INSIDE THE ROADSHOW: Snapchat just met with prospective investors in NYC and faced tough questions

Snapchat executives in New York were peppered with questions on Tuesday about competition from Facebook, user growth for the disappearing-message app, and accessibility in less developed markets as they pitched prospective investors on the company's shares.

Snap Inc., Snapchat's parent company, is looking to raise as much as $3.2 billion in a much-anticipated initial public offering. The executives are traveling from London to San Francisco as they try to drum up interest in the sale.

Tuesday's meeting, on the 36th floor of the Mandarin Oriental hotel in New York City's Columbus Circle, drew a standing-room-only crowd of nearly 500 people that one investor said included "the entire hedge fund mafia."

Inside the hotel ballroom, guests bearing the bright yellow IPO pitchbooks distributed at the event were treated to a light, if uninspired, lunch paired with heady prognostications by Snap's management.

While attendees nibbled on turkey sandwiches and caesar salad wraps, Snap's 26-year-old CEO Evan Spiegel, chief strategy officer Imran Khan, and CFO Drew Vollero answered questions from the crowd, according to people who attended the event.

The meeting lasted less than an hour and consisted entirely of a question-and-answer session. The company had already released an introductory video online on Friday.

Respectful but skeptical mood

Snap, which aims to begin trading on March 2, is seeking a valuation of between $19.5 billion and $22 billion. The offering is one of the largest tech IPOs in years and is being compared to past high-profile internet IPOs such as Facebook, Alibaba, and Twitter.

But while Facebook's stock has soared since its offering, Twitter has languished. And guests at Tuesday's roadshow in New York did their best to get a read on which trajectory Snap would take after its Wall Street debut.

Snap's sudden slowdown in user growth, which could echo the trouble that has plagued Twitter, appears to be among the top concerns on the minds of prospective investors.

One investor at the event told Business Insider the mood in the room was "respectful but somewhat skeptical."

The investor said they did not plan to buy Snap shares unless the company lowers the price.

The questions were tough, according to investors at the meeting that Business Insider spoke to. Here are the main takeaways from a handful of money managers who attended the roadshow. They all asked not to be identified.

Snap's leadership team said they're confident Facebook won't affect its business. They also attributed slow growth in the fourth quarter to problems accessing the app from Android phones. They said Snap will develop on Android at the same time as on Apple's iOS platform to help alleviate issues with the app on Android phones.
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Still, attendance at the event illustrated the buzz and interest surrounding the company. Roughly two-thirds of attendees were seated at round tables in the front of the ballroom, while others filled narrow rows of seats, packed tightly, in the back of the room.

One hedge fund investor told Business Insider that despite concerns raised, he is still looking to buy Snap shares. This investor said the valuation is a fair price.

"It's not that crazy when you think about the total ... market they're trying to go after," this person said, referring to the digital-advertising market taking share from traditional broadcasters.

This story has been corrected to update a figure from 2.5 million to 2.5 billion snaps.