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Early-stage fundraising – Mastering the art of replying to investor questions

Access to Finance specialist, Ian Dixon, shares his insight into how pitching with confidence is key to help start-ups secure investor buy-in.

One of the most interesting aspects of supporting and coaching early-stage founders in their fundraising journey is preparation for the live investor pitching event. Confident, capable and articulate founders often struggle with the perceived pressures of pitching to a live physical, or virtual audience of investors. Invariably, the pitch itself is well-rehearsed and rarely, assuming no technical hitches occur, does it prove problematic.

However, it is how the founders answer investor questions that often proves a stumbling block. Why is this so often the case?

Confidence matters

The reality is that investors are not trying to trip up founders. They want and, more importantly, need to invest. It is very unlikely that potential investors have more knowledge about your market, your competitors or your product.

Furthermore, they understand that there are few metrics or numbers to rely upon. There is very little to consider other than the founder talking. Therefore, it’s fundamental that investors get confident about your business opportunity, by getting confident in you, the founder.

This means that founder confidence and the ability to communicate effectively is critical. If you don’t truly believe what you are saying, why should your potential investor?

It’s less about what you say and more about how you say it

Whilst investors don’t know everything equally, they understand that neither do founders. What many investors do have is what we call a sixth sense. They ask questions to clarify and develop their own understanding of your proposition but also to understand how founders communicate.

Many early-stage investors may be termed ‘conviction investors’ meaning that ultimately, the pitching founders have convinced them the idea will work but that if things don’t go according to plan (which they never usually do) that they will recognise problems early, be transparent in their communications, adapt and fix any issues arising. Investors are looking to support founders who are credible and with whom they can develop trust.

Therefore, in responding to investor questions it’s less what you say and more how you say it. Now clearly, what you say needs to be logical and considered in the context of your business, but your delivery and the way investors perceive you also matters.

Featuring prominently in many sales courses is the theory of a book published in 1971, ‘Silent Messages’ by psychologist Albert Mehrabian. Based on an extensive study of salespeople, Mehrabian outlines his research on non-verbal communication.

Mehrabian concludes that prospective customers based their assessments of credibility on factors other than what sales representatives said. In summary, 55% of the overall message was communicated through the speaker’s body language, while 38% came from the tone of their voice. Incredibly, only 7% of the prospective customers’ credibility assessment of the sales representative was attributable to the actual words spoken.

The conclusion is striking for founders.

What you say is considerably less important than how you say it. In practice we witness this when confident founders are more successful in securing funding than those more hesitant and lacking confidence. Therefore, founders need to address difficult questions such as ‘what is your valuation?’ in a confident manner.

How best to prepare to answer investor questions?

To support confidence development and in preparation for answering investor questions it is important for founders to:

  1. Anticipate investor questions – List all the questions you think investors will ask and seek input and guidance from your advisors and peers. Review a sample of the excellent online content providing examples and insights into pitches and the typical types of investor questions.  
  2. Build your inner confidence – Develop appropriate responses to the list of anticipated questions and solicit feedback.
  3. Practice and record yourself answering questions – Be self-aware and think about how you may improve. Do you look and sound confident?

Additionally, it is important to focus on -

  • Ensuring a realistic expectation of the outcome – Understand, if possible, why an investor passes up on the opportunity. It is part of your learning journey and will help build resilience.
  • Relaxing – Understand you don’t have to answer everything perfectly. It is acceptable to say, ‘I don’t know, can I check and come back to you?’. Ensure you do otherwise, this will erode your credibility.
  • Enjoy the moment –  Founders who smile look more relaxed and there is evidence to suggest smiling relaxes you. Remember, confident people smile.
  • Avoid talking too much – It can communicate nervousness and detract from your answer to a question. Keep responses focussed on the question and short to retain the investor’s attention. After answering a question, don’t fear a pause!

Are you an early-stage business looking to secure investment to grow?

PROGRESS21 Business will be giving founders a safe space to practise and refine their pitch in a friendly, safe environment of peers.
Secure your free place today for an opportunity to road test business ideas and get practical and expert advice from the very best in the industry.


If you are based in Greater Manchester or Lancashire, you can access fully funded, tailored support through the Access to Finance team which has significant knowledge of the funding landscape and extensive relationships with Business Angel networks, Venture Capital, Public Sector Funds and Alternative emerging sources such as International Investors (via UK Home Office Innovator Visas)

Contact the Access to Finance team

Ian Dixon

Ian Dixon, Senior Business Advisor - Access to Finance

Ian is responsible for the management and development of the Hub’s team of A2F specialists. He is a chartered accountant with extensive corporate funding experience and knowledge, developed predominantly within the SME market. Former commercial roles have included financial director, process improvement director and business development director, and he has acquired an in depth knowledge of various forms of finance, including all types of debt and equity, and the processes involved in raising funds.

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