How Do You Answer Investor Trick Questions?

brett fox
5 min readAug 29

I’ll never forget it. The second I answered the investor’s question, I wanted to take my answer back. I had stepped right into his trap costing my company millions of dollars in funding, and the worst part was I knew better, and I still screwed up.

picture: depositphotos

I already started my meetings with the partners of one of my two investors, The notorious “Donald Ventures” was already going poorly when Samir asked me this question, which is our first trick question number one:

A. What is your exit strategy?

I’d seen this question asked a million times before to start up CEOs and I knew the right answer. However, instead of giving Samir the right answer, I fell right into his trap by saying, “I think with the diversified customer base we have that an IPO is possible.”

Samir didn’t miss a beat, and he said, “I think we should sell the company.”


I was already on the ropes and Samir had knocked me to the ground. Now was my answer so bad?

Don’t you think that professional investors already know what the possible exits are for your startup? Of course, they do. If they didn’t know that an IPO or an acquisition were possible, they wouldn’t have invested, so Samir didn’t need my help.

Samir wanted to hear me say, “I’m focused on growing my company. The exit will take care of itself.”

If only I’d said that. It’s such a simple statement that tells investors that you’re focused on the right thing, which is building your company. Let’s move on to trick question number two:

B. Why won’t Google, Facebook, or whatever the equivalent is in your market, build what you’re building?”

This is a classic question that almost every experienced investor asks you, and yet again, the investors know the answer. Of course, they do.

So why do investors ask the question? Because they want to hear your answer. And, if your answer doesn’t acknowledge that, of course, any large competitor has the ability to do what you’re doing, then you’ve blown the answer. I used to get asked this question all the time when I was raising money.

brett fox

I work with startup CEOs to help them grow their businesses . I built several businesses from $0 to >$100M. Learn more at

Recommended from Medium


See more recommendations