10 Razor-Sharp Questions Every Investor Asks entrepreneur Before Signing the Check
As a hard-headed investor, here are ten detailed smart prompts that the investor asks before investing in a business idea:
1. Market Opportunity
Prompt:
"Can you provide detailed market research and data to support the demand for your product/service? Specifically, what is the current market size, growth rate, and key trends?"
2. Unique Value Proposition
Prompt:
"What makes your product/service unique compared to existing solutions in the market? Can you detail your unique selling points and competitive advantages?"
3. Business Model
Prompt:
"Please explain your business model. How do you plan to generate revenue, and what are the expected profit margins? Can you provide a breakdown of your pricing strategy and cost structure?"
4. Customer Acquisition
Prompt:
"What is your customer acquisition strategy? How do you plan to reach and attract your target audience? Can you provide specifics on your marketing and sales tactics, and any customer acquisition cost (CAC) metrics you have?"
5. Scalability
Prompt:
"How scalable is your business model? What are the key factors that will allow you to grow rapidly, and what potential barriers to scalability do you foresee?"
6. Financial Projections
Prompt:
"Can you share your financial projections for the next three to five years? Please include detailed income statements, cash flow statements, and balance sheets, as well as key assumptions behind your projections."
7. Team Composition
Prompt:
"Who are the key members of your team, and what are their backgrounds and qualifications? How does the team's expertise align with the demands of your business, and what roles are critical for your success?"
8. Risk Assessment
Prompt:
"What are the main risks associated with your business, and how do you plan to mitigate them? Please provide a comprehensive risk assessment, including market, operational, financial, and regulatory risks."
9. Intellectual Property
Prompt:
"What intellectual property (IP) do you own, and how is it protected? Can you provide details on any patents, trademarks, or proprietary technologies that give you a competitive edge?"
10. Exit Strategy
Prompt:
"What is your exit strategy for investors? Can you outline potential exit scenarios, such as acquisition, IPO, or other liquidity events, and the expected timeline for these exits?"
These prompts will help ensure that the business idea is thoroughly vetted and that you have a clear understanding of the potential risks and rewards before making an investment decision.
