Pitching to investors can often be a scary prospect for an entrepreneur. It can make you feel as if the company’s existence is solely in their hands. However, that is not true. Having investors invest in a company is also a test for the investors. On this two-way street certain questions need to be asked and answered in order to make sure that the future of the company is safe. The reality is that a good investor can go on to become a potential mentor for the business, a stock advisor, and introduce the company to better avenues in the future. Here are 5 key questions that need to be asked before inviting investors to your business –
Q1. How can the investor add value to the businesses?
What is the practical approach of the investor? Are they thinking of making new hires or adding more stock advisors to the board? Check beforehand how the investor has fared in his previous investments. What does the investor care about the most? Is it company culture or advertising? After making it clear what you are looking to improve, make sure to get the opinion of the investor on how they can add value to the business. Make sure that they are not being too demanding.
Q2. How can the investor improve our product?
Although experienced investors’ know-how is priceless in the industry, having someone who trusts your vision and your product by your side is more important. If they wish to direct your company in a completely different route, working mutually could create arguments. Instead, find an investor whose business outlook is in line with your plans. In other words, find out someone who is as passionate about the product as the entrepreneur himself.
Q3. How good is their problem-solving skill?
This question is designed to test whether or not the investor sees the bigger picture in terms of the future. As opposed to concentrating on the details of the product/service you’ve established, focus on industry related problems and ask them about how they can help solving them in the future.
Q4. Who are their influences?
When you make ties with an investor, essentially their whole network is coming in business with you. So, it is important to know who their business influences and tie-ups are. Ask what other businesses they have invested in the past; how successful they have been in the past and how these business ties can help them in the future.
Q5. What other companies they have invested in and will they be available when needed?
Often, investors tend to invest in various businesses. While having a diverse portfolio is a positive for an investor, for start-ups, it is better to go into business with someone who is available for guidance most of the time. If the investor cannot promise prompt presence whenever required, it would be better to find one who will.
Clear all the confusion by asking these questions. Investor-Entrepreneur relationships are crucial for the success of a business.
Investors can be a crucial part of your business, so you must choose them wisely. Prior to having someone or some entity invest in your business, ask questions like, how they can add value to your business or improve your product, whether they would be available for guidance when needed, and so on.