You Want Me to Invest in What?

By December 14, 2010July 19th, 2023No Comments

The Ed Tech Business Forum (ETBF), sponsored by the Software & Information Industry Association (SIIA), was jam-packed with excellent sessions, and “You Want Me to Invest in What? A View from the Financial Community” was among my favorites.

The session was moderated by Robin Warner of Atwood Advisors, Inc. (formerly Quayle Munro, Inc.), and featured three panelists:

Factor shared an excellent list of questions company executives should be prepared to answer when they meet with potential investors.  Interest in her remarks was very high during the Ed Tech Business Forum – rarely have I seen so many executives working so fast to write down everything a presenter said.  Given that high interest, here are some of my notes from Factor’s presentation:

What is your business model?10.  What is your business model?

9.  Can you do a product demo?  “Not your product development person but you, the CEO,” Factor said.  “If it’s too hard for you to demo, it’s too hard to understand.”

8.  How do you know your product is effective?  Factor said hopeful investors should be prepared to share information related to changes in test stores or graduation rates, or avoiding special ed referrals.

7.  Who are your competitors?  “And don’t tell me you don’t have any,” Factor said.  She said executives should be able to answer questions such as:

  • How are you like other products?
  • How are you different than other products?
  • What are you replacing?”

6.  What source of funding do your customers use to buy your products? What changes in funding do you anticipate in next 3-5 years?  Can you get into budget system and not part of regular grant?

5.  Who is your target customer and how will you reach your target market?  How will that grow over time?  How will that change over time?  Who will make the buying decision?  How long is your sales cycle?  What’s been your experience with the sales cycle?  Are there ways to shorten that?  Do you have a sales force?  Factor said far too many entrepreneurs reach out for financing before they’ve developed a sales infrastructure and plan.

Who is your target customer?4.  Do you have a compelling business plan?  Factor said she received a plan recently that was 80 pages long.  “It doesn’t have to be that long.”

3.   What is your current capital structure? Are there any obstacles to us making an investment?

2.  How will you use the capital you are seeking?  Further build out projects? Marketing projects?  Sales people?  It’s much more important for us to understand your thinking than your numbers.

1.  Lastly, what value do you think Weld North could add as investors?  How do you want us to be involved?

We use a similar question set when we chat with start-ups and other prospects, though our last question is more often expressed as:  “How do you define success?”  The answer really helps us define our future working relationship.

A big tip-of-the-hat to Factor for summarizing her information needs in a way that seasoned CEOs and first-time entrepreneurs alike could benefit from.  She also used the best sports-in-business metaphor I’ve ever heard: K-12 is “not a hockey-stick business” and “investors will question ed tech hockey-stick projections.”

Do you have an additional tip or two to add to this list based on your experiences seeking funding?