3 ways to spin tough investor questions in your favor.
It happens to every entrepreneur: A potential investor, mentors, and even friends bombard you with skeptical questions about what you’re working on. Most of the time, you can answer it directly, or at least deflect it in some way.
But sometimes, you get hit with a curveball. What happens when the pressure is on and you don’t have an answer? How do you tackle tough questions from investors?
Sometimes, not knowing the answer is an opportunity to show you’re coachable, one of the most important factors investors look for in an founder.
Here are 3 steps to turn an “I don’t know’s” into a statement that will actually impress investors.
1. Thank them for the question
Investors will drill you. They will intentionally ask you things they know you might not be able to answer, just for the sake of catching you off guard. A great way to show you’re confident and buy time to come up with an answer is to say “Thank you for your question.” You can also say, “That’s a very good question, I’m so glad you asked.” (Even when you wish they hadn’t!!).
2. Admit up front you don’t know the complete answer.
Rather than wasting their time to come to the conclusion you don’t know the answer, say it upfront. Then, back it up with your best guess, or information you know that relates to that question. For example, let’s say an investor tells you your expenses for manufacturing your widget are too high and asks you if you’ve looked into a specific manufacturer (that you’ve never heard of). It’s okay to say something like, “I’m not familiar with that manufacturer, but I appreciate you bringing them to my attention. If you have a contact that I can reach out to, that would be great! I’ll get the quote ASAP. But you should know, this quote was an average price we were given from several manufacturers and we always want to give ourselves a little wiggle room in our budget.” Although you didn’t answer their question, you defended your estimate (without sounding defensive-- which is key!).
3. Ask them for an answer.
It’s fair to say that when you’re raising capital, you’re looking for smart money. This means you aren’t just looking for a check, but a wealth of knowledge related to your industry. If you don’t know an answer, you can say you’re looking for an investor to help fill those knowledge gaps. If you get a complex question that you have absolutely no answer to, spin it back to them. You can say something like, “We’re looking for an investor that has more expertise in this area to guide us. That’s exactly why we are standing in front of you today”. This is a great way to tackle tough questions because it makes the investor feel valued beyond their pocketbook. This response also shows you’re coachable.
BOTTOM LINE: Investors are interested in understanding how you handle things you aren’t prepared for. Not knowing an answer to their question is actually a great opportunity to show your willingness to learn from someone more experienced than you are.