5 Questions that entrepreneurs should ask potential investors

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Introduction: Raise money In fact this is a two-way choice, in addition to some basic background checks, there are 5 problems that entrepreneurs should, or must be to your potential investors.

How do you know you've chosen the right investor when you're trading a lot of ownership for an investment?

Although raising money basically looks like a process that needs to be won, it's actually a two-way choice. The investor has the money to invest, does not mean that he or the company is suitable for your business and can bring the corresponding added value. When they choose to invest in your business, you are also choosing investors, and it is likely that you are choosing partners who need to work together for many years.

In addition to some basic background checks, there are 5 questions that entrepreneurs should, or must, offer to your potential investors.

1. What additional value can this investor bring?

To be honest, although it may sound funny, I did see investors who knew nothing about the projects they invested in, and more than once. Entrepreneurs need to be careful about what you need from investors in addition to money. What you need is someone who can fully understand how to build a business from scratch, a person who knows how to finance and has enough experience to guide you, or a person who has experience in a particular field, such as sales, marketing or product development.

Choosing an investor is a certain way of marrying a marriage, because this person will fit into your life and be with you for a long time in a boat. In fact, investors have a good will also have the general, so the entrepreneur must choose the right for you or suitable for your company's investors.

2. Does the investor understand your entrepreneurial project?

Looking for an investor is not just about looking for money, it's also important to consider whether investors understand your business model and whether they have experience in your industry. Entrepreneurs should understand the development of investors and their areas of focus, which often reflect a broader knowledge of the investor in the industry in which you are engaged.

For example, you start a digital marketing startup project, and you need to be aware that this is the first time an investor has invested in a project like this. Without previous experience, the investor is likely to have no connections to your industry or enough power to give you the right advice or decision. In addition to the VC report, LinkedIn is often an important channel to help you understand potential investors.

3. How interested are investors in the area where you start your business?

Just as you need investors to understand the importance of your startup project, entrepreneurs should also be mindful of how interested potential investors are in the types and areas of your startup projects. Find out if there are any similar projects in the enterprise he is also investing in, see if your project is in a key area of his investment or whether he is ready to invest in more of the same type of enterprise or is already tired and ready to go. Entrepreneurs always need to find investors who are more interested and willing to invest in the relevant entrepreneurial field.

4. What stage of his career is this investor in?

Most venture capitalists, if he has 15-25 years of experience in the field of venture capital and personal career, will certainly bring a positive impact on your business.

A partner who has only a few years experience in the field of venture capital, lack of experience must be a problem, especially if he has not had a successful investment case before, then his networking, understanding of entrepreneurial projects, and the experience of bringing a start-up company from start-up to success will not be enough. The impact on your company is far from ideal, and his proposals and proposals are not in place.

Try to understand the motives of his investment, if he is also trying to build his own career or brand, then his pace does not necessarily coincide with you, which will lead to some outdated or unpredictable situation. For example, he might want to advocate for an investor or board member who looks good on another CV, but that person may not be right for your business, or he might suggest some very good ideas in the start-up phase, but it may not support the sustainable development of the enterprise.

Another disadvantage is that if the investor is beginning to fade, it will weaken his influence in your business, which is critical in the next round of financing or when you have a new proposal to vote on. An investor who is at the end of a career may also not be able to make a success of your business.

When you're ready to give up part of the company's ownership, it's not just about money, it's also a window for advice and help. Define the investor's stage in his own career, and make it clear that the investment is in the interests of the company rather than the personal needs.

5. How much money does this investor prepare for your company?

Plan for your next round of financing, ask about the development of the investment company at this stage, how much money you have prepared for your company, and whether they have reserved the next round of investments in full or temporarily. Some companies will not reserve funds, all will be in the next round of financing time to make a decision, depending on their existing funds and other investment opportunities, while others will have hard reserves or soft distribution of future funds. Find out if investors have made a decision to continue investing in your company in the future, and prepare for your next round of fundraising. (Translator: Han Lin)

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