what to ask when investing in a startup company

This means that investing in startup equity is very risky, because many startups fail to return investors’ money, and startup equity is relatively more difficult to sell before the company IPO's. Nine Questions To Ask A Startup. In a perfect world for investors, the startup’s management personnel are the alchemists who turn their entrepreneurial idea into gold. From my experience, not very many people ask these questions. ET (noon to 1 p.m. on the West Coast). Ask yourself if this business addresses a real concern or problem in the marketplace, and bottom line… Some vendors have been known to try and win business using videos, clickthroughs, wireframes and sometimes even images to simulate a dashboard or report. That’s why you should consider investing pre-IPO. And while most job candidates know they should prepare to answer tough questions at this stage in the process, many fewer prepare to ask them. Unfortunately these are the tough questions to ask as much as they are to be asked. In reality, management teams are often unable to unlock the full potential of their creation. Gains you don’t see on the stock market. However, this increased risk and illiquidity is coupled with the potential for a very large return if the startup succeeds. In fact, when you’re investing in startups, you won’t have the same publicly released information as you would investing in a company listed on the NASDAQ or NYSE; thus, you have to be more logical and patient in your investment strategy. Benchmark with other companies - Ask around and find out … I had a really enjoyable time in Miami earlier this week as a guest speaker for the Entrepreneur Magazine/UPS Growth 2.0 Conference. You must assess what core skills the startup needs to succeed – and test whether it has them, or will have them, on board. 7.

Ask specific questions to ensure that the …

In the end, an investor wants to be assured that you are willing to eventually sell your company, so they can cash out, and that you have a credible, realistic and timely exit strategy to do so. As a venture capitalist, your most important concern when considering an investment is the business’ potential market. Pre-IPO investing has the potential to bring in massive gains. Investing in a Start-Up: Essential Questions to Ask. There was one question I didn’t answer well because it would have taken too long and would not have applied to a lot of the audience. When considering a startup investment, investors must be aware of how it affects their overall asset mix and risk level. Early Investing, along with KingsCrowd (a San Francisco-based startup rating company), will be hosting an exclusive live webinar with Jonathan and his lieutenants this Thursday, April 2, from 3 p.m. to 4 p.m. If you’re interviewing at an early-stage startup, you’ll likely have the chance to meet with not only your future boss, but the company’s CEO or other senior leadership. ... and these reasons are ultimately what is going to help these individuals and groups formulate the questions they will ask to a prospective startup company looking for funding. You may have seen my 10 Practical Tips for Starting Fast here Tuesday, taken from my talk there.. As matter of fact, I usually answer these questions as a way to show candidates the strength of the company even though it is a startup.

Try to get as many questions answered conversationally during … Very cool post. If you’ve become emotionally attached to the company, you may be convincing yourself, or going with gut instinct that the company will make it, the pr…

How much equity should you ask for? Finding the right balance, however, can be tricky. You need to use your intuition less often in startup investing before writing a check.

Also 23 questions to ask before joining a startup didn’t have as good a ring to it.

To conclude, as a potential investor in a startup company you should follow your gut.