Founders get to ask questions too. There is an important moment in an pitch meetings when founders have the opportunity to turn the tables on investors.
Founders who ask the right questions will gain valuable information that with allow them to probablity-weight investor interest.
1. Why are you investing in startups?
Investors (angels, funds, accelerators) each have unique reasons for doing what they are doing. Connecting on a high level will determine whether a long-term relationship makes sense for both parties.
- Do you have an investment thesis?
- How would my startups fit into your investment thesis?
- What investment criteria are most important to you?
2. Are you investing in startups?
You may be surprised to know find out many of the people you pitch to in Latin America aren’t actively investing. While any meeting can lead to positive results, it is important to gauge capacity to invest and prioritize accordingly.
- What startups have you invested in?
- How ready are you to invest in this round?
- How much committed capital do you have?
- How much have to budgeted to incriminate startups each year?
3. What is your capital deployment strategy?
Determine if this is an investor that can dedicate capital not only in this round, but future rounds. Keep in mind, angel investors do not typically reserve capital for subsequent rounds.
- What is your typical ticket size?
- Do you reserve for follow-on investments?
4. What are the steps to your investment process?
Be clear how much work and time will be required to land an investment. Investors in Latin America aren’t usually great at saying “no,” so these questions can provide valuable information that can give you an idea where you stand.
- What are the steps to your investment process?
- What percentage of startups at each step are approved?
- Do you lead rounds?
- Do you have any terms that are necessary for you to achieve?
5. What can I expect from you post-investment?
Starting thinking about how investors can help you in the future. This can help you plan out corporate governance and roles, especially important for seed rounds with a lot of investors.
- How do you interact with founders after making an investment?
- Would you require a board seat in order to invest?
So, don’t be afraid to dictate the pace and agenda of pitch meetings in order to get these questions answered. An investor pitch should be a meeting on equal terms. The aim is to determine whether alignment around a common goal is possible.
For more information about raising capital in Latin America, check out this post: ¿Cómo preparar una ronda de inversión semilla? by Nicolas di Pace, founder of Culqi.
If you are interested in managing investor interactions effectively, see Both Sides of the Table, written by Mark Suster.