How to Prepare Your FAQs for a Fundraise

About a year ago, I was helping a founder raise their Seed round (we raised £2m in the end).

About a month into our 1-2-1 calls I got him to take some practice investor calls and send me the recordings. When I received these calls I was surprised at how bad he actually was.

During one call, a VC asked a question and the founder went on a tangent for 30 minutes! He jumped from one part of the business to the next.

The second call was slightly better, but not by much. The VC was allowed to ask a whole 3 questions, but the founder ignored about 2 of them because he kept on talking.

You might think this sounds crazy, but after spending over 6 years on investor calls from all sides, I can confidently say that 90% of you are doing the same without realizing it.

When you go off on tangents and are not concise with your answers, investors get bored. They start to daydream. Then lose interest in you and your opportunity. When meeting with investors, it is crucial to have a two-way conversation and, more importantly, not dominate the conversation.

The biggest issue I have found on why you do this is that you don't prepare your investor questions in advance. Without this type of preparation, you don't have a structured approach to answer each question and as a result, you either don't answer the question at all or provide unnecessary information.

This can lead to investors not understanding your business at best and rejecting you at worst.

To become the best founder at answering investors, you need to work on your FAQs well before you start fundraising.

Here’s the 6 steps on how to do this:

Step 1: Create a repository of all the questions to be asked

While it is impossible to prepare for 100% of the questions you will be asked, I have found that you can anticipate around 80% of the questions that investors typically ask. You can achieve this by:

• Asking your investors for insights
• Consulting seasoned advisors, like myself
• Identifying the main obstacles you are facing in this round
• Reviewing the major questions asked during the previous round
• Conducting practice calls with less critical investors to gauge their inquiries

Once you have compiled this collection of questions, you can begin to identify the key questions for your current round and plan your responses accordingly.

Step 2: Think of what the question is behind each question

When an investor asks a question, they often have an underlying question beyond what they initially ask. This is typically due to skepticism about you and your company, so they ask a surface-level question even if they are actually inquiring about a more deeper topic.

For instance, let's say an investor asks, "What's the payback period of your product?"

You might think they are simply asking about the payback period, and to some extent, they are. However, there is a deeper meaning behind their questioning. When an investor asks about the payback period, they are actually evaluating whether you have achieved founder-product-market fit and if your venture can be VC-scalable. Therefore, when answering the question about the payback period, you need to address this deeper concern as well.

I want you to understand that this step is not easy. In fact, its a challenging task when you don’t have extensive investor experience. You may not always know what the underlying questions are, however, it is still a valuable exercise to put yourself in the shoes of an investor. Only then can you start to see what someone wants from you when they ask a question.

Step 3: Write as much as you can for each question

Once you have written down all of the questions you will be asked, you want to start to information dump an answer for each question. Let the information flow freely, as if you were rambling on in an investor meeting. We want to capture everything that can be said about this answer before we begin refining it. Make sure you are showing your own unique insights on why you are great.

Sometimes, they will be super hard questions that feel unanswerable. I’ve written about how you can answer these harder questions here.

Step 3a: Add emotion to each question

When answering this question, it is important to consider incorporating stories, examples, or events that evoke the appropriate emotions. This is an area where I have seen many founders often struggle both when advising and investing. You tend to focus solely on presenting facts without any emotional appeal because you know so much about your industry.

But here’s the thing: investor’s don’t know, and never will know, more than you. So your goal is to create a relatable and grounded narrative where you can effectively convey what sets you and your company apart. Treat an investor like a 5-year and think about what emotions about your customers or market or stories can make than investor understand more.

Step 4: Cut out everything that isn't answering the question

Now, the focus is on eliminating any unnecessary information that does not contribute to the answer. This process requires multiple iterations. The goal is to identify the core of the question and remove any irrelevant content that does not aid in providing an answer.

Step 5: Bullet point the major parts of the answer

Once we have done this, we want to list the underlying points to help you answer this. The purpose of doing so is purely for memory, as it is much easier to remember the bullet points and answer questions in your meetings.

This way you don’t ramble on with unnecessary information when trying to wrap your head about how you are going to answer everything.

Step 6: Practice in the field

There is only so much preparation you can do before there are diminishing returns. Once you’ve done the first 5 steps and have created bullet-pointed answers to each questions, it is time to start to practice this in the field with real investor meetings. Focus on:

• Low priority investors
• Mock calls with advisors
• Mock calls with founder friends
• Mock calls with current investors

Only then will you be able to understand what is working, what isn’t and start to answer investor questions better.