December 22, 2020 by investor
In talking with startups, I find the investor must always probe for the final answer.
A single question rarely reveals the full answer.
I spoke with a startup recently who said, “We’re raising a million dollars and we have raised half of it already.”
On the surface, it sounded like they had $500K invested in the business.
So I asked, “That’s great. You have $500K in the bank already from your raise?” to which they responded, “Well not exactly. We have several investors telling us they are interested in investing.”
After four more questions, it came out that they had $100K in the bank and around $300K in soft-circled commitments.
It’s good progress, but not exactly the half a million we heard at the beginning.
Never take the first statement as the final answer.
It takes at least 5 questions to get down to the real answer, and as an investor, you want to know the real answer.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today.
Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.
