Handling investor questions
What is the best way to address investor questions?
Your business plan should be your start. Include very good financial models, with operating and cash-flow statements, that demonstrate what will happen to the investment capital when it comes in. It also will reveal when any distributions or return of capital will occur.
Be prepared to answer hard questions without being defensive. Do this by posing some of the obvious critical questions yourself beforehand. Consider a "worst case" scenario financial model and how you would deal with it. Do not confuse this model with a conservative one. It's worse than conservative, but not to the level of failure.
You should also include both "reasonable" and "home run" scenarios. Dwell more in the "reasonable" model, but let your prospect know that you've considered each scenario. Don't automatically show every model; just lay them on the table.
If your prospective investor has a "pain-in-the-neck" advisor with them, your preparation will help diffuse the potential damage they can do, especially if you don't act defensively. If you get a question you are not prepared for, admit it, and promise to get an answer.
After all, think of all the hard questions you would ask if someone were asking you to invest your money in something you weren't in love with.
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