7 Things to ask at Venture Capital Vs Angel Investors
New and young entrepreneurs are so often fixated on getting a ‘YES’ with a Venture Capitalist or an angel investor – and will go to great lengths to answer any question posed to do so – that they forget to ask them any questions. So here are the seven most important questions that I feel should be asked before saying ‘YES’:
1. What percent of the fund is this investment?
The more significant the percentage the better. It means the venture capitalists have more money to invest.
2. What are your areas of expertise?
Always ask your angel investors about their expertise and experience as this could help you fill in your knowledge gaps if you have never dealt in those areas.
3. What is your typical investment timeline?
Knowing the investment timeline is essential. Some angel investors take 2-3 meetings before funding. Other investors, like Venture capitalists, take longer to finalize the funding.
4. What is the last company you backed, and why?
Knowing which companies an angel investor or venture capitalist backs up is crucial for your success. It helps you gain some insight into their work style, which companies they back, and why they had made investments in those companies. Knowing these factors can help you know the similarities between your business.
5. How many more investments do you plan on making this year?
The number of investments that an angel or venture capitalist will make to you is inversely proportional to the amount of time they can spend on each company. So, pick an investor that takes a reasonable number of investments per year and can spend adequate time with each company!
6. What are your concerns about our business?
Asking about the concerns about your business indicates that you’re open to feedback and respect the opinion of the investors. The answer you receive from this is not only beneficial for your knowledge but also, helps you understand how much experience the investors have in your domain.
7. What is the best way to communicate with you?
Establish communication that feels like a jewel in the crown if you want to get this relationship off the right start! Find out what works best for the investment you will be working with. This will help you in finding compatibility and trust in your relationship.