Welcome back to part 2 of my blog series on what questions you can expect from investors when seeking funding for your business. As discussed in my previous blog, some of the first sets of questions investors will ask right out of the gate typically focus on the market, personal aspirations, and business traction. Let us explore the many more aspects of your business that investors will be interested in.
Understanding your competition is something that both you and your investors will need to be highly skilled in. Who are they, and what are your advantages over them or disadvantages in comparison to them? This is another aspect that will give you great insight into your industry regarding areas where you could improve, and areas that you are currently mastering. In the same realm, investors will ask why you, or even why your competitors, are falling behind.
Obviously, your business’s financial state will come into question as well. This can include a wide array of specific questions, including your marketing efforts, marketing budget, acquisition costs, equity, possible debt, and more. How did you go about raising your funds when you first started out? How much time passed before your business became profitable? Stock options should be noted here as well, how they have been dispersed, and the distribution of equity amongst your company’s founders.
From a holistic standpoint, investors will want to know what makes your company stand apart from the rest, and what problem you solve on a larger scale. Why did you choose to start this specific company in the first place? Dissecting this subject into smaller parts, do you foresee any legal issues in the near future or any liability risks? If any founders or employees have left the company in the past, would there be any reason for them to claim ownership of intellectual property?
Having a strong business model is another important aspect for investors to ensure that your company has already hit the ground running. Questions regarding this subject may include those on the marketing channels you are utilizing, a ‘plan B’ in the event of your current sales strategies failing, profit margins, and scaling. Have you already undergone any adjustments in this realms? Too many could be seen as an unstable business in the eyes of some investors. Conversely, having many opportunities for additional streams of revenue could be reassuring.
Obtaining investors can be a difficult task for business owners. However, being confident in yourself and your business is the foundation for attracting them in the first place. So long as you understand the ins and outs of your business and have complete faith in its success, every question thrown your way should be answered with ease.