As the founder of Fire Memos, an app that enables employees to record and recognize their achievements through AI-powered career coaching, I was ready to take my startup to the next level. So last year, I took the leap and applied to tech accelerators.
Four months later, we landed our first investment from Techstars and were accepted into the Techstars Anywhere program.
3 Common Investor Objections to Overcome
- They question your and your team’s ability to lead the company to growth.
- They can’t see your company’s traction.
- They think your goals are too modest.
The entire process, from filling out the application to doing the interviews, required me to figure out how to handle potential objections. I was so nervous, but knew I needed to project confidence. We were right at the start of our journey, but I knew I needed to convey traction. Our team was tiny, but I knew I needed to convey confidence in our capabilities.
To get past my nerves ahead of each meeting during the process, I wrote out every tough question I could imagine and practiced how to respond. This is how I prepared to address these common investor objections.
They Lack Faith in Your Team
When you’re just starting out, investors want to know if there’s a strong fit between the founders and the market. Early on, they’re likely to dig deep into your background, wondering if you have what it takes to lead a high-growth startup.
How do you persuade them? Start by showing off your domain expertise. Highlight what makes you and your team uniquely qualified to tackle this problem. If your team has experience in the industry, understands the market inside out or has a solid grasp of the technology involved, make sure the investors know about it.
Share any unique insights your team brings to the table. Maybe it’s something you’ve learned from firsthand experience or in-depth research, or it’s a fresh perspective that has shaped how you’re approaching the problem. Whatever it is, emphasize what sets you apart from others trying to solve the same issue.
And finally, back it all up with proof. Share your team’s track record, whether it’s previous startups, relevant projects or successful collaborations. These accomplishments show that you have the skills to execute and deliver and that you’re not just talking the talk.
They’re Not Sure You Have Traction
Traction is a key signal that your startup is on the right path. It’s the momentum you’re building, whether that’s proving your product fits the market, acquiring customers or generating revenue. This reassures investors that your startup has real potential.
When you’re talking to investors, showcase the metrics that make your startup stand out. If you’ve already gained some momentum, highlight the numbers: how many users or customers have jumped on board so far? If you’re bringing in revenue, share those figures. Monthly or annual recurring revenue is particularly impressive. And don’t forget to mention customer feedback. Testimonials, reviews or Net Promoter Scores all help paint a picture of a product that people love and rely on.
But what if you’re still pre-launch and pre-revenue? This is your chance to sell the vision. Show investors a future where your product has made a significant impact. Highlight the gap in the market and explain why your solution is uniquely positioned to fill that gap in a meaningful way.
If you’re still in the development stage, share the milestones you’ve hit so far, like completing prototypes, successful beta testing or valuable feedback from early users. Any partnerships, pilots or beta tests can serve as evidence that people are already interested in what you’re building.
Finally, lay out your go-to-market strategy. How do you plan to attract customers? Mention any upcoming partnerships, marketing efforts or launches. If you’ve got a waitlist, a growing list of email subscribers or a highly engaged following on social media, now’s the time to bring it up.
They Might Not See an Opportunity
Investors may not fully grasp your vision if they think your goals are too modest or unlikely to generate significant returns.
Start by showcasing how large your product’s market really is. Use data to estimate the total addressable market, serviceable available market and serviceable obtainable market. These metrics will help you define clear milestones for your startup’s success and get investors excited about the size of the problem you’re tackling.
Make sure the investors you’re meeting with know that you understand what’s happening right now in your market. Talk about the trends driving demand for solutions like yours and provide a thoughtful analysis of the competitive landscape. Who are the key players? How does your solution stand out? These insights will demonstrate your deep understanding of the market.
If you’re at an early stage, focus on who your ideal customers are and why they need your solution. Even if you don’t have paying customers yet, describe the profiles of companies or users most likely to adopt your product. Highlight any early validation you’ve received, whether it’s a growing waitlist, strategic partnerships or letters of intent, as proof that there’s real demand for what you’re building.
This isn’t an exhaustive list of possible objections, so if you’re getting ready to talk to potential investors for the first time, prepare thoroughly. Anticipation, preparation and commitment will enable you to handle even the toughest objections effectively.
