Good news! You are a entrepreneur with a promising quantum/biotech/AI… (name it) startup and a prominent investor -maybe the EIC?- has invited you to an interview.
You have everything prepared, right? Your glossy deck, your nice growth diagrams, your beautiful words about the product-market fit, even your MVP or prototype but wait! The investor does not only want to interview you, the CEO, but also three key members of the team. This was unexpected!
Suddenly you realize there may be some “issues” that you should tackle ASAP. Your CFO is not aware of your last development delays, your CTO does not know the change in the hiring plans…. Ah! And this key expert who is no longer in the team?
Over the last years we have trained many startups in how to face investor-team interviews including the -so terrifying- EIC (European Innovation Council). Based on our -sometimes painful- experience, I have come up with a list of do’s and don’ts for all our friend founders:
Do’s:
1. Spend lots of hours rehearsing answers to all types of questions about the tech, the G2M, the financials… and involve the whole team!
2. Prearrange who will be responding each type of question. It might look weird if the CEO is answering tech questions while the CTO is silent for instance. A balanced distribution in the Q&A is a must.
3. Be prepared to answer nasty questions about incentivation plans or the cap table. Explain the rationale behind some past decisions. Why do you have 80% and your co-founder only 5%? 😉
4. Know your numbers. Fine Quantification is critical in business. Most market opportunities are hypercompetitive and your competitive advantage might depend on how optimized are all business KPIs. General answers will not work.
5. Give concise and brief answers. Do not extend by giving non-requested and collateral info.
6. Investigate who is going to be on the other side. Their profiles will help you prepare beforehand on the type of questions you might get.
7. Know the competition. Be ready to answer any question about competitors and even about competitors you might not even know. And, please, don’t say you don’t have competitors!!
8. Polish your Linkedin profiles and all your media coverage. Know your digital footprint. you might be surprised about the many things that investors may be able to get from the web and social networks.
9. Take care of team dynamics. Team issues is a top reason for startup failure. Try to show a positive, professional but also close relationship. How you handle questions as a team provides a lot of insights.
10. Finally, create a sense of urgency! At the end of the day, you are competing and you must convince the jury/investor that the opportunity is NOW.
Don’ts
1. Avoid the overuse of technical jargon, especially when explaining the problem and solution. If you lose the attention in the first minutes, you’ve lost your opportunity. Investors must easily understand the problem you are solving and be excited about it.
2. Don’t get innovative when deciding who should come to the interview. The CEO presence is mandatory along with the CTO (for a tech startup). Then probably the COO or CFO would also be welcome. In some cases, a regulatory (ie. In the Medtech field) or market role could also be relevant. It would be strange if some critical C executives are not present.
3. Don’t shadow your colleagues. The CEO should be the first to take many questions and lead the Q&A but a shared leadership will always look stronger.
4. Don’t overcomplicate things. Give straight answers.
5. Don’t give information, unless explicitly asked, about side projects or new developments. Startup founders tend to overestimate the value of the last month’s milestones…’this great idea/meeting/… you had last week!’ This will not give a good impression most probably.
6. Avoid the orchestra director scheme. Having someone forwarding questions to the team may be problematic because it might get the receiving member unprepared. It’s much better to preliminary allocate the topics among the team members. This also shows that responsibilities are clearly defined and divided.
7. Don’t overrelax. You know your thing but the jury will for sure be advised by market/tech experts. Even if there are not field experts in the interview you should not underestimate the possibility to get obscure super detailed questions about the tech or the pricing model for instance.
8. Don’t leave open questions; ask back if there is a repeated question. “Wasn’t my previous answer clear and why?” Try to understand investors motivations… if you leave a question open, this might make the turning point in the ulterior conversation on the investor side.
9. And finally… don’t improvise if you don’t have an answer for a specific question. Startups investors should be used to unknowns. Be transparent if you believe you are still not at the stage in which you will have that answer. Also, if you improvise in a team interview, the other members might also do it creating a risky environment for the team as incoherences may eventually appear.
I could probably go on and on… but to be frank, it’s easy to give recommendations “from the outside”, but not so easy when you are on stage. I’ve been there and done lots of mistakes. The key takeaway: team-investor interviews are challenging because many CEOs are not used to them. Involve the team in the preparation as soon as possible!
Good luck!
#teaminterview #eicinterview #startupinterview #investorinterview #eic
Article written by David Arias and first published on Linkedin on May 27, 2024.
