The problem that solves the product, the market potential, competitors, returns and investment returns, and conditions of exit from the business, if we are talking about buying a share in it, – all this information the founder needs to summarize the presentation. If it will satisfy the investor, be prepared to answer more complex and sometimes unexpected issues that many baffled.
Usually before the meeting, the investors study the presentation and reporting of company – this saves time and helps in advance to formulate key questions.
Question No. 1. You have developed the product themselves?
Be prepared for the fact that you will be asked to provide the investor with the developer of the product or technology. We do not invest in startups, if among the founders there is no man, who knows how the product or technology works from the inside. It is also desirable that, the company had three founders: one is Manager, another is an experienced salesman, and the third is technical Director. This composition we call the “perfect three”.
Question No. 2. Why did you decide to do your own business?
Get ready for what you have to tell us his life story. The founder must have an iron confidence in the success and to infect the confidence of others. A good sign for investors – the willingness to step out of the comfort zone for the sake of the project. You left the Corporation began to Finance your business early on, you had to give up various benefits like official cars and high wages? Is your plus. Entrepreneurs willing to invest in not only power, but also the personal assets, can be trusted. Imagine the CEO of a construction company with a salary of $1 million a year who decided to quit and open his own company. Surely, he will do it not in order to ever begin to get the same $1 million, but still putting on a lot of new responsibilities. Most likely, he really is planning something more ambitious.
Question No. 3. Are you married? You have friends?
Do not be surprised if the investor asks a personal question. For the founders, the risk of burnout. To work in constant stress, multi-tasking, taking responsibility for the team and the product, and even in the limited time is like to lay the rails under a moving train. Therefore, founders are so important to a balanced life. The crisis in the company and the divorce that happened at the same time, can be devastating both for the founder and for business in General. Ben Horowitz, co-founder of venture Fund Andreessen Horowitz, said that the investor should become the founder of a personal therapist. Horowitz believes that this is the main role, because if you have decided to invest their money in the project, the investor needs to be sure that the company is run by people with strong nerves and a sustainable lifestyle.
Question No. 4. Who are your competitors?
“We have no competitors!” – the answer is incorrect, in our time, it’s too loud statement. And perhaps this is the best that can be said the founder, to stop us in the desire to invest. Naivety or lack of knowledge will lead the project in a critical situation. Maybe you will be surprised, but the phrase: “we Have very strong competitors, but we know their weaknesses and know how to grab them 5% of the market” sounds much better.
Question No. 5. Why do you need investment?
To say: “We can’t survive without this round,” not for a strong entrepreneur. Investors do not like to be the last hope of a startup. “We know how to grow much faster with the investment” – that is what we want to hear from startup.
Question No. 6. You had a crises?
Experienced failure is sometimes more important than the UPS. It is not necessary to conceal from investors the truth. Every startup has three or four “valley of death”. When things are going good, strong team works best, but ordinary can achieve results. But in a crisis, some continue to struggle and recover, while others give up. Just tell us what really happened, and prove that came out of the crisis with dignity (unless, of course, it was).
Question No. 7. What goals do want to achieve?
The founder should feel uncomfortable until you reach the ultimate goal of the project. Intermediate results, like investment round or exit to self-sufficiency is not a reason to relax, assign a market wage or cashout. While the project is under development, the salary of the founders must be exactly such that it was enough for basic living needs. We welcome, when the founder remains a solid share in the business, and in the later rounds it needs to compensate all the hardships of building a company.