[page_counter]
How to answer tough investor questions

How do you answer tough investor questions? 10 tips from the experts

June 7, 2017

How to answer tough investor questions

What’s the most daunting part of speaking to investors?

For many, it’s answering tough investor questions.

Questions are  tricky to prepare for, as you don’t know exactly what you will be asked. And, different investors approach questioning in different ways.

So how do the most successful fundraising teams handle investor questions effectively?

Having prepared management teams for fundraising for over 10 years, we recently polled our team of expert advisors and identified the core elements of a successful investor

Whether you are a fund manager, a director of a quoted company or the CFO of a start-up, these ten tips will help you emerge from tough investor questions with a smile on your face:

 

Ten steps for strong answers to tough questions

1. Think like a teacher
2. Remember, every investor is different
3. Listen to the question
4. All questions are good questions
5. Every question is an opportunty
6. How you answer is important
7. Prepare properly
8. Avoid unanswerable questions
9. End strong
10.Avoid traps
11. Extra tip

Investor Questions Tip #1. Have the mind-set of a teacher

Too many people treat tough investor questions as an exam.

They feel the need to answer each question correctly in order to pass. That attitude leads to failure.

Instead, think of yourself as a teacher.

You have a topic you know well, and you have a student (the investor) who wants to know more. Your job is to inform, educate and perhaps even entertain. If you do it right, you may build a strong personal relationship, which is important in helping the investor feel comfortable about investing in you.

 

Investor Questions Tip #2. Each investor is different, yet every investor is the same

We all know what drives investors – it’s getting a financial return.

So investors need to balance expected returns with risk. But weighing expected return and expected risk is subjective. That means each investor will assess you differently.

For some, it will be about measuring you as a person, for others it will be about gathering more data.

And people have their own style – from super soft to nail hard. You’ll have to assess what they are looking for and how they work. The best way to do this is to listen to and learn from the comments they make and the questions they ask.

 

Investor Questions Tip #3. Listen to the question!

Take a mental step back when you hear a question.

  • What’s really being asked?
  • What’s behind the query?
  • Is there a hidden agenda?

If you are not sure, you may need to clarify their question before answering.

Without clarification you may be answering the question you want asked, rather than the question they want answered.

And as you listen, you will learn something. Most investors are looking for management teams that listen to them and want to learn.

 

Investor Questions Tip #4. There’s no such thing as a stupid question

It may sound stupid to you, but every investor question is aimed at unearthing something.

Don’t assume that you know what the investor really wants.

Perhaps they don’t understand – or perhaps they are testing how you react to “stupid” investor questions (yes, they do this!).

So treat every question with respect, consideration and then use it as an opportunity to help the investor understand your business (and you) even better.

 

Investor Questions Tip #5. Every question is an opportunity

If you are properly prepared for your investor meeting, then you will have key messages to get across.

Use your answers to reinforce, restate, or reframe your messages.

Beware of treating tough investor questions like a tennis match. You do not want to score points with your answers.

Instead, like a teacher, you want to enlighten the investor and perhaps help them see the world the way you see it. One powerful piece of advice is Show, Don’t Tell. Use stories, examples and illustrations to bring your business to life when answering investor questions.

 

Investor Questions Tip #6. How you answer is as important as what you say

As we said before, your meeting is not an exam. It’s more like a meeting of minds. So work out what the other person believes and is feeling.

How can you do this?

You could ask probing questions, such as:

  • Does what I’ve just said explain it?
  • Do you want to know more?

For more hypothetical questions you could explore what they believe: “And what do you think?”

The more it feels like a conversation rather then a quiz, the more likely you’ll be successful.

 

Great Answers Tip #7. You must prepare

We have seen too many people turn up to investor Q&A sessions unprepared.

By contrast, successful fundraising and management teams prepare with the intensity of an elite athlete.

After all, you want to be seen at your peak when meeting investors.

There are three best practice techniques for preparing:

  1. List the tough questions you may be askedespecially the ones you don’t want to be asked. Work out answers to these well in advance, decide which should be answered before the Q&A by incorporating it into an earlier part of the meeting, and which will wait for the Q&A.
  2. Select who in your team will respond – You will feel more confident and, if the questions do get asked, you will be properly prepared.
  3. Bring in a fresh perspective. Get someone outside the organisation to identify new questions investors may ask you – and get the outsider to listen to your answers to the tough questions. A neutral third party (like Benjamin Ball Associates) can give you insight and expose the weaknesses in your arguments and answers.
  4. Stress-test your answering. Spend time as a team firing questions back and forth, and reviewing how you answer these. Keep at this until you have got it right. The more you prepare, the more natural you will sound.

For important investor events, we frequently spend many hours preparing teams with tough questions, video review and rehearsals. Just like elite athletes, you only build muscle strength with practice.

Tough Questions Tip #8. Don’t try and answer impossible questions

There are some investor questions you cannot answer.

If you learn our approach of Question Triage (a technique for classifying questions up front) you can spot these a mile off. Then you can use proven techniques to get yourself back to safe ground and onto a topic that you can talk about with confidence.

 

Question Tip #9. Finish strong

Investor question sessions often end flat.

Frequently, people feel pressured to finish quickly, especially if time is short. This is a mistake.

Never miss this opportunity to reinforce your important messages while also showing that you have listened to what the other person has said.

Even a strong 30-second summary at the end will show that you have listened. This can also highlight what they need to hear.

 

Investor Questions Tip #10. Beware the last question trap

AKA the Columbo moment.

If you are a child of the ‘70s you may remember the TV series Columbo.

The bumbling detective always finished his interview with a suspect and, as he walked away, would say “Just, one more thing….’  With that one line he caught the suspect off guard and got the information he needed.

status columbo just one more thing

#11. Just one more thing…

If you’d like to improve your handing of tough investor questions, please give us a call.

We’d be happy to discuss ways we can help you. For example, we run extensive investor Q&A session to build skills and increase confidence.

You’ll find that working with our experts is a small investment that can deliver amazingly high returns.

To discuss how you can improve your next investor question session, please call Louise Angus on 020 7018 0922 or email louise@nullbenjaminball.com.

Help me improve my investor Q&A

 

You may also be interested in...

Fundraising Presentations: a survive and thrive guide for talking to investors

Apr 21, 2017

Fundraising presentations are hard work. You're bombarded with challenging questions from investors, worn out by long days, and struggling to...

Read More

Persuasive Investor Presentations – five techniques from psychology

Apr 13, 2016

Investment decision-making is not totally rational. Are you using all the tools at your disposal to create and deliver persuasive...

Read More

Why good public speaking skills make you a better leader

Nov 11, 2016

Do your public speaking skills inspire, motivate and influence others? They should. Many leaders are nervous of public speaking. Some...

Read More

Ten Benefits Of A Better Investor Pitch Book

May 10, 2018

A great investor pitch book is at the heart of successful fundraising. You use it to capture the essence of...

Read More

Why Body Language Matters When Pitching to Win Business

Jun 29, 2012

Better Body Language We all know that body language is important in business.  But how important? And does is really...

Read More

Private Equity Fundraising Tips from the Experts: Become a Top 1% Fund

Sep 06, 2017

How can you be seen as a top 1% fund by investors? At SuperReturn Emerging Markets in Amsterdam, experienced LPs...

Read More

How you can create a powerful investor elevator pitch

Mar 07, 2016

A great elevator pitch is an essential part of your toolkit Last month I chaired the Quickfire Showcase at Berlin’s...

Read More

How to prepare for your media interviews

Jan 16, 2013

You must prepare for media interviews The excruciating Newsnight interview with Treasury Minister Chloe Smith this summer is one example of...

Read More

How To Write So People Will Read – 6 Great Tips

Mar 11, 2018

These days, we are writing more than ever.  That means it’s harder than ever to grab attention.  Your readers have...

Read More

How well do you answer difficult investor questions?

Nov 16, 2017

When an investor questions how you calculated your Private Equity fund's performance, how do you react? If an investor asks...

Read More

How to Choose a Public Speaking Coach

Aug 21, 2017

How do you choose a public speaking coach? When selecting a public speaking coach or presentation trainer, you want to work...

Read More

10 Power Language techniques to use in your next talk or presentation

Sep 06, 2017

How To Use Powerful Language For Leadership Communications   Great leaders use Power Language. It adds interest and colour to...

Read More

What is The “So What?” Test? – And how to use it.

Dec 30, 2019

So What? is probably your most important question. When you put your talk or presentation together, how do you decide what...

Read More

Private equity fundraising | Seven tips for first investor meetings

Dec 10, 2015

What do LPs want from private equity funds at first investor meetings? That's the question I put to the panel...

Read More

How do you pitch investors?

Sep 21, 2016

What do investors really want? Six tips We wrote this piece with our Private Equity clients in mind. But there...

Read More

Give high impact talks and presentations – 5 simple tips

Mar 01, 2017

Do you want to give high impact talks and presentations? Do you want to engage your audience? And do you want...

Read More

Use a great business story for better business

Jul 05, 2017

How to tell a great business story Leaders use storytelling so that audiences listen, remember and act on what they...

Read More

How to Make Your Investment Pitch More Memorable – Six Tips

Mar 29, 2017

How do you make your investment pitch more memorable? It's a real challenge these days. Investors have more opportunities than...

Read More

Three persuasive appeals you must use in your talks and presentations

Nov 30, 2016

Your leadership talks need to be persuasive As a leader, every talk or presentation you give is an exercise in persuasion....

Read More

What do LPs want from your private equity pitch book?

Oct 14, 2015

A well-crafted private equity pitch book can make the difference between securing a first meeting with investors and getting a...

Read More

ESSENTIAL PROGRAMMES

Top Blog Post Categories

What Our Clients Say

“BBA transformed our pitch into a compelling investment narrative. They undoubtedly helped us secure Sky TV as an investor.”

Gerry Bastable  Director, Blast Films


“The new presentation properly represents the institutional quality of our fund. It has been a step change for us.”

Erwin de Kleijn Head of IR, Saemor Capital


“We were very pleased…[BBA]  helped us define and explain our unique value proposition. As a result we have attracted new and different investors.”

Florian Kemmerich  Managing Partner, Bamboo Capital Partners

 


To Learn More…

Contact our
Client Services Director
Louise Angus
+44 (0)20 7018 0922