Important Questions to ask Investors

During an investor pitch, typically it is the investors who ask a volley of questions. But as an entrepreneur you should also take this opportunity to evaluate whether this is the right investor to take fund from. It is not a one-way selection but a two way process. Having the right investor is vital for the future growth of your business.

  1. The current round of funding will last XX months. Will you be able to participate in the next round of funding? Can you help in bringing in other investors in the next round of funding?
  1. What is your typical investment size?
  1. What is your process for decision making?
  1. How else can you help us besides funding?

This will help you understand if the investor is well connected and can help you with his connection. Also, helps you understand if he is willing to mentor you.

  1. Have you ever invested or worked in this sector before?

It is important to know whether the investor understands this business or not.

  1. How do you interact with founders after investing? What kind of governance mechanism you like to keep in place?
  1. Do you have any exit strategy (mechanism & time-frame) in mind?
  1. Why is this investment important to you? How does it fit into your overall investment portfolio?
  1. When did you last invest?

This will help you understand if he is an active investor or just wasting your time.

  1. What factors and criteria drive your investment decision?

References:

http://www.forbes.com/sites/theyec/2014/05/13/the-seven-questions-you-should-ask-your-potential-investors/#34e19dbf2110

http://www.entrepreneur.com/article/235204

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