Enjoy, and feel free to send me additions!
1. Have you ever founded a tech start-up and, if so, what was your role and how did it turn out?
2. What can we, the Twin Cities start-up/entrepreneurial community, do to get more Angel/Seed investors interested in investing in pre-revenue tech start-ups?
3. Do you ever invest in companies, when you have serious doubts about their ability to raise more money if they should need it or if they come right out and say that the don’t ever want to raise more money?
4. What does it say about an entrepreneur, when they say they want to raise $1 million on a pre-money valuation of $1.5 million and does it ever seem weird that everyone throws around such large round-numbers, so casually?
5. Do you ever invest completely independently or do you ever fully fund a round, without other investors; Why/why not?
6. Have you ever funded an “idea?”
7. Have you been so impressed with a team or an individual, that you funded what you considered a terrible idea? (how did it turn out?)
8. If you could describe your favorite quality in an entrepreneur that leads a company that you have funded, and is (or has) provided exceptional ROI, what would it be?
9. How do you figure out whether an entrepreneur knows the difference between an opportunity and a problem.
10. When you meet an entrepreneur for the first time, someone who may have been successful in something they have done or started in the past, do you care or even think about whether they were good at what they did or just lucky? How do you tell the difference?
11. Is it important for entrepreneurs to know the difference between prepared and over-prepared or do you find that the majority of entrepreneurs are underprepared so it is actually refreshing to meet someone who is over-prepared?
12. What are the signs of an entrepreneur who is over-prepared what message does that send to you, as an investor?
13. What are the two-or-three due diligence things that you do, every-single-time, before you invest in a company?
14. What are ways or examples, that you have consistently seen start-ups waste time on things that don't matter.
15. If a founder, founders, need to be paid some kind of salary, does that affect whether you will invest?
16. What is an acceptable salary for a CEO, CFO, or CTO if their company isn’t profitable yet?
17. Are founders allowed to get raises in salary or do bumps like that always come in the form of stock?
18. Since we all start somewhere, and none of us has any experience until we just jump in and start doing something, what are a couple of important lessons you have learned since you made your first investment?
19. From both a business and personal standpoint, what is the best thing about investing in Start-ups? The worst?
Questions for Entrepreneurs
20. Aside from your own company, or companies where you have been an employee, have you ever invested in a tech start-up? If so, what was your role (board seat, etc.) and how did it turn out?
21. Now that you have been through it, what is the most important element to choosing the perfect investor. In other words, if you could choose one thing that an investor would bring to the party, what would it be?
22. When you know you have a hard deadline or some really important event coming up that could make or break the success of your startup, should you tell potential investors? If so, how do you communicate it so you don’t look desperate or pushy?
23. Why is it important to be patient and when is it ok to push an investor to take action?
24. When you meet an investor for the first time, do you care or even think about whether they have been successful in their past investment activities? How do you tell the difference between a successful investor and just someone who has a lot of money?
25. What are the dangers of hiring too quickly?
26. What are the dangers of firing too slowly?
27. What are the areas where you “Under-budgeted” for critical elements/expenses in your business plan?
28. What hurt your start up more, making decisions too fast or too slow?
29. What helps/hurts a startup more: Looking for answers from other people or Looking for approval from other people
30. Before beginning to build your product, is it possible to get too much input or listen to too many points of view and, if so, which group is it more important to seek advice from; potential customers or potential investors?
31. Following up on the previous question, is it more important to seek advice from those who already serve your industry or those who have built a company with a similar business model?
32. If, as a founder, you have responsibilities and financial commitments that make it absolutely impossible to work for free; should you go into deep debt, threaten the financial security of your family, or be expected to, to “Prove” your commitment to your company?
33. From both a business and personal standpoint, what is the best thing about founding a Start-up? The worst?
34. Have you ever fired an investor or had to figure out a way to remove them from the mix? Why/how?
Questions for all
35. Besides getting customers and revenue, what is the one thing you would tell someone to do to really get your attention?
36. What is the dumbest mistake you have ever seen an entrepreneur, who eventually got funded, make?
37. What is something that you hear from entrepreneurs/investors that makes you say to yourself “Well, I can cross them off the list of people I would ever consider investing in/taking money from?”
38. What is the difference between important and urgent and how do you decide which is which?
39. Is it more important for an entrepreneur to be seen as smart-as-hell or obsessively driven?
40. Thinking back on start-ups you have funded, how do you gauge whether the team understands the difference between focus and activity and, as an investor, how do you help steer them toward more productive activities.
41. Is it more important, for someone who is looking for funding, to be better at generating publicity or confronting reality and can one overcome the other?
42. What are the areas where you consistently see entrepreneurs “Under-budget” for critical elements/expenses in their business plans?
43. What are the tell-tale signs of an entrepreneur who has let getting funded go to their head?
44. What are the most common things, as an entrepreneur that you found yourself Overspending on and how did you figure out that you were doing so?
45. What is worse; Under-communicating or over-communicating?
46. What are the kinds of critical events that happen during a start-up’s early stages that breed overconfidence?
47. What is worse for the long-term success of a company: Not shipping fast enough or shipping a crappy product?
48. If a start-up hasn’t filed legal documents, which designate them as a C-Corp or an LLC, does that send a message to investors and, if so, what is that message?
49. How do you decide what the percentages are that each founder gets?
50. For multi-member founder teams, who or what kind of founder usually gets screwed or at the very least, under-valued for their contribution. Who’s contribution is overvalued?
51. If you had to choose just one, is it more important to have a great accountant or a great lawyer?
52. When is it time to bring in an experienced CEO
53. What are the characteristics of a good start-up CEO and how do they differ from the characteristics of a good CEO of a company that has 25 employees and/or 5 million in revenue?
54. When should you no longer be considered a Start-up?
55. In general, would you say it is more important for a start-up, in its infancy, to have a long-term strategy for self sustainability, so that they can minimize the amount of outside investment they need to take, or a well-defined path to becoming a good acquisition target?
57. What is the difference between a start-up friendly lawyer and an investor friendly lawyer and how does an entrepreneur know the difference?
58. (This question for all except entrepreneurs) Are there lawyers, accountants, developers, other common types of vendors that you will not, or maybe prefer not to, work with, all thing being equal? Does this ever become part of the equation when you are considering investing in or working with a start-up?
59. Should a start-up have an advisory board? why?
60. How many people is about the right size for an advisory board and when is it just too big?
61. How should an advisory board differ from a board of directors/governors?
62. What is the most appropriate level of compensation for a Board of Directors/Governors? Does this include cash as well as stock?
63. Is it appropriate to have a completely independent voice on the Board of Directors?
64. What is “smart money” and is it so important to have smart money, that you should turn down “dumb money” no matter what?
65. What is the worst way for a start-up to spend money?
66. What is the most cost effective way for a start-up to spend money?
67. Do investors ever get pissed or think you are losing focus if you spend time mentoring someone else or participating in activities that don’t bring tangible value to your company?
68. Other than stealing or some other criminal activity that directly affects the company, what is the one thing, above anything else that should trigger immediate removal from the team/company/ board, etc…?
69. In what percentage of start-ups are one or all of the founders removed from their initial role’s by the board? Do they usually stay with the company, long-term, or is that a signal that they should probably leave? Is that usually the message that the board is trying to send?
70. Out of every ten start-ups that get funded, how many start-up CEO’s are equipped to handle that job, long-term, through multiple rounds of financing or through a successful exit?
71. How often do founder teams split up, and why?
72. How do you go about firing a founder? When should that happen? What are the signs or triggers for this to occur?
73. What are the worst case-scenarios you have seen for a company that had to get rid of a founder? (not naming names, just situations)
Networking - I am often intimidated by networking events filled with people who could probably help me or teach me something, but might also be WAY ahead of me in the experience life-cycle.
75. What is the importance of networking for an entrepreneur?
76. Do investors ever consider how networked an entrepreneur is when they are thinking about investing?
77. What are some of the most important groups that an entrepreneur can get involved with, that signal that they understand the importance of networking?
78. For each group, what is the one networking event that you would never consider missing? Why?
79. For each group, what is the one networking activity that you think some entrepreneurs waste their time participating in or that they participate in, to the detriment of their goals.
80. What are some great networking behaviors that impress you? For entrepreneurs, talk about investors; for investors, talk about entrepreneurs; for legal, talk about all; for accountants talk about all.
81. Is it more important to network with others in your same industry and/or your relative level of influence or social stature, or should you risk looking like an idiot or worse, feeling like an outsider in a room full of people who already know each other?
82. Is networking more or less important after you have been funded?
83. What are the characteristics of a good mentor?
84. Should mentoring be a formal relationship. In other words, should I say to someone, “would you be my mentor?” or “would you mentor me in this X area?”
85. Is mentoring a business relationship?
86. What should an entrepreneur be trying to get from a mentor?
87. What should an entrepreneur never ask of or try to get from a mentor?
88. What’s in it for the mentor?
89. How many mentors is too many?
90. How much time is too much when it comes to networking?
Would you rather have:
92. An awesome, charismatic, leader who can communicate the vision OR an awesome, super-organized and empathetic (people) manager, running a start-up?
93. A principal founder/start-up CEO with Undying Passion for the idea OR Real World Experience
94. Founder/CEO who is Confident OR Pragmatic
95. Founder/CEO : Street smart OR book smart
96. Founder with a technical background OR Founder with sales background in target industry
97. Founder with a technical background OR founder with operations, finance and HR background
98. Founder with sales background in target industry OR operations, finance and HR background
99. Founder/CEO: MBA with 2 years at McKinsey OR BA in English and 8 years in sales to target market
100. Investor with personal net worth of $200 million but no experience in your industry OR Investor with net worth of $5 million, but can introduce you to lots of customers.
101. Investor who is super-supportive of your company and helps any way they can, but likely can’t/won’t invest in follow-on rounds OR a micromanaging investor who doesn’t really offer much besides money, BUT can help you raise a ton of money, as you grow.
102. What can a good accountant do for you and is it important that they have experience working with start-ups? Why?
103. In general, for entrepreneurs looking to raise money, should they file as a C-Corp, an LLC or should they wait to see what their investors want them to do?
104. What is the best thing about working with entrepreneurs?
105. What is the most difficult thing about working with entrepreneurs?
106. Why do you think it is so hard for entrepreneurs to understand the concept of pre-money and post money.
107. If an entrepreneur has a good accountant and a good attorney, is it still important for them to understand the minutiae of pre-money and post money valuations. Why?
108. How do you value a company that hasn’t produced revenue? Are there any indicators or benchmarks that one should look for?
109. For a pre-revenue tech start-up with no patents or tangible IP, what is the top end of the valuation-scale and what makes some companies, in similar situations, more valuable than others?
110. What is the difference between legal representation that is used to working with startups and those who aren’t?
112. Is reputation a factor that entrepreneurs should consider when they hire a lawyer?
113. What is the best thing about working with entrepreneurs
114. What is the most difficult thing about working with entrepreneurs
115. What are the most important things to get right from a legal standpoint, when forming a company?
116. What should an entrepreneur do if they don’t have the money or good fortune to have access to a good attorney?
117. Finally, For an entrepreneur who needs:
- A co-founder or two - Who bring skills, experience and a solid background/reputation of providing specific key elements to other successful businesses
- Investors - who inevitably will want them to keep the company as lean as possible in the early stages, to reduce the burn rate
- Market validation – to show both investors and potential co-founders that the opportunity is worth the risk