How To Field Investor Questions Like A Pro


This XSeed blog was written by Venture Partner, Jeff Thermond, and originally appeared on Forbes.

When asking entrepreneurs how their pitch went to a new VC firm, I often hear, “It was going really great until I got asked this question which really threw me. It was completely off topic. Things didn’t go so great after that.”

Having given well over a hundred fundraising pitches myself, I’ve been there and it is an uncomfortable moment. In an instant, what seemed like a linear flow to an increasingly interested audience gets sidetracked. The air goes out of the ball and not only can you not shoot well; you can’t even dribble. It is not fun at all.

So what can you do about it?

The first thing is to recognize what might be the potential cause of the question which has caught you by surprise.

I believe there are five potential causes here, and they’re each quite different. It is very important to understand which cause is driving the left field question. The five causes are:

1. The questioner is on track; you’re not.

The question has caught you by surprise, even though it is on topic to everyone else in the room. This usually is caused by you getting so far into your pitch, you’ve stopped listening and watching the audience. The danger is that you’ll appear to be a poor listener.

2. The questioner is testing your flexibility deliberately to see how you react when surprised by his rapidly shifting the discussion to a new topic.

This is a test of your flexibility, listening ability, and ability to deal with more than one topic at a time. The danger here is that you’ll appear insensitive to a potential investor if you stick to your original point.

3. The questioner has changed topics because you’ve answered everything in the previous thread he’s interested in, but you didn’t detect he was done with the previous topic.

You were successful in presenting your last point, but not sensitive enough to know they want to switch topics. If the left field question seems more wide open and judgment based, it probably means they’ve moved on. You need to be ready to move on as well.

4. You’ve lost the audience’s interest in your pitch and they’re moving abruptly towards an end of meeting.

This particular cause is one you probably cannot recover from, but you can stop digging a deeper hole. It is important to remember that you don’t have to win over every investor. It takes only one or two. It is also important to recognize that the venture community is very tightly linked. Trying to overstay your welcome is a fast way to dig that deeper hole.

5. The question you’ve been asked is based on the questioner misunderstanding the facts, and so the question seems at best a non sequitur and at worst just stupid.

This is the most dangerous scenario because you run the risk of embarrassing the questioner in front of his peers by correcting him, which is never a good idea. Much like the fourth cause, the opportunity to dig a quick hole and fall into it looms.

Now that you understand the potential causes of left field questions, let’s discuss how to handle them.

As mentioned earlier, the first step is to identify the most likely cause. Each cause is quite different and reacting to one cause as if it were another will compound an already awkward moment. I suggest you practice your pitches with your team or current investors, and ask them to posit left field questions based on each of these various causes so you can get practice recognizing them quickly and reacting smoothly. Role-playing in advance is the key to surmounting each of the first three types of left field questions.

You really can’t overcome the fourth cause; you can just exit quickly and gracefully as opposed to overstaying your welcome. Recognizing that you don’t have to win every time is the essential mindset here. Great hitters in baseball get paid millions of dollars for failing two out of three times at bat. But they are evaluated on every plate appearance.

The fifth cause is also helped by rehearsal and role playing, but it needs something unique to complete your recovery. The key here is to not get into a factual argument with an investor partner in front of his peers in which you have to prove him wrong to show you’re right. The technique I most often recommend is to suggest that the answer may require an extended discussion and would best be conducted one on one after the meeting. Another technique is to suggest that a member of your team who is not present is best equipped to answer it and perhaps that can be done in a follow up meeting. Either one of these techniques defers the discussion but does not denigrate the question or the questioner, no matter how harebrained the question is.

Left field questions are never pleasant and can create a ‘make or break’ moment for an entrepreneur. How you handle these questions can make a big difference in how you are perceived and talked about in the tight knit venture community. Use the strategies above to prepare for each of the five types, recognizing that each is quite different. Then when that zinger comes out of left field, you’ll be glad you can recognize it immediately and respond with visible confidence.