Questions That Investors Will Ask You

Hello everyone, this is Patty Post, your host of the UPersevere Podcast, where I am trying to inspire you to keep persevering in business. If you've decided to go out and raise money independently, God bless you, because we are in a very hard time right now to raise money, especially if you are early-stage. I hear that early-stage is the worst. And then the other one is after Series B, like Series C beyond is dried up right now. So, good luck. And today it's for those that are fundraising. And I'm just going to go through a couple of questions, and I will flag this as fundraising.

And I'm going to answer some of these questions or explain the questions in each of the episodes. And these are questions that will come from the angel investor or the venture capitalist that you are pitching to. And the scenario is that you have pitched to them, they've seen your deck, and they know your story.

At the end, you typically have half an hour of questions and they are going to ask some questions that are going to stump you. So if you already had your first pitch, you are probably like, oh yeah, I had a few questions that stumped me, dang it. Now I don't remember them. So the first tip is, well, write them down. Ask if you can actually record your pitches. Just do a voice note and be like, you know what? I'm working on this, I'm trying to get better, and I would love it if I could record this through a voice memo, would you be okay with that? I mean, I've never had anyone say no. And it's a great thing to have on record because then you can go back and track the questions that you were asked and then you can write down the answers. So you end up with a whole Rolodex of this. I talked about this in a podcast early on, and how I've done it and now I'm fundraising again for my pre-series A, and I will record everyone. 

And I will also start creating my book of questions because they poke holes. And you want your pitch to be as solid as possible because if they get nervous, they're like, she doesn't know her stuff. He doesn't have his financials together. He doesn't have his story right. They're going to step back. It's not an environment where you want to play.

Like, you got to know your stuff. So right here I have about a dozen questions that I'm going to go through for the next 30 days. So today I'm going to talk about a question that they are going to ask you, which is, “why the jump in revenue?” So you're going to have a slide, it's typically going to be slide 14-15, the end of your slide deck.

Don’t have your slide deck be more than, Kevin O'Leary says 12 slides, I say about 15, especially if you have some intricacies in your product, if you're science-based, biotech, if you have something that is, you know, you have to do more explaining, you're going to need a couple slides to do that. But it shouldn't be much longer than that.

I am a big fan of having just my pro forma at the end slide. So that's showing everything from your forecast. So you're going to need to have your forecast. If you don't have a forecast, then you shouldn't be pitching because what are they investing in? Right? Like, oh, you have this great idea. Well, how much money are they going to make? They're going to want to see that you've thought this through.

So when they ask a question, if they see that in year three you went from $50 million to $300 million, you have to tell them why. Like, “oh, you know, I just 10x-ed my revenue because I thought that, you know, we were going to hit a banner year. Typically companies do well in year three.” Wrong. Wrong, wrong, wrong. Do not say that. Here's what you say. Hey, in year one, I'm going to start with regional. Say that you are on the East Coast. Hey, I'm going to launch in New York, Connecticut, New Jersey. I'm going to launch in the 12 colonies and that's my launching point. And I'm going to take 12, let's say $2 million; I'm going to take $2 million to do that and I'm going to use it in digital revenue or digital spend, I'm going to do it in ads and conferences.

I'm going to hire two salespeople and then I'm going to do some billboards and ads, bus stop ads, some things like that. And then you're going to say, so that's why we see the jump in revenue from year one to two. Like this is what I spent and then I expect to 10x that so that I made $20 million. And then I made $20 million and I decided to expand that to down the coast into Florida and then into the southern Bible Belt states. I went through into Kentucky and I went into Ohio, you could say the Midwest, you could say whatever that is. Be sure that you are very strategic. You get what I'm saying here. Like, okay, I started here and then I moved into this region. And then you see that year three, hey, I was across the country.

Like I landed, we expect that we're gonna land a big retailer, or we are going to go from 5 million to 50 million by being throughout the country. And we also are adding more salespeople that for every salesperson that has a $100,000 quota every month…

You get what I'm saying here. You need to have that story down. And then they're going to ask year four and five. And like for me, I say, okay, I'm going to launch digitally first, then I'm going to go to regional pharmacies. Then we see a big jump here because I'm going to launch into Walmart. And when I launch into Walmart, I'm suddenly launching into 11,000 stores. And we average that we're selling them five tests per store and they're gonna turn that inventory every six days. 

And for all of those tests, we assume that 25% of them are going to have strep. And so they're going to need to see our telemedicine provider and we make X amount on that. You see what I'm doing here? So they wanna know what's the story on your jump in revenue and then how are you going to get there?

And why. So they're going to ask questions around, okay, well, what you're saying right here, I understand, but why? Where is your thinking on that? So I really encourage everyone that if you have put together your forecast, put a script together on how you are going to answer those questions. So say it again. What's the story on your jump in revenue? Why did you go from one million to fifty million, from year one to three, have that down. And then how are you gonna get there? Okay, is it gonna be digital? Is it gonna be sales reps? Is it gonna be retailers, B2B sales, service model? Get that down. Have a good pitch there. So that is the podcast for today. If you like this, please follow me. So I'm trying to grow this following of @PattyPostCEO, but then also @u.persevere on Instagram. So I'm going to be having infographics on there. And eventually, I think that we can put some good content that is really educational. That's why I'm doing this for 30 days. So then I can start putting things that I've learned and put it out there for the rest of the world because I want people to be successful. I want you to keep on persevering in business because I did and I'm so glad that I did. There were so many times that I wanted to quit, let me tell you. And you just gotta keep optimistic and think of what's on the other side. So I encourage you to do that. Please DM me if you have questions and love a review, and not just a five-star review. Love it if you wrote something. Like I love to do things with intention. So I'd really appreciate if you did too. Write a sentence or two about what you think of this and if you have suggestions, let me know. But until tomorrow, keep on persevering in business. I'm Patty Post, your host, founder and CEO of Checkable.