Entrepreneurs benefit tremendously from practicing their pitch and Q&A. The more practice they get, the stronger they get at understanding what questions tend to get asked, how to respond clearly & concisely, and how to handle the emotions of hard questions. But mentors only so many hours in the day they can donate to help! And… many (although not all) mentors don’t ask the hardest questions or give enough critical feedback.
You can configure ChatGPT (version 4) to simulate an investor and practice your pitch on it. I’ve done it and was shocked at how good the results were. I fed it the executive summary of my last venture and figured it would ask me perfectly fine, generic questions like: who is your competition and how do you stand out? What are the qualifications of your management team?
No. Its first question was…
Your revenue-sharing model is somewhat unconventional in the startup investment space. While it’s clear how this aligns interests initially and provides early returns to investors, I’m curious about the long-term sustainability of this approach. Specifically, how do you ensure that the royalty payments do not overly burden the startups as they scale? A 5% revenue share until a target of $500k is reached could become a significant expense for a rapidly growing company. Could you elaborate on how you’ve seen this impact your portfolio companies, especially those that are experiencing fast growth?
I mean… wow. That is not a generic question. It, and the follow on questions for the next 20 minutes, were every bit as targeted. All of the questions were completely in line with the actual questions I received when I was raising money for that startup. At the end it provided me an analysis on my strengths and weaknesses that was pretty darn good.
If I was running an accelerator, I’d have all my teams conduct multiple rounds of simulations before I put them in front of my mentors. If I was an entrepreneur, I’d run the simulation on myself over and over before leveraging my mentors for feedback. That way the basic stuff can be taken care of and mentors can focus on the higher-value advice.
Try it for yourself:
- Go to chatGPT in your web browser and start a new conversation
- Paste the instructions from the quote box below into the prompt
- Attach the executive summary of your company and hit enter
- Launch the ChatGPT app on your phone
- Using the menu button in the upper left, open the conversation you started on your web browser for the simulation
- Hit the headphones icon appearing in the lower right. This will switch ChatGPT into audio mode… it will now speak aloud to you and you will answer aloud. This creates a more realistic simulation experience than doing it all via text.
You can edit any of the instructions but the parts you are most likely to want to edit are highlighted.Below are some alternate answers you might want to try once you have the hang of the basics and want a more challenging simulation.
- Emotional Tone: Aggressive, rude, aloof, disinterested, etc.
- Area of Interest: Financials, technology/product, legal, marketing, sales, operations, etc.
I’m a mentor to startups and want to help them learn how to think like, and talk to, investors. I’d like you to use this conversation as a simulation where you play the role of investor and the entrepreneur interacts with you.
Parameters for the simulation:
* Format: You will have read an executive summary – which I will provide you below. The format of the meeting is you presenting your clarifying questions and/or challenging questions to test how well the entrepreneur knows their material and how strong their answers are. Ask one question at a time. If the entrepreneur’s answer is particularly weak or inspires high priority follow-on questions, ask those next one at a time) before resuming with your initial set of questions.
* Role: You are playing the role of an angel investor who likes to invest in seed and pre-seed stage companies.
* Your Emotional Tone: Challenging. Deeply Skeptical. Respectful.
* Your Area of Interest: General.
* Approach: Actively look for holes in the business model, assumptions, and scalability of the startup. Frequently require the entrepreneur to provide some evidence to support their. Provide no positive feedback when playing the part of the investor as investors want to spend their time asking questions and listening to the entrepreneur. You can save your feedback for the end of the simulation.
* Pacing: Please handle objections one at a time.* Depth of Exploration: This is a 20-minute session, and as such you do not want to go into deep detail on any one issue.
* Role Switching Indicators: I will say “Pause simulation” to ask you to temporarily stop playing the role so that I can ask you how we are doing or provide other instructions. I’ll say “Resume simulation” when we are ready for you to switch back.
* Feedback Level: If I say “End simulation” , please end the simulation and provide a detailed summary of where we did well, and where we did poorly, and why. Please also let us know if our answers were clear & concise, or if they were unclear or rambling.
I’ve attached the startup’s executive summary. If you have trouble reading or understanding the executive summary, please let me know. If you have no problems, tell me you are ready to begin.
Paul G. Silva 