Are there any particular investor questions I should prepare for?
Monday, October 24, 2011/
I will be pitching my business’ concept to an investor soon – an eco-friendly taxi service – and I’m frantically preparing all my financial information, business plan, etc. I want to know, though, if there are any particular questions I should prepare for?
Investors’ potential questions are a good roadmap for how you should present your business opportunity.
When presenting any “story”, be it a business to customers, to new staff or to investors, I like to use the graphical image of a “funnel” to provide the framework of the story.
At the top of the funnel – is the “macro” business opportunity and at the bottom of the funnel is the “micro” takeaway from the meeting, in your case the investment “ask”, your timing and next steps.
In your case of investment for an eco taxi service, your story would follow this order and logic:
Your background and experience
Spend the first five minutes of your meeting talking about your professional background.
What have you done, why did you choose to explore this opportunity, what are your goals? Try to establish a business and personal connection with your investor.
The Size of the market
Is the “market” national or local, is it all taxis, or a subset of taxis? Make sure you present your market size with relevant industry statistics in graphical form (revenues, number of taxi bookings per year, etc).
The competitive landscape
Who are the players in your market (which you have defined above). On what basis do they operate? Locally? with online bookings? With what price points?
Business overview and competitive advantages
What is new or unique about your business? The price, the location, the marketing, your commercial partners, your staff, your access to vehicles or customers?
What are your operational milestones achieved to date? What is the plan for the next six, 12 and 24 months?
What systems do you have or need? CRM software, taxi booking software, payments processing, mobile apps.
How much is off the shelf, outsourced, or built in-house – at what cost?
Who has invested (cash and time) at what valuation and when?
Current and forecast financials – profit and loss, balance sheet and cashflow statement for the next 36 months, on a monthly basis.
A key question will be how much capital do you need to achieve cashflow break even? And when?
Investment requirements and valuation
How much capital are you seeking at this stage, at what valuation? Will there be requirements for further capital? When?
Next steps and timetable
Suggest a timetable for the process. Everyone works best with a deadline, so give your investor a deadline for an expression of interest, an indicative term sheet, the due diligence process, the legal documentation, the availability of new funds.
When meeting your investor assume you have 45 minutes in total, so a slide deck with 20 slides with a minute for each should the most you aim to present.
Your slides must have few words with as many graphics as possible. Less is more, so use the slides as talking points not to be read as the full story.
If you are prepared with the data outlined above you will be able to answer most of the questions from most investors.
If not, make notes and send the additional data within a week.