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The Fast Company Executive Board is a private, fee-based network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.

15 smart questions to ask yourself before seeking funding for your business

Seeking capital to fund growth can come with strings attached, so it’s important to ask yourself and your investors the right questions.

15 smart questions to ask yourself before seeking funding for your business
Members of Fast Company Executive Board share their expert insights. [Image: Courtesy of the individual members.]
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An essential ingredient for a growing business is access to capital at the right time. To accomplish fast, scalable growth, many business owners turn to investors for funding. The decision to add one (or more) stakeholders—who may or may not seek to have input on your company’s operations in exchange—comes with many questions (or should).

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So what do entrepreneurs need to ask themselves before putting together a pitch, and what should they ask their potential investors? Below, 15 members of Fast Company Executive Board share the important questions business leaders should ask when considering bringing in outside investors to ensure they’re making the right choice at the right time.

1. “WHEN WILL I NEED ADDITIONAL CAPITAL?”

Build a long-term timeline to answer the question, “When do I anticipate needing additional capital to reach the next milestone?” In B2B software-as-a-service, there are pretty well-defined thresholds for the stage or accounting rate of return of a company that an investor looks for. Make sure you are 100% confident the capital raised and firm(s) selected will be enough to get you well beyond that next growth milestone. – Brian Price, cloudtamer.io

2. “WHAT TYPE OF CAPITAL DO I NEED?”

You must know what type of capital you need and how much. Additionally, you need to identify the target audience that you will raise from to grow and scale your business strategically. Not every business needs to be venture-backable. – Melissa Barash

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3. “WHY AM I ASKING FOR THE STATED AMOUNT?”

You need to know exactly what you’re doing with the money and be able to clearly articulate those plans. If you are asking for funding, you should be specific about why you are asking for the stated amount—is it to hire a key leader, build out your marketing function, or invest in research and development? There needs to be a clear outline of what you’ll do with that money and what it will achieve for the business. – Becca Chambers, Ivanti

4. “WHICH TYPE OF INVESTOR WILL HELP ME REACH MY GOALS?”

Too often entrepreneurs will take money because it’s available. Investors should bring more to the table than just funds. The best investors bring their networks, their time, and/or their operational expertise. When adding people to your table, make sure you are selecting the best team to get you to the next level. – Nathalie Walton, Expectful

5. “DO I NEED AN ACCELERANT OR AN ENABLER?”

When founders pitch me to invest, the first question I ask is, “What area of your business is on fire so that you just need more gasoline?” Funding should be an accelerant, not an enabler. – Kathleen Griffith, Grayce & Co.

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6. “HOW MUCH DECISION-MAKING POWER DO I WANT TO MAINTAIN?”

If you are interested in scaling quickly and are the type of founder who is looking for support to steer the ship, seeking capital may be the optimal route. However, if you want to control the brand’s growth and maintain autonomy, you may want to delay raising venture capital. – Kelley Higney, Bug Bite Thing

7. “HOW WILL I BRING VALUE TO THE INVESTOR?”

In a world of finite resources, business leaders should put themselves in the shoes of investors and proactively answer this penetrating question: “How am I uniquely capable of adding value to this opportunity?” – Todd Miller, ENRICH: Create Wealth in Time, Money, and Meaning

8. “WHAT ELSE MUST AN INVESTOR BRING TO THE TABLE?”

You must ask yourself, “Other than financial capital, what will an investor bring to the table to help grow my business—partners, operational expertise, marketing expertise, distribution expertise? Are they a visionary?” When you are in the process of securing funding, assume the investor(s) will be a valuable part of your team. – Antonio Patric Buchanan, Antonio & Paris

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9. “IS THE INVESTOR ALIGNED WITH MY MISSION?”

Don’t take money from people who are not enthusiastic about your mission. If you want investors or lenders who are really in your corner, they have to be stoked about what you are doing with the money. – Alex Husted, HELPSY

10. “AM I OPEN TO LEARNING FROM MY INVESTORS?”

Are you open to learning from others? If the answer is no, raising outside capital might not be the best option. The magic of monetary capital is that when you combine it with intellectual capital, it can result in exponential growth. Without its intellectual companion, monetary capital is just a tool—like a hammer. Being clear about your own willingness to collaborate makes all the difference. – Joe Watson

11. “AM I WILLING TO HAVE EXTERNAL INFLUENCE ON MY BUSINESS?”

How willing are you to deal with external influences on your business? When an investor puts their money into your business, they’re naturally concerned that you’re doing the right things to protect and leverage their funds. This can—and frequently does—lead to conflict. If control and staying true to your vision matters, you need to think carefully about bringing investors on board. – Syed Balkhi, WPBeginner

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12. “AM I READY TO ‘MARRY’ AN INVESTOR?”

Are you ready to get married? Raising capital is akin to getting married to an investor for an unknowable length of time, in sickness and in health. There’s as much social pressure to get married as there is to raise money. However, getting married to the wrong investor at the wrong time could cost more than the funding is worth if you are not ready to make that leap or if there’s a bad fit. – Rhoden Monrose, CariClub

13. “HOW WILL I SPEND THE CAPITAL RAISED?”

You must start by asking, “Why do I need money, and how I am going to spend it?” There is no free money. It always comes with strings and expectations, so you need to ask yourself if this is the right time. Are you raising money to scale your product? If the answer is yes, then you need to have a plan for how much money you need right now to take you to the next level and clarity on how you will spend it. – Ximena Hartsock, Phone2Action

14. “WHAT IS MY END GAME?”

When seeking capital, it’s important to think about your end game and what you want for your business. If you want to continue running your business independently, raising venture capital is not a good fit. With venture capital, you are signing up to turn the investment into rapid growth and work toward an exit—an IPO or an acquisition—which is when your investors will get their return. – Alexandra Cavoulacos, The Muse

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15. “IS NOW REALLY THE RIGHT TIME TO RAISE FUNDS?”

Founders need to keep in mind they will be diluted by about 30% in every investor round and will probably need many rounds if they want to scale to be a huge company. The mistakes early-stage founders make in raising money can cost them ownership in the future. Always question if it’s the right time to raise funds and if you’ve found the perfect match with a venture capitalist. – Yoav Vilner, Walnut