We are going to talk about which questions make sense when an investor meets with the founders…

Most of the time before meetings with founders, investors would have a chance to look at the pitch deck of the Startup…

In a well-prepared pitch deck, you will be able to see the business model, team, market, and tractions if there are any…

So the aim of the questions investors are going to ask the founders will be to learn more about those subjects…

Besides pitch deck-related questions, there will be some additional questions to understand the mentality of the founders… We will mostly focus on these types of questions in this blog post…

Investor-founder initial investment meetings

Before we dig in, as an investor there are some basic tasks you have to accomplish before and during the meetings…

Always spend time researching the startup, its market, team, and their backgrounds… Go to social profiles to check founders’ backgrounds… Remember their name at the meeting…

Never interrupt the speaker while they are talking during the meeting… It is human phycology, they may get nervous and it could cause them to perform badly…

Don’t exceed 45 minutes… It is more than enough to understand each other…

Leave the last 15 minutes for founders to ask you questions… It is as important as your questions. Asking questions is an art… You can evaluate founders by what type of questions they asked…

Now, first… let’s start with the basics then we will continue with the special type of questions…

1- What problem are you solving?

Which means… Can you explain your business model in a little bit more detail? I prefer to ask general questions to test the founders if they understand what I am asking specifically…

Also checking their public speaking capabilities is very crucial at that moment… Don’t forget, you already know what the Startup does from the pitch deck…

Just check the mimics and body language of the founders… Can they easily explain their idea?

Are they passionate about it? Are they direct or telling about a bunch of other things? There are the clues you can get from your potential partners…

2- What is your market size and where do you see your company in 5 years?

Ok… Very important… Always check the market size before the meeting… Take your time and search for it… Being a seed investor doesn’t mean that you do not have to spend some time on startups…

Learn as much as you can and listen to the founders talking about their market…

Evaluate their knowledge… Do not interrupt the speaker even if you think he says something wrong…

Just take some notes and after the questions ask about the point that you think is wrong…

The key point here is, to listen to their reactions to your questions…

Try to listen to their exit strategy when they are talking about 5 years of plans for their startup… If they don’t mention you can ask a separate question…

3- Who are your competitors? How are you different than them?

Do the founders know anything about their market? In previous lessons, we mentioned the market types… Check the founders if they have a piece of knowledge about their market type and their competitors…

Again, I will tell you once more… Never interrupt the speaker if they don’t know… You are there to understand if the idea and the founders are suitable for your criteria…

Always keep in your mind that you are not the boss, you are just a listener…

4- Do you have any tractions and what is your investment need? Where do you plan to spend the investment?

I am assuming the startup has already created some tractions…

The important point here is, when you look at their traction so far, you can have a basic understanding if the startup can manage to grow in the future…

And if the founders’ need for investment is sufficient or not…

What do I mean by that? For example… Let’s create a scenario. And let’s say the startup is a Saas helping SMEs to create chatbots on certain platforms…

They have already had a working product for 4 months and a customer database of 150… With a 20% churn rate every month…

If the founders ask for $25.000 just to spend on development or rent and office furniture… This is a bad sign for an investor…

Because naturally, an investor would want a working development team to be set up in the company… The money should be used in marketing to scale up the business…

OK… Now the secret questions you can ask the founders to understand their personality better…

1- How did you guys meet?

Let them speak about their past experiences… It is important to understand how long the founders know each other… And what is their relationship together…

Did they work together previously? Don’t forget, a good connection between founders can prevent future problems in the startup…

2- How did you come up with this idea?

Best solutions are created from the problems that you struggle with… It is important that if the founders have this problem and try to solve it by themselves…

3- What happens if you fail with your startup?

This question seems a little bit harsh but failing is a part of life… Try to seek their answers about the risk they are taking?

Both taking too much risk and too little risk is not wanted…

If the founders can tell you they are aware of the risks and they are willing to pivot the idea if it is needed… It is the best answer…

Try to understand if the founders are metric-driven… This means if they take action on guts or after analyzing the data!

This tells a lot about their personality…

If they tell you there is no option as a failure, it is a big red flag… It means that the person is immature and not so experienced…

To sum up…

Be aware all meetings are different cases and you are dealing with human beings… There is no one formula for the question of what to ask the founders…

However… your aim should be to understand the idea and its potential… After that, if the founders are a good match for you…

Always… And Always tell the founders if you are interested or not after the meeting…

If you don’t interest in their idea, it is important to tell them why… You can tell them right away or by email… It depends on your and the founders’ personality…

If you feel ok to tell them face to face… Always better… But again it is your choice…

If you are interested in their startup then set up the following meeting and share the schedule with them…

Do not let them lose time… Because it is very precious for the founders… Start the procedure right away…

I will be here for you first-time investors to reach out and ask me about investment-related questions.