Things you need to be prepared to address when entering investment meetings:
1. What do your customers need and how do you know for sure?
2. What evidence can you provide of prior business success?
3. Who’s on your team?
4. How well do you know your competitors?
5. What's your competitive advantage?
6. How do you define your target market?
7. What is your business most sensitive to?
8. What's your sales and distribution model?
9. What have you already accomplished?
10. What do you need the money for?
Questions to ask investors during meetings:
1. "Can you tell me what kinds of startups you have recently invested in?"
Asking this question not only separates the looky-loos from the active investors but also increases the respect that active investors have for you. A serious angel will have invested in at least one company over the time period noted above. If the angel has not made many (or any) investments during any one of these periods, ask for a realistic assessment of your chances to obtain funding. If you receive a vague response, such as “I’m currently reviewing several proposals” it may be that this person is not a genuine investor but only seeking to hear about new ideas. A common method for an investor to get out of a deal after they have obtained all the information about your concept is to attach unacceptable terms, such as significant input into business operations or unrealistic expectations of performance. If you are asked a stupid question during a Q&A after your pitch at demo day, you respond with "Thanks for your question. Before I respond, can I ask what your most recent startup investment was? If you can let me know this will help me frame my response to be as relevant as possible".
2. Are you in a position to invest now if this opportunity meets your investment criteria? How much do you have available and how long will it take for you to close?
3. Are you a qualified investor?
4. What current projects are you working on? How are they going?
When you're listening to the answer to this question, pay close attention to the prospective needs and interests that your client might have.
5. Why did you come to this meeting?
Knowing why your audience chose to meet with you and your team is perhaps the most valuable insight you can get with regard to their needs, desires, and unique pain points. Not only will this help you tailor your pitch and related materials (case studies, examples, etc.) specifically to each particular potential client, it'll help you understand their overall needs and potentially inform any future meetings.
6. What's the one most important aspect you're looking for in a partner?
What you're looking for in a client/partner and what they're looking for should be aligned. A philosophical connection is just as important as ensuring that your skillset or service offerings match their needs, otherwise the relationship may never be as fruitful as you both hope. Try your best to get the real answer to this question; not the "politically correct" answer. Learn what and who they are actually looking for?
7. Who is the key decision-maker on the project?
Always keep in mind that you need to cater (at least a little bit) to the person signing the checks. Try to find out whatever you can about the decision-maker(s) in advance.
8. What do you personally hope to gain out of this relationship?
What does success look like to you? Understanding the goals of your potential investor is one of the most important elements of developing a strong, positive relationship. Even if you already have a basic idea from your initial contact or interview, it's key to hear what they have to say about their goals in their own words. Seeing an example of how your prospect defines success is a valuable learning experience since then you can see what they value the most from a partner in general and with regard to your partnership in particular.
9. Why should we/I work with your company?
Give them a chance to sell you on the partnership. If they can't offer satisfying reasons for what you and your business have to gain (besides the monetary aspect), this may not be the right partnership for you.
10. What are their specific criteria for investing in the company?
This question is one of the first you should ask. You want to know at what stage of the business they fund (i.e. concept, beta, product launch, first customer contract). If your needs don’t mesh with their funding strategy you can cross this investor off your list early in the process.
11. How involved do they wish to be in the business?
This runs the gamut from completely passive (“call me when you sell”) to active participation in day-to-day operations– complete with desk and phone—to everything in between. There is no right or wrong answer here just ensure that you are comfortable with the level of involvement (or noninvolvement) the investor desires to have.
12. Will they fund additional rounds, if needed?
Most angels are focused on the short-term and seek to exit within 5 years or less. As a result, they don’t anticipate funding beyond the first round. However, many times additional funding is needed down the line and, while you can apply for a credit card to obtain needed funding, it pays to also explore just how deep each investor’s pocket is.
13. What is their exit strategy?
As noted, most angel investors seek to exit within 5, perhaps 6 years. There are also investors who subscribe to the “early exit” model and seek to be out of the business within two or three... The other end of the range has investors staying in for at least 10 years (these are the investors who may be willing to fund additional rounds). Again, no right or wrong answers here but just make sure that you and your investor are in agreement regarding exit strategy.
14. Who do my attendees know that they will tell me to reach out to after the meeting?
No matter how well the pitch went, you'll want to be able to contact the more people and also to thank the people you met. Make it soon, simple and keep your follow-up brief but respectful.
15. Do you want to write a check or wire funds?
What day can we get this done? ______ or _______?