Three Important Questions an Entrepreneur should Ask an Investor

When capital raising, it is easy and natural to be myopic, focusing only on the quickest way to secure a specific amount of money needed to move a business forward, or potentially, keep it up and running.  However, having a relative amount of patience and understanding the importance of screening an investor on their partnership merits as diligently as that same investor screens entrepreneurs on their investment merits are paramount.

Whether you are being pursued by an endless amount of investors or struggling to find any at all, it helps to be mindful to ask the following three questions to a prospective investor:

  • Why would you make a great partner for my company?
  • What experiences, expertise and relationships do you have that can help my company scale as fast and efficient as reasonably possible?
  • Can you introduce me to any of your current or prior portfolio companies to speak with? (This question may not always be appropriate for a first meeting)

These three questions are important because entrepreneurs should be seeking “smart money” partners who will help you move your business forward in ways beyond just a bunch of cash transferred to your balance sheet (expertise in the industry, relationships to potential customers, etc.).

It is truly a union/marriage between parties with an equity investment, and both sides need to be really comfortable around each other.  There is too much at stake to have a shotgun wedding.

Hunter has been leading CED’s Connections to Capital program since January 2018 and has made over 300 connections between investors and entrepreneurial companies.  To learn more about this service and other support CED has to offer, visit our website.

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