Questions To Ask Start-up Founders
What are some key questions to ask start-up founders? This question is often considered by those looking to invest in a new opportunity, but it depends on the start-up and whether you are talking to the founder or a fellow investor.
It may be difficult to know where to start when talking with a founder about their company, but asking the right questions can help you learn more about their business plan and the people behind it. It can also be a good idea to check with the founder to see if they are working with a startup advisory service to further their growth.
This blog post will discuss five essential topics to explore when talking with start-up founders.
1. What Is Your Company's Mission?
If investors ask this question upfront, they can better determine if the company is worth their investment.
Mission statements usually answer these questions: what, how and why. You want to know what the company does, how it will help people and why the founder started their business–as well as any obstacles they had along the way.
The founder's passion and knowledge of their business will be evident when answering these questions. If they cannot clearly state their mission, it may signify that they lack enough personal investment in their own business.
2. What Is Your Motivation Behind Your Business Idea?
Every company has a purpose; it's your job to figure out why they do what they do. The founder may say that their business exists because of the high demand for their specific products, but digging deeper will help you discover who they were influenced by and any life-changing events that played a part in the creation of the start-up.
This question lets you see if the founder is in it for themselves or others. Often, people find inspiration in their own experiences and want to create something that will help others. Understanding the motivation behind the business can give you a glimpse into its future success.
3. Where Do You See The Company In Five Years?
Knowing if the founder has a solid plan with achievable goals is essential. It will show that they are serious about their business and have thought about its future.
If you ask this question, you should be worried if you get an answer like, "We'll be happy if we're still around five years from now." A company without a long-term plan will be challenging to invest in because the founder doesn't have a clear vision for its future.
You want to know if they plan to take things one step at a time or are considering something big that could potentially impact their business (i.e., funding, product launches, lawsuits or the departure of key stakeholders). When asking this question, you are also trying to figure out the founder's risk tolerance.
These questions will help you understand the strength of the start-up’s foundation and potential for long-term success. Remember that you do not need to ask all these questions during a single meeting. Answers can vary depending on the stage of the business and what you are trying to unearth.
4. What Kind Of Obstacles Do You Work With Daily?
Founders should tell you a bit about the problems they encounter in their business, giving you an idea of what is going on behind the scenes and how big an issue it may become.
You don't need to know every detail, but if risks could impact your investment, you need to be aware of them. Common obstacles are lack of funding, hiring and firing employees, government regulations and competition.
You should be concerned if the founder cannot list any potential problems or if they brush them off as no big deal. It means that they have not faced any substantial difficulties yet, and it's only a matter of time until something goes wrong.
The founder's attitude towards these problems will be very telling; do they seem ready to face challenges head-on, or are they avoiding them? These questions will help you get a better idea of the potential risks associated with investing in a specific start-up.
5. What Makes Your Company Unique And Why Should I Care?
Every business has its unique selling point that makes them stand out from the competition. If the founder cannot explain it, they may not know what theirs is. This is a major red flag.
These questions are also helpful in understanding what makes this business different from others that have failed. Asking about the competition will give you an idea of who they are up against and how well the founder knows their market. After all, if a start-up doesn't know what's happening around them, they won't make much progress.
Final Thoughts
As an investor, it is essential to ask these questions to gauge a start-up’s potential for success. By understanding the founder's motivation, long-term plan and daily obstacles, you can better understand how risky it may be to invest in the business.
Keep in mind that not all start-ups are created equal. Some will have more risks than others. If you're still unsure about the investment after asking a start-up founder these questions, reach out to an expert for a consultation to gather more information. Good luck and happy investing!
On our blog, we cover additional topics around entrepreneurship, business, and marketing, such as: “What's the difference between mentoring and coaching?”. Be sure to check our blog for even more information.