So you have been approached by an angel investor interested in funding your startup. That’s great news! But before you accept the money, it’s important to do your due diligence and make sure the investor is a good fit for your company.
39 Questions to ask angel investors:
- What inspired you to become an angel investor?
- How much experience do you have as an angel investor?
- Which industries are you most interested in?
- What stage of the companies do you usually invest in?
- In which geographical areas do you prefer to invest?
- Do you have any sectoral preferences?
- What is your ideal investment size?
- What is your investment timeline?
- How much money do you normally invest per company?
- What is your preferred method of investment (equity, debt, convertible note, etc.)?
- What is your investment philosophy?
- Do you prefer to lead or follow in investments?
- Do you have specific areas of expertise that you can offer to the companies you invest in?
- What role do you want to play in the companies you invest in?
- How involved do you want to be in the day-to-day operations of the companies you invest in?
- What are your expectations for return on investment (ROI)?
- Do you have any other conditions for an investment, such as a minimum equity stake or board seat?
- How do you handle disagreements with other investors?
- Are there any warning signs that would make you hesitate about investing, such as legal or financial problems?
- Have you ever invested in a company that failed? If so, what lessons did you learn from that experience?
- Have you ever had to write off an investment before? If yes, why?
- Have you ever had a company go through a major restructuring? If so, how did you handle it?
- What due diligence do you typically perform before investing?
- What are some of the most important qualities you look for in an entrepreneur?
- What stage of funding are you most interested in?
- What type of equity are you looking for?
- Have any of your portfolio companies had successful exits? If so, how did you help them achieve this success?
- Have you ever been sued by an entrepreneur whose company you funded? If yes, why?
- What are your thoughts on diversification?
- What are your thoughts on valuations?
- What do you think are our startup’s biggest strengths and weaknesses?
- What do you think is the most important thing a start-up CEO should focus on?
- How often do you communicate with the CEOs of your portfolio companies?
- What are your thoughts on giving advice vs. letting the CEO figure things out on their own?
- What do you think is the most important thing for a startup to focus on to be successful?
- If an entrepreneur makes you an offer and you are not interested, how will they know?
- What are the biggest mistakes entrepreneurs make when seeking funding?
- Do you have any advice for entrepreneurs seeking funding?
- Do you have plans to retire from angel investing?
17 Questions to ask angel investors about your company:
- Do you have any co-investors I should be aware of?
- Do you have any connections that could help my business, such as customers, vendors, or service providers?
- Do any of your other portfolio companies compete with my company? If so, how do you handle this conflict of interest?
- Do you have any suggestions on how I can improve my pitch?
- Can you introduce me to other potential investors?
- What is the best way to keep you informed about the progress of my company?
- How accessible are you after an investment has been made? Can I contact you anytime if I need help or advice, or will I only hear from you when it’s time to ask for more money?
- What other startups have you invested in? Can I speak with them about their experience working with you?
- Are you willing to make introductions to your network on my behalf?
- Will you be available for advice and guidance as my company grows?
- Do you have any concerns about my business? If so, what are they?
- What do you think are the biggest risks and challenges for my business?
- What happens if we can not agree on important decisions about the direction of the company? Who has the final say – you or me?
- What happens if the business is not successful and we can not pay back your investment? Are you willing to write off the debt or take equity instead of cashback?
- Are there any other terms not listed in the term sheet that I should know about?
- Do I have full control over how I use the funds from this investment or do I need to get your approval for certain expenses?
- Do I have anything else I should know about you or your company before deciding whether or not to accept your investment?
Frequently Asked Questions
What should I look for in an angel investor?
When looking for an angel investor, you should consider the person’s experience and track record. An angel investor with a successful track record is more likely to be able to help your company grow. You should also make sure that the investor has a similar vision for your business and is willing to offer more than just money. An angel investor should be able to provide mentorship and advice in addition to financial support.
What are the advantages and disadvantages of funding from an angel investor?
Financing through an angel investor has both advantages and disadvantages. On the one hand, angel investors can provide your business with much-needed capital that can help you grow and expand.
On the other hand, angel investors can often demand high rates of return on their investments and may also want to be involved in the management of your business. So weigh the advantages and disadvantages carefully before accepting funding from an angel investor.
How do you know your business is right for an angel group investment?
You’ll know your business is suitable for an angel group investment if you have a solid business plan and a passionate team. Make sure you can show how you will use the money and how you will create value for investors. A well-developed business plan is critical, as is a good understanding of the financials. If you can show that your business is on track for success, then an angel group investment could be the right step for you.
Conclusion
Asking these questions will help you get a better picture of your potential angel investor, what they are looking for, and whether or not they are a good fit for your company.
Remember, just because someone is interested in investing in your business does not mean they are the right fit – so it’s important to do your homework before accepting their money!
