Top Ten List

At our most recent Ten Minute Pitch Clinic, we had a packed house and a particularly lively group of entrepreneurs who asked some very timely questions, one of which inspired the below Top Ten List. In Dave Letterman style, we'll do a reverse countdown of what we recommend entrepreneurs ask of any angel organization from whom they seek funding:

10. What are your fees to entrepreneurs? (your time is money, but money is money too...make sure the fee structure is transparent, as there are both for-profit and not-for-profit forums in town...the range of fees is significant, from under $100 to well over $2000).
9. No, seriously, what are your fees? (this is the part where you ask about application fees, presentation fees, cut of proceeds, or any additional obligations or hidden fees throughout the process). For an overview of the Seattle-area angel group's, check out Susan Schreter's article on the topic in the P-I.
8. How long does it take to close the deal? (due diligence is a critical part of the process and shouldn't be short-changed, but expectations should be set for how much time will be required, and over what period of time)
7. How much money did your forum invest last year? (not how much investment did your network "facilitate," not "how much did your members invest in start-ups in general", but "what was the dollar figure of investment made only by your members in deals that you screened")
6. In what stage of company does your forum invest?(seed, early stage, post product, post revenue, growth phase)
5. What is your profile of investments by industry? (high-tech, consumer, retail, real estate)
4. Of the companies that presented, how many received funding from your members? (don't be shy about asking for the average and range of investment either).
3. If I present to your group, how many investors will be in the room? (this is an opportunity to ask not just about attendance but about their membership base....accredited investors? active and experienced angels?)
2. What's your deal flow? (how many companies do you meet with every month? how many companies presented to your organization last year? since your organization's inception?)

And as much as results matter, so does the experience.....so:

1. Can I contact any companies who have recently participated in your process?

For some best practice recommendations, check out this link on the Angel Capital Association web site. But don't just read about it-- ask! What they answer-- and whether they answer-- will speak volumes.