One of the lasting insights I’ve learned about presentation stems from Joe Dolce, a leading media trainer, when he shared that “you should know the five worst questions you could be asked” before going into an interview.
Joe’s insight, as well as other important strategies he shares in his First Round Review Piece, Powerful Tips from Tech’s Top Media Trainer and Speaking Coach, made me rethink how I approach communication; Especially, when it comes to important meetings and interviews.
While it’s impossible to control a meeting’s outcome, thoughtful preparation gives you the best shot at making your message unforgettable, Joe’s ultimate goal for the authors, celebrities, and CEOs he trains.
Startup founders are constantly meeting potential partners, and their time with investors is a direct way to accelerate their company’s growth.
Numerous resources exist to help founders ‘perfect their pitch.’ However, in the words of my friend Jenny Lefcourt, a Partner at Freestyle Capital, “Smart people ask smart questions.” Venture capitalists are among the smartest in the game.
Fundraising is widely known as a significant learning curve for founders. Often times, the most difficult questions can make a transformative impact on a startup’s business model.
For today’s feature, we’re excited to share the most challenging questions Arian Radmand, Brittany Hodak, Liz Wessel, Mike Townsend, and Munjal Shah have been asked by investors.
This is how they responded.
Arian Radmand, Founder and Director of Engineering at CoachUp
There are many challenging questions you’ll be asked while raising funds. For the most part, all investors ask the same questions about your business so you’ll usually have come up with a great answer before even speaking with them. For me, the toughest aspect of raising money was convincing investors that both myself and my business partner were capable of executing the vision we had set forth. He was a first time CEO and I was a first time CTO. Investors normally like to back folks who have a proven track record of success, so proving that I was the right person to lead and build the engineering team was the biggest challenge that I faced.
My method of addressing concerns in that department was basically being overly-organized as well as demonstrating my past accomplishments. As a proficient engineer, taking on bigger projects to which there is no known solution is just part of the job. So it was easy for me to show my past record of engineering solutions for industries in which I had little to no experience. Furthermore, each round of funding that we raised, it became an easier sell as more people invested in us and gave us the vote of confidence with their money.
Brittany Hodak, Co-founder of ZinePak
In September 2014, I taped an episode of the TV show Shark Tank with my co-founder. Talk about a high-pressure situation to be asked questions by potential investors! The toughest questions (many of which didn’t make the final cut of the episode) were about ZinePak’s policy of not taking on all projects offered to us. Our top-line revenue numbers would be higher every year if we said yes to every project a client wanted us to take on, but we don’t feel like that’s the right thing for our business. We want every ZinePak release to be special, reserved just for properties with SuperFans. A mass-market, 150-releases-a-year approach isn’t for us. Also, it’s important for us to align only with the properties and people we want to work with. We don’t want to put our name behind a celebrity or team we don’t believe in or wouldn’t feel comfortable endorsing.
Liz Wessel, Co-Founder and CEO of Campus Job
“Would you sell this company for $1 billion?”… I had no idea what to respond with. At the end of the day, it depends on the situation, on the timing, on who the buyer is, and on how our company is doing. I was definitely caught off-guard, and I honestly don’t even remember how I responded (though my guess is that I talked my way out of answering it.)
Mike Townsend, Co-Founder of HomeHero
Investors tend to ask similar questions, market size, personal story, business metrics etc, so we get very strong at thinking about and answering them.
A very challenging question is “if you look back in a year and things are going bad, what is the reason?”
Its hard to predict the future, and as entrepreneurs we’re naturally optimistically biased, so thinking about why we would fail is difficult. I usually respond with the statistical likelihood of a major earthquake in California that destroys our office and swallows Los Angeles, our largest market, cutting revenues in half.
Munjal Shah, Co-Founder and CEO of Health IQ
One of the biggest things you get pitching any idea is what I call the Godzilla problem. It’s like, ‘You could do this, but what if Google decides tomorrow that they’re going to launch that?’
The truth is its a difficult question, because what are you going to say? You can’t sit there and say that you have a friend who works at Google who said they’re not going to do it. The investor can then be like ‘That may be true right now, but they may change their mind once they see it’s working for you.’ There’s no rebuttal to that. They may be the platform owner or have some strategic leverage in the marketplace. If they decide to do it your toast.
With all investors, there is a framework between fear and greed. They toggle between ‘I’m really excited about this company. We can make a lot of money.’ to ‘Oh my god. This bad thing could happen to this company.’
Don’t attack fear with why they shouldn’t be fearful. You’re almost telling them that their fear is irrational.
You address fear with greed; By saying ‘You know, that may be right. Facebook may come and do that, but this is such a great opportunity that if they don’t, see how much money we are going to make.’
You always attack fear with greed and you always address too much greed with fear. Never try to address fear with fear or fear with a rational argument on why they shouldn’t be fearful.
So many entrepreneurs try to do that. They try to address that and say ‘You shouldn’t be worried about that because…’ Some questions can be answered that way to show that you did your homework, but the big ones like this can never be answered that way. They can only be answered by saying ‘You’re right, that may happen and if it does we’re toast, but if it doesn’t we’re going to make $10 billion.’
If you’d like to learn more about raising capital tune into this Slideshare and submit a question to be answered by a founder or thought leader in our Q&A.