I wear two hats right now. As an attorney at Lowenstein Sandler, I spend my days – among other things –helping founders prepare for investor due diligence. As the founder of Fansmit, I’m currently living through that same process myself, raising a pre-seed round. That combination has taught me something I didn’t fully appreciate from the legal side alone: questions investors ask aren’t a perfunctory checklist topunch. Rather, they’re a window into how investors actually evaluate risk, and founders who understand why a question is being asked answer it far better than founders who just answer what was asked.
Before your first pitch call, know your own numbers and documents inside out, your formation paperwork, cap table, IP assignments, key contracts, and financial model. The founders who win the room have those answers ready before anyone asks. To borrow a concept from David Letterman, here are the top ten questions that come up in nearly every pitch call I’ve had recently, and what’s really behind each one.
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Company History.
If your company has existed for more than a year or two, investors want the full timeline: prior pivots, funding attempts, leadership changes, dormant periods. This isn’t about penalizing you for a winding path. Investors are testing whether you can narrate your own story honestly, and whether you understand why now is the moment the business is ready, as opposed to two years ago or two years from now. A vague or defensive answer here reads as a red flag even when the underlying history is fine. -
Team.
Investors want to know who’s full-time today, who joins once funding closes, and what you still need to hire or outsource. Investors aren’t just evaluating your product; they’re evaluating whether the team in front of them can execute the plan they’re describing. Gaps are fine to disclose. Gaps you haven’t thought
about are not. -
Status of Your Product.
What works today? What’s left before your MVP is real? If you have a demo, show it — nothing substitutes for watching a product function. If your product depends on technical integrations (in my case, synchronization across streaming platforms and devices), investors will ask for test results, notassurances. Precision matters more than optimism here. -
Traction.
Have you conducted any pilots? If so, do you have any usage data? Do you have paying customers?
Revenue? If you’re pre-revenue like Fansmit, say so plainly and move on to what evidence you do have— engagement, repeat usage, waitlist conversion, letters of intent. Investors have seen founders inflate “traction” into meaninglessness, so specificity and transparency are what earn credibility. A single clear metric beats three vague ones. -
Customers and Partnerships.
Investors will always ask you to distinguish a signed agreement from a promising conversation. Be exact. If a partner is committed, say what they’re committed to and on what terms. If a partner is interested, but not signed, say that too. Overstating this is one of the fastest ways to lose an investor’s trust, and it usually surfaces during diligence anyway.
6. Business Model and Competition.
What’s your business model? How will you make money? Who is your competition? Claiming you have no competition or simply stating “we’re different” aren’t real answers. Naming your competition directly, rather than avoiding any comparison, actually builds credibility, since it shows you understand your market. And, providing evidence – or reasoning – why customers will pay to use your product is crucial.
7. Intellectual Property.
If your business depends on IP or on third-party rights — patents, licenses, data-use permissions — investors will want the specifics. What’s protected? What’s owned? What’s licensed? This is an area
where founders often underestimate how much diligence will happen. Know your own IP position cold, including your technical dependencies and what you have not yet secured.
8. Budget.
As a founder, I am always asked about our proposed use-of-funds, burn rate, runway, and the milestones this specific round is meant to buy. If your plan involves multiple rounds (a seed followed by a larger raise, for example), make sure every document you show investors — your deck, your summary, your model — tells the same story about what happens in which round. Internal inconsistencies between your own materials is one of the most common things diligence catches, and it costs credibility even when it’s an honest oversight rather than a misrepresentation.
9. Financials.
Investors will ask for whatever historical financial statements exist, alongside a forward-looking model, and they’ll spend more time on your assumptions than on the outputs. Anyone can build a spreadsheet that shows a hockey stick; what investors are really evaluating is whether your pricing, customer acquisition costs, creator or partner compensation, and revenue growth assumptions are grounded in something real, rather than picked to make the model work. Be ready to explain where each number came from and to show your math, not just your conclusions.
10. Valuation and Terms.
Fansmit is raising a pre-seed round via a SAFE. We are often asked how we arrived at our valuation cap and what evidence supports it. Investors will also do basic math on your cap table: if someone funds your entire round, what percentage do they end up owning before future dilution? Know that number cold. If you can’t answer it instantly, it suggests you haven’t fully modeled your own round.
The Upshot.
Almost every one of these questions is really asking the same thing in a different way: do you actually understand your own business as well as you think you do? The founders who fundraise most efficiently aren’t the ones with the most polished pitch. They’re the ones who answer hard questions with precision, disclose uncertainty instead of glossing over it, and treat every document they hand an investor as something that will be checked against every other document they provide.
As a founder, I'm experiencing this in real time. It doesn’t make the process easier. But it does make it more predictable, and predictability is exactly what investors are looking for.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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