The Only 3 Questions to Ask an Angel Investor
If you are a startup founder wanting to tap external funds to support the growth trajectory of your company then your best bet would be to find an angel.
Angels are very hard to find. Angel investors even more so.
If you are a startup founder then sooner or later you will probably have to tap external funds to support the growth trajectory of your company. At that point in time your best bet to secure funding would be to find an angel.
Finding a true angel is an arduous task in itself but once you have found the right person it will serve you well to ask him or her these 3 questions -
1. Do you believe in our team?
This question ensures that the abilities and ethics of your team are given the consideration they deserve while the investor grapples with the larger question of making an investment. All angels must ultimately conspire with these teams to get the economic returns they desire so this question becomes non-negotiable.
2. Do you believe in the problem we are trying to tackle?
This question is double pronged since it deals not only with the market and opportunity size but the purpose of the enterprise as well. Over the long term it is this purpose that builds the culture and consequently dictates organizational behavior. Thus, unless the angel believes that this problem is one which must be fundamentally addressed there is no reason to secure their fiscal contribution. Furthermore, the collective belief of the team and investors will eventually be tested so ensuring that everyone is committed to the same vision is paramount.
3. Do you believe that you can give us something more than money?
This question recognizes the fact that in developed ecosystems cash is readily available from several sources and promising companies have multiple financing options. In this context, the power of choice has shifted from angels to founders and additional value differentiators such as global network, domain expertise, credibility, etc. dictate the final decision. Startup founders are now looking for mileage that money cannot immediately or efficiently procure and this is redefining the valuation equation globally.
If the answer to all the three questions is a resounding yes then confidently accept your angel’s intent to invest and join the team. However, if for any reason only two of the questions are resulting in a yes then they must be the first two since only then will there still exist the potential for massive upside.