HQQA035 If you knew with 100% certainty that you were to raise significantly more funding, what would you do?

What they mean

Things can go unexpectantly well. How are you going to manage high growth?

This is the flip of the question we just went through of what you would do if you couldn’t raise again. This is a meta-level question that challenges you to understand all the drivers of your business. If you don’t know what you are doing, you are really going to struggle.

They are testing to see how you would build a substantial size business a lot faster than you had originally presented to investors. Investors want super high growth companies, so if you are crushing it, then you really might find yourself receiving a $20m check at a stage, and you are going to have to be able to smartly spend it.

If you don’t know how you will be able to scale hiring, allocate larger amounts of cash to the marketing channels you are utilising, scale your tech infrastructure and develop your product roadmap, you simply will not be able to cope.

A smart team will have thought about the downside, the base, as well as the upside scenarios. This could be a great moment to show you are worthy of getting a large check.

Maybe the investor is thinking ‘there is a lot of promise here, they have figured out their unit economics, what if they raised 3x more and went for it?‘

What you need to say

“Thanks for asking that; we were hoping you would. We have already mapped out a plan! We see a lot of opportunity in the enterprise sector. They fundamentally are underserved. The issue with the enterprise sector is that there are a long sales cycles. Companies typically cannot afford the cycle of 8-12 months, the professional services and infrastructure we would need to deploy. However, if we had 3x more much money he would be able to address this.

We feel that if we raised twice the amount of money, we would be able to make a decent effort into really penetrating this segment which we think will be incredibly profitable. If we had three times the amount of money, I believe we will be able to afford a really strong VP of sales and make this scalable. Furthermore, we can double down on the acquisition channels identified for the SME portion of our customers that we are targeting. We have an LTV of about 3.5x and a payback period of eight months. According to industry benchmarks, those are quite strong metrics. We haven’t been able to afford to differentiate with really strong customer care and customer success, so we would dramatically improve our systems and make additional hires which would have a positive impact on our churn and expansion revenue.”