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The Interview article

Source: http://angelinvestornews.com/ART_interview.htm

 

Congratulations!  You have just received a phone call from a venture capitalist, angel investor, or the commercial loan officer at your bank inviting you to come in to discuss financing.

 

The investor will probably pour over your business plan in advance, looking for chinks in the proposal.  There may be three or four people on their side of the table peppering you with questions. But no matter, you'll be ready. 

 

PRIOR TO THE INTERVIEW

 

Listed below are some of the most common questions to expect.  Also examine your business plan with the critical eye of a financier.  What other questions would an astute lender or investor ask?  Prepare and rehearse answers to all questions.  Then ask someone in your office to grill you until you are familiar enough with the answers to deliver them smoothly and confidently.  (This is no different from an employment interview. Anyone who does not have solid answers to predictable questions like "Why did you leave your last job?" won't get the job.)

 

DURING THE INTERVIEW.  

 

 

QUESTIONS AN INVESTOR MAY ASK

 The Market

·   How large is the specific market for your product?

·   What growth is expected in this market?

The Product/Production

·   What, specifically, are the company's products/Services?

·   How are they better than other products or alternative solutions?

·   Are there patents?  What, specifically, do they protect?

Competitive Positioning

·   Overcoming Inertia - What will it take to get customers to change what they are using/doing today?

·   Where will you fit into the industry?

Product Development

·   What work remains?

·   Identify major development risks or challenges. 

Marketing and Sales

·   Briefly explain the selling cycle.

·   How will you raise customers' awareness of your product and stimulate buying?

·   What channels of distribution will you use to deliver your products?

Leadership

·   What is your background and previous experience?

·   Where did the idea for the company come from?

·   How did you get involved with the company?

·   Who is presently managing the company?  What are their credentials especially regarding ….

o         Financial management

o         Marketing

o         Product development and production

Business Strategy

·   Identify the steps needed to reach positive cash flow.

·   How has the company been funded to date?

·   What is the business model? (i.e. how will the company make money?)

·   Do you have any corporate partnerships in place? 

Financials

·   What kind of revenues can the business produce over the next five years?  Profits?

·   How will the investor get his money back? Through an IPO? Acquisition? When?

Requested Funding

·   How much capital is required to carry the company to the next stage?

·   What is your current "burn-rate."  

·   How much hard-money (cash) have the founders put in?                

If you anticipate being acquired…

·   Identify the two or three most likely buyers                                                                                   

·   Explain why they would be interested