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First of all, know
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3Ws
of
Venture Investing
History
and Background
What is your background
and previous experience? Where did the idea for the company come?
How did you get involved with the company? When did the company begin
operations? What exactly does the company do? What is your long-term
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vision for the company? How has it been funded to date? Where
does it stand today?
Management
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Management Team
Who is presently involved
in
managing the company? What are their credentials? Why will
they be able to build a successful company? If not all management
spots are filled, what is the plan for filling them? What kind of
people are we seeking, and to fill what roles? If you do not expect to
be the CEO that builds the business to $10 or 20 million, what kind of
person would you bring in? When? Who is on your board of
directors? How does the board function? |
Products
and Technology
What, specifically, are
the company’s products and what, if any, proprietary technologies are used
to make them? What do the products do? What makes the products
unique or special? In general, how are they better than other products
or alternative methods of solving the problem? Why would the customer
buy these products? How much better are they than other solutions?
Can we demonstrate that they are cost effective? Are there patents? If
so, what, specifically, do they protect? Why will they be of value to
the company?
Markets
What specific
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problem do
the products
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solve, for whom? That is, who specifically is the
customer? Why is the problem important?
Why will the customer
buy our product? How do we know the customer will buy? How do we
know the price the customer will pay for our product? How large is the
specific (narrowly defined) market for our product? What growth is
expected in this market? How do we know the market exists? How
do we know customers will pay our
price?
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Competition
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How else can the customer
solve the problem
our products
solve? What are the alternatives? How do we compare to each?
Why are we better? In what ways are we worse? Who are the
vendors of these other solutions? How do they compete with each other?
Where will we fit into the industry? Why will we be able to compete
effectively against them for the next ten years? Why are we confident
that no new entrant will come along with a better solution and blow us away?
Why do we think we can dominate
our market niche?
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Benefit from
Your Competitors
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Differentiation
Strategies
Business
Strategy
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Surprise To Win:
3 Strategies
→
Creating Sustainable Profits:
9 Questions To Answer
What are the important
strategies for building the business? What kind of business will
it be? (Manufacturing, service, distribution, software, combination?)
What is the
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Business Model
 ?
(i.e. what will produce the
company’s
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revenue?) What kind of gross margins will the company
have? What expense levels are required to run the business? What
level of operating
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Profit
can the business generate? Do you have any
corporate partnerships in place? Do you plan to put any in place?
What channels of distribution will you use to deliver your products to your
customers? How will these channels be established? By whom?
When? What are the significant risks to your business?
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Manufacturing
What special issues relate
to manufacturing the product(s)? Are there any special materials or
processes, any proprietary process? What special equipment or
facilities are required? What investment is required to set up
manufacturing, and for what capacity? How do you know you can
manufacture the product at a cost that will yield acceptable gross margins?
Finances
What kind of revenues can
the business produce, on an annual basis, over the next five years?
Profits? What investment is required to carry the company to the next
major level of
valuation? What specific tasks need to be accomplished to do that?
How long will it take? (Try to identify a “next level” that can be achieved
in less than 18 months.) What investment will be required beyond that?
To the extent possible, explain key assumptions behind your forecast.
And make sure the forecast relates in a logical way to the market forecasts
you described previously. How will the
investor get his money back? Will it be through an
IPO?
Acquisition? When?
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