Top 10 questions to ask potential investors - from industry experts

Taking investment isn’t just about money. You want to make sure that you and your investors are a good fit for each other, and that they can support you with more than just capital.

Before going ahead with a deal, you need to understand if an investor is right for you. We’ve spoken to investors and funded founders to put together this list of our top ten questions to ask potential investors.

In the article:

• First, do your research
• Top 10 questions to ask investors
  –What excites you?
  – How can you support us with mentorship and training?
  – Tell me about your network and strategic partners
  – What would you like to get from this investment?
  – Do you see yourself being with us for the long term?
  – What are your expectations about board seats or control?
  –What’s your view on the potential risks and challenges in our industry?
  – Can you introduce us to other founders in your portfolio for references?
  – What’s your preferred exit strategy?
  – If you were me, where would you take the company?
  – Do you have any concerns so far that we can address?
• Resources to improve your pitch
• Talk to the experts

First, do your research

Success starts with pitching to the right people. Do as much research as you can before you send or present your pitch deck to investors. You’ll want to know that they’re interested in your industry and can provide what you need.

Personalisation is key, so show them that you already know a bit about them and that you reckon there’s some good alignment. Whether it’s an angel or a VC, find out what you can online (websites and LinkedIn) to suss out whether there’s potential before you make contact. This will save your time and theirs.

What to look out for during your research:

• which industries do they invest in?
• at which stage(s)?
• and in which countries?
• how much do they typically invest?
• what companies have they invested in before?
• why do they invest? (what drives them?)

Top 10 questions to ask investors

What excites you?

Investors need to be inspired by what you do. Both of you have to believe in the company for it to be successful. Aim to understand what drives the investor and what excites them about your industry.

This question is also an opportunity to get to know your potential investor, establish a connection and evaluate if your personalities are a good fit.

How can you support us with mentorship and training?

It’s important to think about how potential investors can support you beyond capital. Many investors offer mentorship and training to their founders and provide industry knowledge they’ve gained from experience. It’s a good idea to work with investors who can provide knowledge as well as capital.

Tell me about your network and strategic partners

As well as capital and knowledge, investors should also help you access a strong network to enhance your ability to succeed.

When deciding which investors you want to work with, consider if their network and partnerships are a good fit for you. A good network can help you:

🛒  create opportunities to sell your product or service
👩‍💻  access industry expertise
📱 reach a wider audience to market your product
🤝 collaborate with other companies
💡 inspire new ideas to improve and expand
🔓 access more funding opportunities

Make sure you understand how the investor can support you with access to their network and partnerships. 

What would you like to get from this investment?

When you know what the investor wants, you can judge whether you’re a good match for each other. Are you confident that your company can give them what they’re after?

For example, they might expect an exit in five years but you know you don’t want that kind of pressure on you. Or perhaps they just want to be a part of how your company makes a positive impact. Can you deliver the kind of ROI they’re looking for? Both parties should be clear on expectations before you enter a deal.

Do you see yourself being with us for the long term?

It’s good to get a sense of how committed an investor is to your venture. You want to know that you excite them enough to go the distance with you and that you can count on them in the long term.

As part of this question, ask if they’ll support with follow-on funding.

What are your expectations about board seats or control?

This question will help you understand how involved an investor wants to be in decision-making and the strategic direction of your company. It’s important to understand their expectations.

Many founders don’t want investors getting too involved, but some like to have substantial guidance and mentorship. Make sure you align on the degree of control and influence investors want in your company before moving ahead with a deal.

What’s your view on the potential risks and challenges in our industry?

This is a good question to help you get an idea of how well an investor knows your industry and how they think. It can also help you gain some insight and perspective from them, and share your own as well.

Can you introduce us to other founders in your portfolio for references?

Ask your investors if they’re happy for you to get some references. Reach out to founders of other startups they’ve invested in and ask what the investors are like to deal with post-raise. Ask about how supportive they are and what challenges there have been, if any.

What’s your preferred exit strategy?

If you can, it’s a good idea to get a sense of how and when your potential investors want the company to exit. They might also ask you this question when you pitch.

To prepare for a discussion about exit, read our posts:

• Exit strategy: what it is and why you need one
• How to sell your business: the founder’s survival guide

If you were me, where would you take the company?

This is a good question to get investors to envision themselves as an integral part of the future of your company. It also helps you understand more about how the investor thinks, how well they know your industry and to build a connection.

Do you have any concerns so far that we can address?

This can be an uncomfortable question to ask. But it’s a smart idea to find out if there’s anything you can address or improve now that will make investing in your company more appealing.

Resources: How to pitch

To perfect your pitch and improve your chances of getting funding, read our posts:

🎨 Create your pitch deck with step-by-step guidance: Free pitch deck template
🤔Understand what investors want: How to pitch to investors: insider tips to get funded
💡Prepare for the Questions investors ask (from actual investors)

Talk to the experts

Our goal at SeedLegals is to help founders raise funding more easily and sort the legals for your startup efficiently and affordably. We can help you:

• create a free pitch page to share with investors
• close your funding round fast
• raise before a round
• top up after a round
• secure your Advance Assurance for SEIS/EIS
• extend your runway with R&D tax credits
• set up a share option scheme

…and more. Book a free call below with one of our experts to find out how we can help.