and achieves competitive advantage. It helps to provide clarity in investors by getting to know the pricing, marketing, distribution, sales strategies for your business.

  • What plans do you have to overcome the existing barriers?

With increasing competition barriers are also increasing in industry. Investors always look for opportunities that have more possibility to get good returns. Barriers existing in present ecosystem need strategic business planning if you want to overcome them without any loss. So, be ready with a plan to beat the barriers that are there for your business.

  • What is your exit strategy?

Investors would like to know your exit strategy before investing in your startup. Exit strategy gives an idea to investors that how they are going to recoup their money invested in your business. Be clear on your exit strategy to convince investors.

  • Why should I invest in your Business?

This is one of the major questions that can change the mind of investor even after a bad impression. In this question, an investor would like to know what unique specialization that you are providing that others don't. They would see the confidence and checks the understanding you have for your business. If you seem nervous or not clear at any point then its the break point and you will not be able to seek the deal.

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