During your presentation to an investor, the investor will ask you a number of questions. Be prepared to answer these questions at any stage of the fundraising process:
Take notes on what the investor is focusing on and saying. Reply in a timely manner (less than one week) to the investor’s follow-up requests or questions that you could not answer at that time.
The Investor Questionnaire suggests an asset allocation based on information you enter about your investment objectives and experience, time horizon, risk tolerance, and financial situation. Your asset allocation is how your portfolio is divided among stocks, bonds, and short-term reserves.
Trade-offs must be weighed and evaluated, and the costs of any investment must be contextualized. To help with this conversation, I like to frame fund expenses in terms of what I call the Four C's of Investment Costs: Capacity, Craftsmanship, Complexity, and Contribution.
Once the basics are out of the way, an investor will want to see the nitty-gritty of your company's finances. To dive deeper into your company's financial health, show them what you're currently spending and how you're spending it. Provide financial transparency with investors by providing: Income statements.
Key summary. Investors want to understand how the company operates under the bonnet and ensure there is sensible business structure beyond the founder(s) they've been speaking to during the fundraising process.
As with an interview for any job, make sure you do plenty of research about the company before you go. See what they have done well in the last few years, along with focusing on the parts that they could improve on. Make sure you're aware of what their portfolio consists of and what kind of investments they focus on.
Be honest. If you don't know the answer to a question, don't try to make something up. Instead, be honest and tell the investor that you'll look into it and get back to them. They'll appreciate your honesty and it will build trust between you and them.
What to Offer Investors in Return? Most investors expect to receive a stake in your business in exchange for their funding. Venture capitalists might be willing to take on greater risk, such as requiring 40% of the company if the product is still in development.
So they're going to want to know exactly why you need the cash and exactly what you plan to do with it. They'll also want to know when they can expect a return; that should be a part of your business plan. Investors will also be looking for an exit strategy, and you need to think about that in advance.
Introduction: My name is Errol Quitzon, I am a fair, cute, fancy, clean, attractive, sparkling, kind person who loves writing and wants to share my knowledge and understanding with you.
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