Investor Questions for Startups…

Michael D. Moberly, Principal, Founder kpstrat and ‘Business Intangible Asset Blog – Business Intangible Asset Strategist & Risk Mitigator

Investing inthe funding of startups – early-stage businesses often include variants of family, friends, venture capitalists, crowdfunding, and conventionally structured loans, etc., and if same emerges from university-based research, pursuing grants may be an option.

In advance of pursuing either, startup founders – management teams are absolutely obliged to objectively

  1. achieve familiarity with sources – options of potential funding, investment, and/or loan which are relevant and considered doable.
  2. compare – contrast the viability – do-ability of each potential option-sources’ e.g., process, requisites, rationales, amounts, negotiables, and time frames, etc.

Funding – financing identified as a ‘loan’, may be offered with provisions of a payback process with interest, and within a specified time frame, irrespective of challenges that may arise.

Most forms of private investment – venture capital, on-the-other-hand, are not characterized as a (conventional – installment) loan with interest, instead…

  • private investors will receive – own equity in the startup which they choose to invest.

Safeguarding – mitigating risk to their equity will likely entail variations of…

  • monitoring and oversight.
  • assuring progress toward designated objectives and conditions.
  • attracting future – successive rounds of investment.

The amount of capital which a startup assess they need – endeavor to seek, will likely influence how – when – where/which (prospective) sources of capital to consider, try to attract, prepare, and pursue.

Either way, startup founders – management teams are obliged (be prepared) to address experienced, circumstance – sector specific ‘lines of questioning’ which prospective investors or loan officers seek answers, i.e., authentic – realistic clarity.

Seldom, will startup leadership vying for investment capital, be offered an opportunity for a do-over – second chance if-when either their

  • initial ‘pitch’ or responses to investor questions are deemed managerially inexperienced, overly optimistic, too risky, or wholly insufficient.

Startup leadership should avoid considering prospective investor questions are mysterious or arrogant about the questions private investors (venture capitalists) are likely to pose to + seekassess answers from startup leadership.

I respectfully encourage the latter to modestly recognize, (a.) the questions + (b.) the assessment of the responses, likely converge – reflect various investor experiences, economic circumstances, and their preference to…

  • avoid – mitigate risk relative to their ‘invest…don’t invest’ decision.
  • enhance – sustain the valuation of their equity.

Collectively, the above reflect prudence ofstartup founders – management teams to sense their (fiduciary) obligations, i.e., the essentiality of preparation, e.g.,

  • how responses to particular-questions, issues, and challenges, etc., which prospective investors may ask – listen to, are
  • often telling, pivotal, and will likely to be interpreted and materialize through investor’s lens, as
  • performance probabilities, conditions – stipulations relative to ‘invest – don’t invest’ decision.

A respectful reminder to readers…I am a business intangible asset strategist and risk mitigator, my

  • experientially driven research, books, papers, blog posts, engagements, event speaking, and service, encompass various matters and audiences related to business things intangible.
  • focus is on the development, differentiation, introduction, competitiveness, valuation, assessment, safeguards, and mitigating risk to ‘business specific’ intangible assets for a range of circumstances and transactions.
  • work entails mediatingarrays of positions, perspectives, strategies, operating cultures and missions.

The ‘Business Intangible Asset Blog’ is experientially-researched, written, and produced by Michael D. Moberly, to provide perspectives, insights, and additional and sometimes alternative perspectives to readers, ala business leaders, management teams, boards, and investors, etc., to aid in identifying, distinguishing, assessing, valuing, safeguarding, and lucratively – competitively utilizing -applying their ‘mission essential’ intangible assets. 

Readers are-encouraged to review and comment on this, and other posts wherein arrays of issues related to business things intangible are authentically and practically conveyed.


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