The Questions A Business Investor Will Want To Know Before Giving You The Cash
July 3, 2017
Article Overview10min read
Before introducing a product or service, an entrepreneur should have a good sense of who their target audience is and if the product or service will benefit them. Plenty of research needs to go into this before developing a product or service. You gain some insight, experiment with different versions, understand customer behaviour and depending on the feedback, continue to make the product bigger and better.
When attempting to get an investor onto your side, you pretty much use this same psychological tactic. You have to learn about your investor and get into their head. Anticipate their questions, and learn to predict their reactions. Unfortunately, this may be a bigger mountain to climb, as getting in front of investors is not as easy as getting to know your customers. An investor needs to be quickly drawn into your idea, otherwise it will become stale and de-motivating as time goes on. What are some of the questions business investors may expect you to answer right off the bat?
What experience and ambition do you have that is relevant to business growth and success? Investors are always hesitant to take on startups that may end up being a lifestyle business, where the owner is paid a salary but the returns are not great and the investor will rarely benefit. They want to invest in something that will churn out good dividends.
Does your team have weaknesses that may become their downfall? People have weaknesses, identifying these weaknesses is the first step to growth. There should be a strategy to compensate for weaknesses. It may not be something you should focus on immediately, but it should be something that will be addressed somewhere along the line.
Who is your real competition? Investors want to know whom you will really be competing against. Every product or service has a competitor, it may be closer to your space, it may be beyond it. Be super critical and discerning of your competition so you walk into the market with the right attitude.
How do you plan to spend the investment? This is not something that should surprise you. Investors are going to want to know how you plan to use their cash. They will want to see reasonable and achievable details for the next 12 months. This is the area they most control. What will make investors happy is if you plan to use their capital to expand the fund.