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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.
- STICK
TO THE FACTS.
Sophisticated
buyers are not
impressed by
puffery.
Only assert
what you can
quantify and back
up.
- EXUDE
CONFIDENCE AND
ENTHUSIASM.
- BE
PREPARED FOR
UNEXPECTED
QUESTIONS.
STAY
FLEXIBLE.
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
If
you would like to
discuss your capital
requirements and sources
of funding, call Mike
Roer, CVG Executive
Director, (203) 256-5955
or contact him at mikeroer@snet.net.
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