Top Questions Investors Ask Part 2

Top Questions Investors Ask Part 2

“Be prepared, work hard, and hope for a little luck. Recognize that the harder you work and the better prepared you are, the more luck you might have.” –Ed Bradley

Searching out, pitching to, and bringing on investors can be a lengthy and involved process. You can make it smoother by being as prepared as possible. This article is the second in our series covering questions you can expect to hear from investors. We will include queries about your products or services, the competition, and customer acquisition. It is not a complete list, but we hope that it helps you prepare and have the smoothest process possible.

Your Products and Services
Your product or service is the core of what you are trying to get funding for, so now is your time to answer questions about what you created and are passionate about! Investors are looking to back something with a unique selling proposition (USP) that solves a particular customer problem.

  • Why should people care about your product or service?
  • What is different about your product or service?
  • Are you first to market?
  • Won’t a large corporation just build something like this?
  • If you are first to market, why hasn’t it been done before?
  • Were there earlier versions? If so, what did you learn from them?
  • Do you have patents secured or pending?
  • How do you plan on improving or adding on to your product or service in the future?

The Competition
You will always have competition, even if you are first to market. If you cannot identify your direct and indirect competitors, you are likely to have credibility problems with potential investors. A good rule of thumb is to be knowledgeable about your top 5 direct and indirect competitors.

  • Who is your company’s competition?
  • Are there barriers to market entry?
  • What competitive advantage do you have over your competition?
  • Does your competition have advantages over you?
  • Compared with other businesses in your market, how do you compete on price, features, and performance?

Marketing and Customer Acquisition
You may have the most amazing, unique, and desirable product or service, but if you have no way to market and acquire new customers, you are dead in the water. So investors are going to be very interested in how much research you have done on your target market and your strategies for making money through sales. If you haven’t released to the market yet, you will need to research similar companies and project based on the data.

  • How much does it cost to acquire new customers?
  • What is the lifetime value of a customer?
  • Have you done focus groups? What did you learn from them?
  • What are your social media and PR strategies?
  • What is your marketing plan?
  • Describe the typical sales cycle from initial customer contact through closing the sale?
  • What is the client’s cycle? Are there opportunities for up-sales or repeat business?

The more you know which questions you will need to answer, the more prepared you can be for a successful round of fundraising. In our first article “Top Questions Investors Ask Part 1” we covered questions about the big picture of your company, the founder(s) and team, as well as your market. In our next installment, we will look at your company’s traction, the risks and threats, and your exit strategy.

Who Does Equity Crowdfunding Work Best for?

Who Does Equity Crowdfunding Work Best for?

Do you have a great business idea you want to get off the ground? Is your company ready to jump to the next stage of growth? Do you want to launch a new product or service line? If you answered yes to any of the above questions, congratulations!

These are all stages when it’s common for business owners to realize they will need an influx of cash to make their dream possible. Equity crowdfunding is one of the fastest growing methods for raising capital but is it a good fit for your company or business idea? Answer the questions below and see for yourself.

Do you have a plan?
The importance of having a solid business model or plan cannot be overstated. There are different types of business plans and methods for developing them. Regardless of which direction you go, the plan should include the items below:

  • Company description
  • Market analysis
  • Organization and management
  • Service or product line
  • Marketing and sales
  • Target market(s)
  • Funding request
  • Financial projections

Are you prepared to not own 100% of your company?
Equity crowdfunding is not like “traditional” crowdfunding where investors are donating an amount of money for a prize or a discounted rate for the product. With equity crowdfunding, investors get to own a percentage of your company in exchange for the money they are putting into your business. As the business owner, you can determine the amount of equity you are willing to give away to investors. For example, you can choose to allow investors to own 15% of your company and you retain 85% ownership. Understand though that there is a direct correlation between the amount of money invested and the percentage of ownership. Usually, the more money you are asking for, the more of your company you will have to let go to shareholders.

Are you ready for the accountability?
As we mentioned before, you will have shareholders. These are the investors who have given you their money and now own a percentage of your company. This means you could have a group of people you need to communicate with on various topics including how the company is performing. If you want complete autonomy and the idea of being answerable to a group of shareholders is not appealing to you, then equity crowdfunding may not be a good fit for you.

Are you ready to participate?
Companies like Crowdfunder provide a platform for you to connect with investors, but this is not a “build it and they will come” scenario. To have a successful, public, equity crowdfunding campaign, you must be willing to be an active participant in the process of building and maintaining momentum. A plan for marketing your campaign and getting it in front of investors is a must. An effective campaign includes but is not limited to the following:

  • Create a dynamic company profile on the platform
  • Fill out the investment profile
  • Tell your story! Investors often want more than just numbers to invest in they want to invest in you. Connect with them by sharing your story
  • Leverage social media like Facebook, Twitter, LinkedIn, etc., to raise awareness of your public fundraising campaign
  • Actively follow up with interested investors

Equity crowdfunding is not a good fit for every company, but if you answered yes to the questions above then come check out or platform! We’re excited to get hear your story and work with you to get your dream funded.

Meet Katie Talati: Crowdfunder’s Investor Relations Manager

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Katie Talati is the Head of Investor Relations at Crowdfunder, Inc. where she focuses on developing relationships with investors in all aspects of the Crowdfunder business. This includes investors on our platform, limited partners in our venture fund and our investors for Crowdfunder Inc.. During her time at Crowdfunder, she has reviewed hundreds of startup pitches and developed a deep understanding of the crowdfunding industry and its surrounding regulations. She is also the senior analyst for our VC Index Fund and is an associated person with CFI Securities (broker-dealer) as a registered representative.

 

Katie Talati began working at Crowdfunder nearly three years ago at the company’s early stage. She likes the fast-paced nature of the startup space, where she gets to work on different tasks every day. Katie believes:

“Beyond traditional benefits, startups offer the chance to learn far more than working at a large corporation. You’re not given the same thing to work on every day. They also allow employees to have a great work-life balance.”

When Katie started at Crowdfunder, she found herself working on various projects in a few different areas. Management recognized her exceptional leadership skills and within a few months, she was promoted to project manager. When the team introduced Crowdfunder’s portfolio platform, Katie assumed her current role as Investor Relations Manager.

According to Katie, working in Investor Relations at Crowdfunder is different than working the same position at banks and private equity firms. At more traditional financial services firms, Investor Relations is limited to managing relations with a list of investors. At Crowdfunder, Investor Relations focuses on the product side. A big part of her role involves speaking with investors on the platform about their user experience. This involves patience and communication.
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Katie did not originally have a finance background, but she learned quickly.

“I studied Communications and Global Studies at UCLA. Although I didn’t start out in Finance, I was able to use my strengths as a communicator to manage company Investor Relations. I’ve taught myself fundraising and finance terminology, and at the end of the day, my investors are my clients. I go above and beyond for them. I believe you should be personable and dedicated in whatever position you hold. I try my best to connect with investors and find out what each client likes to invest in. Learning why an investor is excited about a specific company helps me create individual relationships. People remember you if you help them.”

Being a female leader at a financial company is rare. Katie remarked that although she is highly qualified, she has experienced others doubting her capabilities due to her gender and age.

“I have had people ask me questions trying to gauge my age. I have also had people turn to my male coworkers instead of me in meetings. That can be frustrating, but I choose to continue to work hard and hope that people will see past those things. On the other hand, I have had many positive experiences with investors who don’t share those biases.”

As a financial tech company with a female-majority team, Crowdfunder breaks the mold in terms of gender equality in the workplace. When our current president Steven McClurg joined the team, he instituted equal and transparent pay. According to Katie:

“Steven refreshed how things are done. He values communication and gave me a lot more responsibility. As a woman early on in my career, that has been invaluable for me. I now manage our VC Index Fund, which includes performing diligence on prospective investments, running financial models and reporting. The work is high level, but it’s been rewarding. I now have important skills that will help me at any future position.”

Due to her success in her current role, Katie was given the opportunity to become a licensed representative of the broker-dealer. This license makes her an invaluable asset to our company’s growth. When asked about the future of her career, Katie said:

“At Crowdfunder, I’m able to see the results of the work I put in with entrepreneurs and investors. Our original mission statements centered upon making a positive economic impact on the U.S.. I believe Crowdfunder has made that impact and will continue to make that impact in the years to come. When our company started, we were only a few years over the market crash, and the job economy was unstable. Several years have passed and conditions have improved, but there’s still more that can be done. I really enjoy the hands-on aspect of working at Crowdfunder and feel like we are working to make a difference.”

We are lucky to have such a strong leader on our team. As Crowdfunder grows, we can’t wait to see what new challenges Katie will take on.

 
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Crowdfunder, Inc. and its affiliates disclaim responsibility for any statement by any of its employees. The views expressed herein are those of the individual and do not necessarily reflect the views of the company. This post may not be reprinted or disseminated without our written permission.

The All-in-One Startup Funding Guide

From the desk of Chance Barnett, CEO of Crowdfunder

There is a proven process to successfully raising startup funding.

I’ve learned about the process over the years by getting to know a few of the worlds most successful serial entrepreneurs, by raising millions myself from angels & VCs, by investing as an angel, and as CEO of the VC fund + equity investment platform Crowdfunder.com.

Across all this investment and fundraising activity, I’ve seen that the most successful fundraises have a several key elements in common. Below are five parts to successful fundraising for your startup — with specific examples, templates, and resources.

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Investing In Socially Responsible Companies

Read Full Article on Seeking Alpha

Summary

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  • In the near future a standard will be established for impact criteria.
  • Impact investors may attain similar results to more traditional vehicles though it may require a longer investment horizon for gains to be realized.

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Beginner’s Guide to Angel Investing

Have some extra cash and want to start investing in startups? Become an Angel Investor. An Angel Investor is a private investor who provides working capital for business startups in exchange for equity. Angel investing is a risky investment but the reward is great if you pick winners. Because the majority of startups fail, due diligence is key. Here are the factors to consider when evaluating startup investment opportunities.

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10 Tips for a Successful Seed Round

You came up with an idea. Started a business. Built an MVP and attracted users to the platform. You now need funds to scale. It’s time for your seed round. The success of your seed round will determine the success of the business. Follow these tips, to make sure you get it right the first time.

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Startup Investing Guide

We have seen massive growth within the crowdfunding industry over the past 5 years. In 2010, the crowdfunding market was relatively small comprised mainly of early adopters. Fast forward to 2015 where projections show the crowdfunding industry to be an estimated $34 billion.

Crowdfunder is at the forefront of this burgeoning industry where over 100,000 entrepreneurs and investors connect to fund startups. As startup investing continues to move from boardrooms to the online platforms, accredited investors will continue to leverage this to gain access to trending startups to invest in.

In this post, you’ll learn the most important things to consider when investing in startups on Crowdfunder. This includes following the lead investor as this means the Deal terms are set and it also provides social proof that they’ve done their diligence. We will also cover how to evaluate the management team as well as what metrics to look for that will point to success down the line. Lastly, we will look into industry trends and startups Deal terms.

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