Is Your Startup Ready to Talk to Angel Investors?
|March 13, 2017|
Previously published on February 27, 2017
Startup businesses need to have their financial, regulatory, organizational, and intellectual property ducks in a row before planning for any capital fund-raising. Angel investors are offering capital funding in exchange for equity ownership. Competition for startup funding is fierce, and risk is high for investors. Below are some of the questions you can expect from investors.
Leadership and Management
- Are the founders still part of the leadership team?
- Is there a founder's agreement in place that details how much of the company equity each founder owns and under what circumstances that capital can be liquidated?
- Who are your key leaders and what experience do they have in the industry?
- How to you plan to scale up leadership and management with a capital expansion?
- Have you secured intellectual property rights?
- Is there anyone outside of the company who can claim rights to any part of your intellectual property?
- Do you have a prototype or demonstration model?
Market and Competition
- What regulatory agencies have authority to oversee your business and product, and what have you done to secure regulatory approvals?
Plan to be able to speak extemporaneously and knowledgeably on markets and competition for your business.
- What is your market and your market share?
- Who is your competition and what is their market share?
- Have 2-3 year projections with the capital expansion.
- Where has the previous investment money come from?
- Have the leadership team members invested in the company?
- How is the business structured?
- What is the exit plan?
The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
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