Meeting with potential investors can feel like a cross-examination for both parties. If you want to show you’re serious about potential investment, coming armed with questions helps alleviate the chance of missing out on important information that could help you both come to quick decision.
If you’re struggling to come up with questions, we’ve compiled a list of those we always think it’s a good idea to ask…
What is your investment history?
Your research will have given you some idea, but it is always best to hear it from the horses mouth as sometimes their expertise on certain areas or industries may not be apparent. Investors need to stay on top of market trends and collect intelligence to help them make decisions, so you really want them to have knowledge in your field.
Who, what and when was the last time you made an investment?
Getting an idea of any potential investors recent history should give you an indication of whether you can take them seriously. For example, if they have not made an investment in a few months, it could potentially be a sign that they might not have required funds.
What is your typical investment size?
You’ll have a number in mind, so before getting into a protracted discussion with any investors it’s always worth understanding what their upper limit is. If you’re some distance apart then it may mean there’s no point in pursuing it any further.
How does our business fit within your portfolio?
Again, you will have done research that should give you some indication of the answer however if they have no other businesses in their portfolio in similar industry you should ask. Additionally, you do not want the chance for conflict to arise if the investor has a lot of similar businesses to yours. Ideally, you want something in middle-ground, where businesses may share the same model but are not direct competitors.
What attracts you most to our company?
Entrepreneurs are naturally passionate about the projects they pursue. You want a partner that shares this passion and your overall goal. This common ground is an important factor to make sure that you can have a positive relationship with your investor.
How do you interact with the investors after investing?
This is a key question as you will want to know exactly what you are getting into. Some investors will prefer to be hands on, whereas others may want to let you get on with the day-to-day of running the business. Investors work in different ways and it is up to you to find out whether they can offer you the kind of support you are wanting.
What is you exit strategy for this investment?
Ensuring to ask exit related questions right from the start helps you gather information into the trajectory the investor has for your venture. The investor may believe that an acquisition in the future may be the strategy, whereas you may have another one.