At a recent TiE Midwest Charter Member dinner, there was serious discussion around (1) are entrepreneurs raising money for the first time truly educated on the process and are they asking the right questions of potential investors; and (2) why is there so much friction when it comes to closing the deal?
Charter Members unanimously agree there needs to be more EDUCATION for entrepreneurs raising money for the first time. So, I came across a recent post of questions and want this community to build an all inclusive list! I would like the VC/Angel perspective as well as the Entrepreneur perspective. I will compile and we can share with the community!
Here is the list and link to article on Business Insider which I used to start the list below:
1. Is this a core investment or something in which you have interest but would walk away from if things get difficult?
2. Does this investment fit with your firm's thesis or primarily your own world view? If you are expending significant relationship capital to get this done, how will this impact us if things get challenging?
3. On how many boards do you sit?Do you really have enough time to impact the outcome of this investment through your involvement and engagement?
4. Is there a culture of providing bridge capital to a series of objective milestones to get to a better point to raise our next round of financing?
5. Do you have the necessary external relationships to help us build the syndicate for our next round of financing? Will you be supportive even if we choose another firm and not your own to be the next round lead?
6. What are your return expectations? If we want to sell for a 5x and not a 20x return on your capital, are you going to stand in the way of us achieving our personal goals relative to you reaching your professional goals?
7. Do you turn into an asshole under pressure? Since we're likely to be under pressure several times in the foreseeable future, can you effectively manage the tension in a constructive way?
