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Seed Funding and Venture Capital

What to be prepared for

Image: abqjournal.com

Before you walk in to the investor or angel meeting

Your presentation maybe strong, but investors know what you’ve left out.  
You will always get fairly similar types of questions, so you need to be prepared.  Listen and learn from the meetings your having and fine tune your presentation.  You will start to recognizing trends in the information investors are looking for and be more prepared.  Additionally you can proactively remove the objections and show the group you understand what’s important.

Expect questions as soon as you get started

Market

Basic information about the market your in or getting in to.

• How big is the opportunity?
• Who are your customers?
• What companies are you emulating?
• Which competitors do you want to look the least like (or companies)?

• How did you come up with the numbers?
• What is your marketing strategy?
• What is your PR Strategy?
• What are your target geographic markets and why?

Momentum

How is the market reacting

• What kind of feedback are you getting now?
• How many customers do you have?
• What is your current growth rate?
• Is your growth consistent?

• What sales have you actually made so far?
• What is affecting your growth?
• How long are customers staying your customers?
• Do you have a demo or your product with you?

Who’s Who

Your foundation

• Who are the founders?
• Where are you located?
• Who is on the team?
• Do you have a board? Who’s on the board?
• Who else may have a right to your idea?

• Who are the existing shareholders?
• Why are you the right person to drive this business?
• What motivates you?
• Do you own the IP?

Competition

Look to your SWAT for some of this information

• Who are your competitors
• SWAT – Competitors
• What are the barriers to entry or to scale?
• What makes you different?
• How is your service different? or how do you compare?

• Why hasn’t anyone else done this yet?
• What makes your product different?
• How does your price fit in to the market?
• What do your customers think of your company? Do you have backup for claims?

Money and Financials

Detail about your value, and money questions.

• How are you marketing your service/product?
• What is your sales and marketing budget?
• Per customer acquisition cost?
• What is your customers lifetime value?
• What stock options have you given already?

• How much are you looking to raise?
• how much have you raised already?
• Who has invested so far?
• What is your burn rate?
• What are your KPI’s you focus on?
• Do you have a stock/option ledger available?

IP and Product

Depth about the product

• What problem are you solving?
• What problem is your product solving?
• What IP do you own?
• Are there any claims to your IP?
• What product liability risks are there?

• What are the regulatory issues which may arise? and affect the business?
• Do you have other IP you are developing
• How are you controlling or protecting your IP?
• Who invented or created the IP?

Use of Funds

Now you have the money, whats next?

• How will you use the funds your getting?
• How much will be spent on founders salaries
• How much money will be used for more fundraising?
• What financial milestones do you have?

• Are you risking any of your own money?
• What happens if you don’t get all the money?
• What other ways are you raising money?
• What are your monthly expenses?
• What are the biggest risks to the investment?

Sales and Marketing

• What are your current sales margins?
• What will scale do to your margins?
• Can you talk about specific customer experiences?
• Who is driving your sales?
• Are there sales risks to any employees leaving?
• How many customers do you have?

• What sales channels are you utilizing?
• What Marketing channels are you utilizing?
• What contingency plans do you have if your sales or marketing channels change?
• What major changes have you made in your sales or marketing to this point?

Corporate and Other Legal

• How is the company legally organized?
• Do you have a copy of the share ledger?
• Where is the company registered?
• Who is doing your book keeping and accounting?

• Do you have mentors or advisors helping?
• What skill sets to the active shareholders bring?

Other Answers you will need to know

Valuation and Money

• What is the exit plan or goal?
• How long will it take to achieve your goal?
• What is your pre-money valuation?
• How are you determining your current valuation?

• How much are you looking to raise now?
• Do you have any commitments for this round?
• What is the milestone this money will take you to?
• How else do you expect an investor will get involved in your business or help you out?