Top Investor Questions for Startups in 2024

What you don't expect to hear from an investor could be the key to success. Picture this: you're pitching your startup, and after a smooth presentation, the investor hits you with a question that stops you in your tracks. It wasn't part of the script. It wasn't part of the anticipated questions on your list, but it's likely the most crucial one that defines your success.

Here's the truth: Investors don't just care about your product or your team. They care about your ability to navigate the treacherous waters of a fast-paced, unpredictable market. And the right question can reveal whether you're ready for that.

1. "How defensible is your business model?" This is the question that makes many entrepreneurs pause. You've got a great product, but what's to stop a well-funded competitor from copying it and out-marketing you? Investors want to know how unique your idea is—and whether it's sustainable in the long term.

2. "What are your key assumptions?" Startups are built on assumptions—about customer behavior, market demand, and competition. Investors are curious about the assumptions that, if wrong, could undermine the entire business. Are your projections based on real data, or optimism?

3. "How are you acquiring customers?" Sure, a great product matters, but how are you getting people to use it? Investors want to know how well you understand your market, and your ability to scale is often reflected in how well you've figured out customer acquisition. Customer acquisition cost (CAC) and lifetime value (LTV) are often key metrics here. If you haven’t calculated these, you're not ready for investment.

4. "What is your runway, and how will this round extend it?" Startups burn money, and every investor knows this. They want to know how long you can survive before your current cash runs out. Do you have a clear plan for how this investment will give you enough runway to hit key milestones?

5. "What keeps you up at night?" Here's where things get personal. Every founder has worries, but what matters is how honest you are about them. Investors respect founders who are transparent about their challenges—whether it's competition, market fit, or team dynamics. How you answer this shows not only your awareness but also your resilience.

6. "What’s your exit strategy?" Every investor wants to know how they’re going to make their money back—and then some. Whether it's an acquisition, IPO, or some other form of exit, you should have a clear plan for how investors will get their return.

7. "Who are your competitors, and why are you better?" Investors want to know how you're differentiating yourself. It's not enough to say you're unique. You need a clear understanding of the competition, including both direct and indirect competitors, and why your solution is superior.

8. "How will you use this capital?" Capital allocation is critical. Investors are looking for detailed plans on how you'll spend their money to grow your business, whether that's on product development, marketing, hiring, or expanding into new markets.

9. "What's your retention rate?" This is a question many founders aren't prepared to answer, but it’s essential. Investors want to know how well you're keeping the customers you’ve already acquired. A high churn rate signals that there may be a problem with the product or its fit within the market.

10. "What are your unit economics?" You may be in growth mode, but that doesn’t mean profitability should be ignored. Investors will want to understand the economics of each transaction—how much it costs to acquire a customer versus how much revenue that customer brings in over time.

11. "What's your competitive advantage?" Investors love startups with a sustainable competitive advantage. Whether it’s technology, patents, network effects, or something else, you need to demonstrate that you have more than just a good idea. You have a way to keep others from copying your success.

12. "Can you pivot if necessary?" The best-laid plans rarely survive first contact with the market. Investors want to see if you have the flexibility to pivot—whether that means adjusting your product, finding a new market, or changing your go-to-market strategy.

At the end of the day, answering these questions correctly can determine whether your startup gets funded—or whether you go back to the drawing board. Investors aren’t just looking for a great idea; they’re looking for a great team, a strong strategy, and a business that can survive the bumps in the road ahead. Are you ready for their scrutiny?