When an investor questions how you calculated your Private Equity fund’s performance, how do you react? If an investor asks how many people left your VC Firm in the last 12 months, what do you say?

Investors tell us that, too often, people avoid, second-guess or provide scrambled answers to simple questions. Sometimes their demeanour becomes defensive or aggressive.

For many Private Equity Funds and VC Firms, answering these questions is the most daunting part of speaking to investors. You don’t know what they’ll ask you, you don’t want too much focus on anything negative and you’re anxious about losing investors’ interest.

However, investors are simply doing their job when they take a critical approach and ask challenging questions.

So how can you handle difficult investor questions more effectively?

This preparation tip is taken from our free ebook: Eight questions you must answer before pitching to investors:

Look at your fund objectively. Get an expert third party to look at it. What are the areas you are most likely to be challenged on? Prepare your answers to these and rehearse delivering them confidently.

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.

Start off with these three tips when preparing for tough investor questions:

1. List the toughest questions – especially 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. Then select who in your team will respond to those questions. You will feel more confident in general, and if the questions do get asked, you will be properly prepared.
2. 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 can give you insight and expose the weaknesses in your arguments and answers.
3. 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.

The best fundraisers invest in preparing for investor questions

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.

Are you investor-ready?

We’ve created a free ebook on standing out with investors, exclusively for Private Equity Funds and VC Firms. By answering eight simple questions, you’ll discover whether you are likely to impress investors.

A ‘yes’ to all eight questions means you are investor-ready, with a persuasive pitch that will make it quicker and easier for you to raise funds.

The ebook is full of practical tips, advice, and feedback from LPs. It will help you to make immediate improvements to your investor pitches and meetings.

In the meantime, if you’d like to improve your handling of investor questions, please give us a call. Working with our experts is a small investment that can deliver amazingly high returns. Call Louise Angus on 020 7018 0922 or email louise@nullbenjaminball.com.

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You may also be interested in our 10 tips from the experts on answering tough investor questions and our six tests to check whether your Private Equity Pitch Book is investor-ready.