It’s important to remember that an investment isn’t like a loan. Taking an investment means you have just bought yourself an ongoing relationship, sometimes indefinitely, with an investor and there are some important questions you should vet before deciding whether the relationship you are going to have it going to be healthy or dysfunctional. Much like a job interview, although the employer or investor will be the one primarily asking questions it’s important that a startup have their own questions lined up as well.
Even the strongest friendships and marriages can sour over money and the relationship you are about the enter with an investor is almost nothing but money, so it’s important to make sure in that initial meeting that you are coming from the same place. Be sure to deliver your questions in a respectful, interested way and not with an entitled attitude and make sure the investor knows that you are inquiring because you know a good relationship will offer the strongest return for both of you. Here are some of the questions we have gathered from listening in on investor and startup meetings here in Australia and abroad:
• Have you had any succesful exits?
• What sort of companies do you have in your portfolio? Are there any similar to mine?
• If there are companies similar to mine, are there ways you see us working together?
• How often do you like to communicate with the companies you invest in? Will be need to meet monthly? Have weekly phone calls?
• What can you offer me besides money? Do you have connections, expertise that would be beneficial to me?
• What stage do you normally invest in businesses at?
• Do you have a particular philosophy on valuation
• What amount do you generally invest?
• Do you ever get involved in the next round of financing?
• What is your due diligence process?
• How quickly do you normally like to have an exit or see returns?
• What percentage of a company are you usually interested in taking?
• What is your particular interest in investing in our company?
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This post was mentioned on Twitter by IPitchAU: After yesterday’s “questions investors ask startups” we have a list of “questions startups should ask investors”: http://bit.ly/1m1fIY...