Below are just a few of the many questions investors may ask hardware founders and entrepreneurs when you are raising capital and seeking investor funding for your electronics hardware product startup.
Obviously, this is only a partial list, and angel investors, and seed and series investors will have different concerns depending on how terms are structured, such as convertible notes, warrants, equity… (Read: Hardware startup plan for design and manufacturing)
1. What [specific] management/industry experiences do the founders/exec team members each have that will enhance/support the model? What ‘specific’ talents do they each bring to the table? What is being done to ‘protect’ the management talent from leaving?
2. Are all management team members currently (actually) with the Company or are they holding other roles in other organizations while simultaneously supporting the Company? If so, why? Do they not believe in the product offering/marketplace?
3. What does the company have now? IP/patents, pats pending? Product centric vs service centric?
4. Are there current revenues? How are current revenues broken-down?
5. To what degree do current customer/industry relationships play into the feasibility of moving forward? ‘How’ do you plan to scale the business model? ‘What’ makes the model so scaleable? Details.
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6. Specifically ‘how’ will you save customers money? What encourages them to subscribe to what the Company is offering? How much can a customer expect to save by utilizing/installing your product? How will the customer justify the expense to ‘its’ BOD? This is essential in determining how much an organization is willing to pay.
7. How does the product effect the customer? Is it compelling enough for them to change how they currently manage the issue/solution your product addresses?
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9. What are the technological hurdles to creating the product? installing the product?
10. What are the hurdles/barriers to selling the product?
11. How is product customer installation/execution completed?
12. How big is the market really? What % of potential customers can afford the Company product/system? Does this effect customer client top-line or bottom-line numbers? How? Is there a positive impact to either line? How is it justified?
In your search results, you can add more Geographies, add more Services plus Market/Industry search criteria.
13. Market situation – what is going on in the current industry/marketplace? Expanding or contracting market, profits increasing/decreasing? Is there money to invest in improvements via the Company’s solution?
14. Risks – what are the technological, sales and competitive risks?
15. (If appropriate) Software development (Manufacturing?) – who is going to develop/manufacture the software/hardware?
16. Product rollout – How? What is the ‘specific’ plan? why?
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17. GRAPHICS/SCHEMATICS: Are they difficult to follow?. If they are to be part of the business plan (and they should be…) are they presented from more of a business perspective or are they straddled with heavy emphasis on engineering?
18. How will the company establish pricing? Has a matrix been created to identify the break-even for ROIC?
In your search results, you can add more Geographies, add more Services plus Market/Industry search criteria.
19. Have expenses been considered (Current/projected staffing, operational overhead, allocations for customer support/training, etc..? Can they be broken-down (quarterly/annually)?
20. How long will it take the Company to burn through the initial/current (round of) funding? What will the Company have specifically completed/accomplished by the end of the first year? When does the Company anticipate being profitable?
21. Is the product dependent of third-party IP? What IP does the Company own outright? Can portions of Company IP be leased? How is value on IP determined?
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