Maximilian Fleitmann, an Entrepreneurs' Organization (EO) member, primarily based in Rhine-Ruhr, Germany, is the CEO of BaseTemplates and Partner at Richmond View Ventures. He has raised venture capital for his startups, helped hundreds of founders craft their pitch decks and fundraising strategy, and invested as a Business Angel. We asked him which questions founders can expect to receive in a pitch-- here is what he shared with us:
As any entrepreneur actively seeking investment will confirm, investors will bombard founders with questions during and after a pitch. It is essential to decide which businesses to invest in. As a founder, it is equally crucial to prepare to answer these questions in a way that's both comprehensible and inspiring.
However, I see founders struggling to answer even basic questions about traction, market growth or their business model. One critical lesson for entrepreneurs is getting accustomed to the back-and-forth rhythm of pitching and answering questions like it's a racquet sport.
I even create a FAQ list of common investor questions and continuously develop my answers throughout the fundraising process. From my experience, here are the 10 most common questions that investors ask founders--so you can prepare your answers in advance.
Timing is integral to every successful company. If your startup is way ahead of its time, you might not get enough traction. If you lag behind, there might already be an extensive list of competitors.
Some companies were only possible because of a technological or regulatory change. For example, Uber used the game-changing transition to smartphones to build its product. Uber couldn't have existed in the pre-smartphone age.
As a founder, you must know the prospective market like the back of your hand. Investors rely on your expertise to anticipate trends and opportunities. Your detailed knowledge builds trust with investors.
Make sure you can accurately estimate market size and are thoroughly familiar with recent trends and competitors.
Investors invest in people, not businesses. To build confidence, show the investor why you are the best people for the job. If stuck, ask yourself: What previous experiences could help solve the challenges ahead? Think of it as your proven track record.
Companies grow because they solve real problems for customers. Emphasize your value proposition, and show why people would be excited about your company. Describe specific customer experiences and how you change lives.
Humans love stories. Great ideas often come from founders solving their own problems. Show your thought process to provide more insight into your underlying motivation.
You can also showcase how you have considered the problem and your vision to solve it.
Demonstrate a keen understanding of all market players to illustrate your comprehensive knowledge of the field. Be sure to illustrate how your solution differs from the competition--and why it's better.
Investors understandably want to see a clear strategy for how you'll use their funds. Make sure you can communicate exactly how you will put their money to good use (e.g., hiring new people or marketing) and what milestones you will reach.
It is also essential to answer how long the runway of the funding round would be.
You must understand precisely who your ideal customer is. Otherwise, you will waste money on marketing campaigns. Use this question to describe your dream customer in detail and share why you think they will love the product.
You can create the best product imaginable, but your business will ultimately fail if no one knows about it. Be sure to have a strategy for approaching your dream customer. It could be anything from social media marketing to distribution partners to PR.
When considering these channels, it's critical to express how you differentiate yourself from other companies using them for the same purpose. It is your task to stand out.
Picking an investor merely because of money is not a smart move. An investor with a broad network or domain expertise brings infinitely more value. But most founders don't even consider this. Talk about the challenges you need help solving--from fundraising support and connections to experts or other portfolio companies of the investor.
When you’re running a company, every second counts. A successful CEO doesn’t have the luxury to spend a lot of time chitchatting over lunch. If they’re experienced, they’ve likely learned how to drill down quickly in order to find the most important skills or character traits they’re looking for in a new hire.
Here are some of the best no B.S. questions current CEOs say they would ask, if they only had time for one single question:
1. How would you describe yourself in one word?
Dara Richardson-Heron, CEO of YWCA, always asks job seekers this question because she feels “the best candidates are the ones who know exactly who they are.” However, Richardson-Heron doesn't judge people on the word they choose. She’s more interested in discovering how people define themselves. The best candidates, she explains, take some time to reflect and consider the question before answering.
2. What is the last thing you’ve learned on the job?
Andrew Felev, CEO of Wrike, likes this question, because it measures a candidate’s curiosity and passion to learn. He listens for how recently they learned something new and how challenging it was. He believes the best candidates are always learning new things that they aren’t required to learn, and by doing so they prove to be workers who will go above and beyond others.
3. What didn’t you get a chance to include on your resume?
In his book, "The Virgin Way: Everything I Know About Leadership," Virgin Group founder Richard Branson says he doesn’t put a lot of faith in the typical job interview. A good resume is always important, he writes, “but if you were going to hire by what they say about themselves on paper, you wouldn't need to waste time on an interview." He likes to dig deeper than the resume and find out what someone is really passionate about that might not be appropriate corporate resume fodder.
4. How long are you willing to fail at this job before you succeed?
This is Jon Sterling, CEO at Interview Circuit’s favorite question because it throws people off - they often can’t just come up with something obvious that will instantly satisfy the interviewer. Sterling says a good candidate will express that they’re willing to stick with the job for as long as it takes to succeed. Weaker prospects will dodge the question, by changing the topic or sidestepping the question in some other way.
5. What’s in the newspaper today?
It may sound insignificant, but Deborah Bial, President of the Posse Foundation, says it’s the small talk that often reveals what the person is really going to be like to work with. She wants to know what someone thinks, how someone thinks, and how they express what it is they’re thinking. In order to do that effectively, you have to get into a discussion about something. “I want to assess how interesting someone is as a person,” she says, “in addition to how effective they might be at work.”
6. What makes you really special? If you were writing 500 words about yourself, what would you say?
Penny Herscher CEO of First Rain loves this question, because she says it helps her measure three traits in a candidate: I.Q., integrity and energy. She has come to believe that IQ, integrity and energy are three traits you can’t teach someone. She likes to get a candidate talking and then sit back and listen.
7. What percentage of your life do you control?
Mitch Rothschild, CEO of Vitalis, chooses this topic because it helps him understand how someone feels about the world around them. Whether someone can force change to happen, or just lets change happen to them says a lot about a person, he explains. Because Rothschild runs a small company, he says he always wants to hire people who can make change happen.
8. Tell me something that’s true, that almost nobody agrees with you on.
Peter Thiel, PayPal CoFounder and President of Clarium Capital, asks this question because he’s looking for people who aren’t afraid to speak their minds. This question is a great test for originality of thinking, he says, and it also measures a candidate’s courage in speaking up in a difficult context. While many people believe that being original is easy, Thiel feels it’s actually really hard to be original, and when you find it it’s really valuable.
9. Describe a day where you’ve just had the greatest working day of your life. You’re driving home and you’re on cloud nine. What was it about that working day that made you so happy?
Lew Cirne of New Relic uses this question to uncover someone’s passion and enjoyment for their work. He strongly believes that people who are doing what they love to do will execute at a higher level than others.
10. So (insert name), what's your story?
Richard Funess, Finn Partners Managing partner asks this question because he enjoys the fact that there is no correct answer. Instead, he says, it always demands a creative response. Whatever a candidate answers will tell you a lot about their character, imagination and inventiveness. Invariably the answer is the beginning of a story, and in today's world the ability to tell a story and create a feeling is critical. On the negative side, if someone acts defensively or pauses too long before answering this question, Funess feels they may take things too literally.
In the end, what’s important to remember is that it’s not just about finding the right questions, but also learning how to listen and appropriately interpret a candidate’s response in order to find the right fit for your company.
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*Image by Hardo Müller