Do you need an injection of money to get your business off the ground? Or to grow it to new heights? There are three types of investor you can approach – angel investors, venture capitalists and private equity. All these investors will be particularly choosy about who they give their hard-earned cash to and they will want to earn the most interest from your company.
Here are six questions investors ask:
Who is the CEO?
Investors are concerned with the character of the person who is the leader in the company. They want someone who shows strong leadership skills. The leader needs to be able to manage the opportunities and threats which they face. The leader should also have a wealth of experience in the product’s field. In addition, they want to ensure that there is a strong team to assist the CEO in creating a great product and brand.
How well is your company performing financially?
Investors will ask you about the numbers and how you will grow them. You should be prepared to answer questions about how you will pay back your debt, how will you grow the profits in your company and what is your potential exit strategy. The investor will want to make sure that your current assets can cover your long and short-term liabilities. Furthermore, they will examine your revenue streams, acquisition costs and your turnover rate.
What is your brand?
The venture capitalist or angel investor will compare the strength of your brand compared to the competition. Do you have a unique offering which will encourage clients to buy your product over others? They will examine your customer base to ensure that it is stable. Angel investors are more keen to invest into products which are a solution for a large potential customer base.
Is your business scalable?
Venture capitalist look for companies which can grow quickly. Can your company grow and increase margins in a short time? Investors want to see a return on their investment in a short time.
What is your exit strategy?
Investors tend to invest in companies for a short amount of time. They would like to see a return on the investment in two to five years and then move on to the next big thing. They also want to know if you have identified people who would be interested in buying your company to merge with theirs. Additionally, you will need to tell your investor why your company would be interesting to the potential strategic acquirer.
Do you have a business plan?
Investors will be interested in seeing your business plan. How are you going to grow your profits and will their investment earn a good sized interest?
By answer these questions, you will be better equipped to face potential investors. You will be able to answer their questions confidently and make sure that you do not look like a gaping guppy when they ask you questions about your business. Got out there and get the financing you need to grow or start the road to your greatest business dreams.