Are you Investor Ready?
You could answer, well it depends on who is investing!
However there are some basic guidelines that can assist you in checking how investor ready you are.
An investor needs to be certain they are getting exactly what they are expecting for the money they are investing. They need to be assured that the business will grow successfully.
At a minimum a prospective investor needs the following questions answered.
- What problem is your business solving?
- Is there a large growing market that will pay for your solution?
- What proof do you have that your solution works and who said so?
- How exactly does your business make money?
- Is your team capable of successfully implementing the business plan and managing the company’s operations?
- How much money do you want, how will you use it and how will I get paid back?
Each of these questions can be broken down further but I’ve found that Investors questions are often focussed around three areas.
- Accountability. Who will be accountable for the funds invested and is there a framework in place to monitor progress.
- Clarity as to your strategy, how it will be marketed and how you and they will make money
- Transparency of the business as to accounts, contracts, IP, conflicts, achievements to date and how founders loans and funds invested have been handled to date.
Lets take them one by one
- Is there an experienced, stable and committed management team in place who are capable of successfully implementing the business plan and managing the company’s operations
- Have realistic, achievable financial projections been prepared for the next 3 to 5 years that have full management buy-in?
- Has a Business Plan been completed that has sign off from the management team?
- Have you got a convincing “Elevator Pitch“?
- Do you have a clear understanding of the market segment you will be operating in?
- What problem are you solving and what pain will be relieved for the customers?
- What are the barriers to entry that will give you an advantage and keep competitors away from you?
- Who are your competitors?
- Do you have customers already?
- Can you prove there is a large growing market that is eager to purchase your product?
- How exactly do you make money?
- How long will it be until you start making money?
- How have you valued your business?
- How much of it are you willing to sell?
- Do you have an easy to read one pager like an “Executive Summary“?
- How scaleable is the business?
- How do you see me getting my money back?
- What has actually been achieved to date?
- Do you have accounts for the previous year or years?
- Have you tidied up any debt that is in the company?
- Are there any outstanding conflicts or conflicts of interest?
- Do you have efficient internal accounting systems?
- Are Debtors and Creditors tidy?
- Is there minimal debt financing?
- Have you a breakdown of all money invested so far?
- Are the patents, trademarks and IP owned by the entity I am investing in?
- Have all complicated contracts been cleaned up?
- Do you have a file of all the contracts the business has entered in to including shareholder agreements, supplier and customer agreements.
- What do industry experts think about your business?