Today we are going the other way round and talk about all the questions you as a founder & entrepreneur should ask a potential VC or angel investor.
In our last blog post, we made a collection of 79 questions founders will be asked before an investor will invest his money.
But I am always wondering why there is a supposed disbalance between investor and founder. It often seems that the investor is the only one who is allowed to ask questions in a meeting. In my opinion, the relationship should be at eye level. And the founder has every right and definitely should ask the VC or angel investor a ton of questions. Think of it as a marriage. Would you ever marry someone without dating and learning about the other person. You sure won‘t.
Most of the time you will have the chance to ask these questions through the course of the several meetings. Your goal is to make sure the investor is a great fit for you. Not only deal wise (the right amount of cash, the right valuation) but also personality-wise (you will work together closely for several years).
When getting funded the most important thing is to get the right investor on board. Always keep in mind that the money is not everything (can‘t stress that enough).
To make it easier for you to understand what we talk about we collected a ton of great questions founders should ask VCs and angels from our own experience!
So here we go:
- What makes you special as an investor?
- What was your best investment?
- What is your biggest learning in investing?
- How will be our partnership down the line?
- How is working with you?
- Tell me about a time when your network helped one of your startups?
- How can you help us besides the money?
- Which VC/Angel Investor do you admire? And why?
- What is your investment philosophy?
- What type of people do you want to invest in?
Fund / Investment Firm Questions
- How many investments have you made in the last 6 month?
- What is your average deal size?
- Who are your LPs?
- How do you make investment decisions?
- What is the average time of the first meeting to investment?
- In what percentage of your investments are you participating in the next round?
- Average Time from investment to sell of your stake?
- What is the lifetime of your fund?
- Where do most of your deals come from?
- Who do you see as your nearest competitor?
- Do you make your own decision to invest or do you wait for other investors to invest first and follow?
- What is the most common way for an exit in your fund?
Team & Investment
- What do you look for in your teams?
- What are your assumptions when investing in us?
- What do you expect of us?
- Why do you like our team?
- Can you give me feedback on our pitch deck?
- Are there any conflicts with other investments of your firm / other partners?
- Are there any costs that are outside the norm for these deals?
- What are the metrics you looking for in a specific sector?
- Are there any special deal terms (e.G. vesting, liquidation preference, anti-dilution)?
- Can you give me the contact to 3 founders you already invested in?
Take all these things in mind before your next investor meeting and try to build a real relationship with the investor. It will for sure pay out down the line!