Questions Investors Ask Startups – Series I

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

This, and companion posts @ Business Intangible Asset Blog are intended to draw readers attention to (a.) questions prospective investors are likely + obliged to ask startup founders and management teams, and (b.) attaching importance to preparation for (investment) pitches – meeting, and (c.) recognizing how responses are likely to be applied by prospective investors to assess – differentiate their-invest – don’t invest decisions.    

Readers are respectfully encouraged to reflect on each question (in the series), i.e., its framing, variants, messaging, and prepare accordingly to execute (good-better-best) pitches – meetings with prospective private investors as well as entities for conventional (business) loans, while recognizing seldom will there be opportunities offered for a do-over.

This series of posts + questions converge to reflect my (a.) experiences and observations, (b.) the reality that viable startups develop, incubate, scale, and secure investment in Omaha, Des Moines, Memphis, Kansas City, Fort Wayne, Lincoln, Laramie, and Madison, in addition to coastal U.S. cities and universities.

Readers are discouraged from presuming there is a one-size-fits-all relevance – priority assigned to questions prospective investors will ask + want to hear responses from (startup) founders – management teams in a pitch or meeting.

Its’ essential for startups to engage in thoughtful – methodical preparation when seeking private capital investment. Experientially, this includes…

  1. recognizing, differentiating, and speaking to the foundational intangible assets relevant to a particular-startups’ mission, operating culture, and sustaining momentum to achieve objectives – clear hurdles.
  2. examining the relevance of each question (in the series) to a startups’ particular circumstance, mission, milestones, and prepare accordingly.
  3. accepting prospective private investors may ask any question they deem relevant because, it is their capital.
  4. appreciating this business economic – operational reality for startups, i.e., 80+/-% of most startups’ mission, momentum, and strategic attractivity lie in – emerge directly from intangible assets, i.e., various forms, contexts, and applications of…
    • intellectual (knowledge, know how) capital.
    • structural (process, procedure) capital, and
    • relationship (association, leadership, management team) capital,

which preferably are collectively – legitimately characterized by startup founders and management teams as converging as impassioned, sustainable, and guidable operating culture.

Each prospective (private – VC) investor which I am familiar, will assess the presence, absence + experiential strength of the above ‘leader intangibles’ as they are exhibited – conveyed by each startup. during investment pitches and/or meetings.  I encourage all to be respected, never assumed, under-estimated, fabricated, nor faked

Similarly, startups’ which seek investment – investors are obliged to recognize in advance of making a pitch or meeting with prospective investors, that…  

  1. private investment – venture capital is not akin to capital an institutional loan officer may commit a specific amount and which the recipient repays in installments over a specified period-of-time.
  2. risk for prospective private investors – venture capitalists is not hinged to assurance of ‘loan payback’, rather,
    1. private investors calculate whether a startup has – will have more ‘attractive tangible – intangible forms of equity’ which they will assume a percentage as a factor to their investment decision.

Let there be no doubt, private investors ‘invest – don’t invest’ decisions are best characterized as a ‘business decision’ which may be variously influenced (qualitatively – quantitatively) by particular-time honored conventions, previous experiences, sector specific market potentials, equity, and assessment of startups leadership, operating culture, and their versions of vulnerabilities, probabilities, and criticalities.

Prospective Investors Questions – Series I

The following ‘series’ is purposefully framed not merely as questions, per se, rather as contexts which startup founders – management teams should duly consider and prepare responses.

  1. Clarity + agreement of near-term mission and strategic objectives.
  2. Startup founders – management team members holding relevant, domain and sector specific experiential skill sets + temperament (collaboratively – collectively) to sustain – grow the startup.
  3. Evidence of a sustainable market – demand and corresponding price points aligned with projections.
  4. Reasonable practices in place for risk mitigation + safeguards attached to startups’ mission essential’ knowledge, knowhow, processes, procedures, ala issued IP (intellectual property).
  5. Evidence of relevant – foresighted (signs of early) traction of startup and authentic testimonials which are convertible – translatable – sustainable for the foreseeable future.
  6. Describe startups’ scalability potential, describe how, when, why, and what’s required to do so.
  7. Describe how – why – what led to and motivated this startup to emerge, acquire – hold unique talents, experiences, knowledge, knowhow, and capabilities to execute this business plan.
  8. Describe how + why this startup management team will be receptive to guidance and will be enjoyable for prospective investor to work with.

Series II – Prospective Investor questions will be published soon @ Business Intangible Asset Blog.

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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