Top Questions Investors Ask Entrepreneurs In Pitch Deck Presentations
Top Questions Investors Ask Entrepreneurs In Pitch Deck Presentations
If you know this, then you will never get it wrong seeking funds as an entrepreneur. This was the words of a mentor to his mentee.
Garry and Mcvictor are the founders of a startup in Silicon Valley. Their business is an innovation that the world would celebrate in the future. In fact, their innovation has the tendency to become a Mainstream like Google, Apple, Facebook, Microsoft and Amazon.
These two entrepreneurs started their MVP with their personal savings and funds from loved ones. As they build the product and the market for the product, they discovered how limiting it is when one has financial challenges. They needed finances in order to continue in the business. This seems to be huge problems to many start-up entrepreneurs especially in Africa.
Image credit: mashable.com
What should they do? Their first action was that they asked questions about where to get finance to finance their businesses. They received answers and got an appointment with potential financiers. During the pitch deck, the investors asked them some questions which suppose to be in their pitch deck. They went to the meeting without a pitch deck neither was there a thorough preparation. They missed the investment.
After many attempts, they finally met a man called Gerald who is a successful entrepreneur, who became their business mentor. Their second lesson was on pitch deck questions from a potential investor. Then, he told them that if they understand and apply what he is about to teach them, they will never get it wrong in seeking funds from investors. Top questions investors will ask an entrepreneur during pitch deck presentation.
I will share with you what this mentor shared with them that day and some questions asked by the panelists of the recent Generation Africa Go Gettaz finalist pitch deck. These questions will guide you on how to successfully arm yourself in order to secure funding from investors.
The Two Parties of Pitch Deck
There are two parties in every pitch deck presentation. I will like you to understand the meaning of these funding terms; the two parties are;
- The entrepreneur
- The investor/financier
Who is an entrepreneur?
According to Lexico.com an entrepreneur is a person who sets up a business or businesses, taking on financial risks in the hope of profit. So this definition consists of three major components which are, setting up of business, taking of risk and expectation of profit.
According to Strive Masiyiwa an entrepreneur is someone who proffer an innovative solution to a problem in the society and take the solution to the market in order to have economic benefit. This definition means that it is the entrepreneurial innovation and solution that birth a business.
Who is an investor/financier?
According to Investopedia an investor is any person or other entity (such as a firm or mutual fund) who commits capital with the expectation of receiving financial returns. Investors utilize investments in order to grow their money and/or provide an income during retirement, such as with an annuity.
The product of the banks and investor is funds, because they trade it to entrepreneurs and business people at a rate called interest rate. To an entrepreneur when the investors trade their fund to entrepreneurs, they owe equity in the business. When the business becomes successful, they will be rewarded by high return on investment (ROI).
Top Questions Investors Ask In Pitch Deck Presentations
A 2018 McKinsey Global Institute reports that Artificial Intelligence (AI) has the potential to incrementally add 16% which is $13tn by 2030 to current global GDP. What huge opportunities will exist in establishing a business that is centered on Artificial Intelligence!
For instance, an entrepreneur has an innovative business in this space. He will surely seek for investment to finance the operations. Here are the questions such entrepreneur will need to answer before securing the needed fund.
Image credit: solvay.com
What Are Your Unit Economics?
In the finalist pitch of the 2019 Generation Africa Go Gettaz the founder of Africa leadership Academy Fred Swaniker was one of the panelists. One of the questions he asked the entrepreneurs pitching was “what is your unit economics?
What is a unit economics in a business? It is simply the cost, revenue and profit of a unit of the product of a business. For instance, the above AI entrepreneur sells software like a Chatbot to corporations. His unit cost is;
- How much does it take to produce 1unit of the software?
- How much is the revenue of 1unit?
- What is the profit that will accrue to the business? This is determined by markup and margin set by the management.
So, an entrepreneur should be able to know his units economics before meeting an investor.
What are your Revenue Models?
The revenue model simply shows the sources of revenue generation of the company. While some business will have single revenue source others have more than two sources. The revenue is what determines whether an investor will consider your pitching or not; because an investor is a businessman who does business with money.
The entrepreneur should know this from his business models. If a product is not making money, it is not a business but a busy-ness.
Is Your Business Model B2B or B2C?
One of the things to master when going for a pitch deck is the business model. You have to know if your business model is business to business (B2B) services or business to customer (B2C) services.
This will go a long way to help you master your market. It will help you to narrow down who actually need your products or services and who does not.
In 3S Rules, there are some business models that are for business to business or business to customers, while some are a hybrid of the two. For example, in the book Alibaba has B2B and B2C model, LinkedIn has both B2B (LinkedIn platform for organizations) and B2C (LinkedIn platforms for professionals).
What Is The Size Of Your Market?
When we talk about market in business know that we mean the supply and demand forces of a business. How high is the demand of the company’s products? How many people are in the market? What is their income demography? What is their age demography? What is their gender demography? What is their location demography?
These factors will help an entrepreneur to know the size of the market and the effective demand of the market.
How do you get your customers?
Knowing your market and customers are not sufficient conditions to win in a pitch deck. What are the strategies in place to acquire them and to retain them?
Marketing strategies are dynamic because what works for one industry may not work for another industry. The entrepreneurs should have creative strategies that they adopt in getting customers.
This is so important because the customer will determine the revenue generation of the business. The revenue generation will determine the success of the company which will determine the ROI of investors.
image credit: cpo magazine
What are the challenges you will face or you have faced?
If you have started, the investor will like to know the challenges you have faced running the business. If you are still developing the MVP, the investor will like to know the potential challenges that the business may likely face. Are the problems controllable or uncontrollable?
The entrepreneur should prepare by asking himself this particular questions. For instance, the Obvious Corp founded Odeo corp, a company into podcast before founding Twitter. They were wiped from the podcast market when iTunes entered the podcast market.
How do you plan to use this fund if secure?
How will you utilize the fund if an investor finally invested in your business? Funds invested in a business is actually given to an entrepreneur to grow so that it will have ROI. So, the investor will like to know how their money will be used by the entrepreneurs.
I will ask you the question; I want to invest USD1M into your business. How will you utilize the fund?
Image credit :genafrica.com
What an Entrepreneur should do in his Pitch Deck Design?
An entrepreneur should follow the following steps while designing and preparing for a pitch deck meeting;
- The business model of the business should be in place
- The comprehensive business plan should also be in place
- Extract information from the above documents for your pitch deck designs with the above questions in mind.
- Practice the questions above when you are done with the pitch deck design.
I know there are many questions in your mind. Ask them in the comment below. If you know this article inspire and educate you and is a piece every entrepreneur should read kindly share it on your social media handles.
Who is the first to comment?
The Business Models of Billion Dollar Worth Entrepreneurs
Have you ever wondered what makes some business start-ups to succeed and become global giants
while others fail?
With 3S Rules you will learn from global icons who founded companies such as Amazon, Microsoft, Lyft, Apple, Alibaba and many others on how they discovered their business ideas.
3S Rules will give you a first hand founder mindset on how to build your billion dollar startup idea.