Are you ready to pitch your startup to investors?

Imagine that you are sitting across from a group of potential investors. They are asking you questions. Multiple questions. How would you answer them? Be honest and upfront with them, even if it means sharing some negative news. Investors want to see founders who are confident in their business and who are not afraid to admit their weaknesses or risks.

Asking yourself early-stage questions before approaching investors not only ensures that you are getting prepared for the pitching process but also serves as a self-assessment of your business's readiness for external funding.

1. Am I ready to be fully transparent about my business?

Investors want to see founders who are honest and upfront about their business, both the good and the bad. They want to know that you have a clear understanding of your business's strengths and weaknesses, as well as the challenges and risks that you face. If you're trying to hide anything from investors, it will be a red flag.

In 2015, Theranos, a startup that claimed to have developed a revolutionary blood testing device, raised over $700 million from investors. However, it was later revealed that the company's technology was fraudulent. As a result, the company collapsed and its founders were charged with criminal fraud.

This example is a cautionary tale for founders who are not honest and transparent with investors. When you're pitching your startup, it's important to be upfront about your business, even if it means sharing some negative news. Investors are more likely to invest in a company if they trust the founders and believe that they are being honest.

2. Is it more difficult for me to persuade customers to buy my product or investors to invest in my company?

If you can't convince customers to buy your product, it's going to be difficult to convince investors to invest in your company. It could be a sign that your business model is not viable. Investors are looking to invest in companies with a large addressable market and a product or service that solves a real problem for customers. Below is an example when founders actually managed to convince investors, but ultimately customers are the one who vote.

In 2017, Juicero, a startup that sold a $400 juicer, raised $120 million from investors. However, the juicer was a commercial failure and the company went bankrupt less than two years after launch.

One of the reasons for Juicero's failure was that it was simply too expensive and inconvenient for most consumers. The juicer required special pre-packaged juice packs, which cost $5 each. This made juicing with Juicero more expensive than buying juice from the store. Additionally, the juicer was difficult to use and clean.

This example shows that it's important to validate your business model with customers before seeking investment. If you can't persuade customers to buy your product, it's going to be difficult to convince investors to invest in your company.

3. What will happen in the market if my business stops operating?

If your business stops operating, will it have a significant impact on the market? This is a question that investors will ask themselves when deciding whether or not to invest in your company. Investors are looking to invest in companies that have the potential to disrupt their industry or create a new market.

In 2010, Tesla raised $465 million from investors to help develop its first electric car, the Model S. Tesla's mission is to accelerate the world's transition to sustainable energy. If Tesla were to stop operating, it would have a significant impact on the electric vehicle market. Tesla is one of the leading electric vehicle manufacturers in the world and its vehicles are highly sought-after by consumers.

This example shows that investors are looking to invest in companies with big missions and the potential to make a significant impact on the market. If your business has the potential to do that, you're more likely to attract investors.

Remember to be honest and transparent, validate your business model with customers, and have a big vision for your company.