10 Expert Questions Startup Founders Should Ask Before Fundraising
March 29, 2022
Funding is critical to startup success. Without capital, growth is stunted, and even the best teams may struggle to achieve milestones. But fundraising can feel like a full-time job. Before getting started, make sure you’re asking yourself the right questions.
In this article, you’ll learn a few of the most important questions founders should ask before fundraising to gain valuable insights, make informed decisions, and find the best-fit investors for their ventures.
Here are a few expert questions to ask, including a few you may not have considered:
What stage is my business at? Determine whether your business is in the early stages, such as pre-seed or seed stage, or if it has reached a later stage of development. Different funding options are available depending on the stage of your business.
What are my funding goals? Clearly define your funding goals and objectives. Determine how much capital you need and how it will be utilized to achieve your business milestones and growth targets.
What type of funding is suitable for my business? Explore different funding options such as venture capital, angel investment, loans, grants, or accelerators. Consider the advantages and disadvantages of each option and assess which aligns best with your business model, industry, and growth plans.
Can you demonstrate founder-market fit, in addition to product-market fit? It’s valuable to consider how your story strengthens your business’s strategy and opportunities.
What is my unique value proposition? Clearly articulate your business's unique selling points and competitive advantages. Investors will be interested in understanding how your business stands out in the market and how it addresses a significant problem or opportunity.
What is the investor landscape in my industry? Research and identify investors who have expertise and interest in your specific industry or market. Understand their investment criteria, portfolio focus, and track record to find potential investors who align with your business goals.
What is my growth strategy? Develop a comprehensive growth strategy that outlines your plans for scaling the business. Consider factors such as customer acquisition, market expansion, product development, and sales and marketing strategies.
What are investor expectations? As you answer this question, think about the growth and return expectations of potential investors. Also consider how involved they prefer to be, and value they can add beyond capital. Investor expectations can impact decision-making and company direction, so it’s important to understand what those expectations are before inking any agreements.
What resources and support do I need besides funding? Funding is not the only factor for success. Assess the additional resources, expertise, and support you require to grow your business. Consider whether an accelerator program or mentorship opportunities could provide valuable guidance and connections.
What is my financial plan and projections? Prepare a solid financial plan and projections that demonstrate your understanding of the market, revenue potential, and cost structure. Investors will want to see evidence of financial viability and a clear path to profitability.
By asking these questions, founders can gain clarity on their funding needs, align their goals with the right funding sources, and present a compelling case to potential investors.
Want to learn more? This topic (and many more!) were covered during an event hosted by Grid110, an organization providing entrepreneurs with resources and support. This panel of speakers shared insights and expertise on the startup ecosystem. The speakers included:
Ileana Gonzalez is a force multiplier, and Head of Growth at Papaya Tutor.
Carmen Palafox is a Founding Partner at 2045 Capital and Partner at MiLA Capital, a seed-stage Venture Capital firm in Los Angeles.
Will Stringer is the co-founder and CEO of Chisos, an early stage alternative investment company utilizing a Convertible Income Share Agreement to invest at the earliest stages of business ideation and formation.
Mariessa Edmonson is the Associate Program and Operations Manager of the Long Beach Accelerator.
Grid110 is an economic and community development nonprofit dedicated to creating clearer pathways to success for early-stage entrepreneurs.
In this lively conversation, these ecosystem experts explored unique funding strategies, the benefits of accelerator programs like Techstars and Long Beach Accelerator, and the factors to consider when assessing funding needs as early-stage founders. They also highlighted the importance of founder-market fit, passion for the mission, and demonstrating determination and organization throughout the fundraising journey.