How to Respond to Investor’s Questions

When you are seeking funding for your small business, it is important to present yourself appropriately to investors. Investors will ask you a lot of questions so it is important that you become prepared ahead of time for potential questions you will be asked.

Many people are afraid that they will be asked something that that do not know the answer to. If you do not have an answer for something that they ask, it might hinder your ability to get funding. Do your homework and know your business and the hard work and research. Know your business model, plan your strategy, forecast your numbers, understand your industry and the metrics that people care about in your industry so that you are able to answer every question with confidence.

It is highly recommended that you put together a business plan because it is the most important. It prepares you ahead of time with all the information you need to know. If you have gone through all the research and work it takes to put a business plan together, you should be able to answer the questions you will be asked.

Here are the do’s and don’ts for when and investors asks you questions that you do not know the answer to.

What to Do When You Do Not Know How to Answer

Do not panic

Your first reaction might be to panic but you must keep calm. Be ready for investors to throw you a curveball. Sometimes it is truly something the investor wants to know and other times they want to see how you react under pressure so do your best to not panic and keep your cool.

Do not make things up

You are going to feel the need to answer every question and have the perfect answer every time. There will be times where you will be facing questions that you do not know the answer to, even if you are prepared and have all the possible knowledge of your business idea.

Do not make up the answer because the investor will not buy it and probably is asking the question in the first place because they have the knowledge about your business idea or industry.

Do ask questions

You can always ask for more information about their question if you think it will help. Make sure that you understand exactly what the investor is asking and ask questions that will help you understand why they are asking the question in the first place.

Sometimes entrepreneurs panic because they think they do not have an answer, but the question might have been asked in a different way or they used vocabulary that you are unfamiliar with.

Do provide relevant information

If you do not know the answer to the question but you feel like you have some information that you think is relevant then go ahead and provide it. If you have thoughts surrounding the question but no real answers, voice those thoughts that you have.

Maybe you can also tell the investor and ask for their help about funding the answer if you cannot figure it out. An investor wants an entrepreneur that is willing to listen and work together.

Do admit what you I know

It is not expected that you know everything about every single aspect but if you can understand their question, you can clarify the questions and you still not might have an answer.

It is okay to be honest and say something similar to “That is a great question. I would like to know that as well so I will be researching and investigating it myself as soon as possible.”

When you are honest, you show that you understand the importance of the question and by promising that you will do research and follow up, you are a true leader, and you are willing to work with the investor.

The Bottom Line

It is not easy to pitch investors. The more practice you have, the better you will get and also the more relaxed that you will be when you are asked something that you do not know the answer to.

As you pitch more investors, create more information on your pitch that contains the information from other investors that had asked you questions. That way you will have that available for the next time the question gets asked or even better you will be prepared with the information for the next time.

The more you understand your business, the better your conversation with the investors will be. It is always good to refine your pitch and approach so that you continue to improve.