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Due diligence on potential investor

What do you feel is fair and equitable to ask a unknown investor (foreign) before you would start in earnest to negotiate an investment?

Would you increase that level in a regulated industry?

Answers

Anonymous
(Founder) |

Depending on the size of the business, investment and form of the investment, I'd be very curious to know answers to all kinds of questions, including but not limited to:

- What is his/her rationale for the investment?
- What involvement, if any, do they see for themselves (completely passive, BOD, advisor, unofficial ambassador of some kind perhaps)?
- What is their exit strategy and expectations?
- What is their experience with these types of investments?

Depending on how those questions go, the conversation may be over or lead just about anywhere.

There's nothing worse than a bad match between an investor and a company.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Do you feel are required under the Patriot Act to "know your customer"?

Allen Gibson
Title: Consultant
Company: Self Employed
(Consultant, Self Employed) |

Wayne - the "know your customer" from my point view is not so much a Patriot Act consideration but more of a Foreign Corrupt Practices Act (FCPA)consideration.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Allen - It's actually both, since the Patriot Act talks ad nauseam about money laundering.

Allen Gibson
Title: Consultant
Company: Self Employed
(Consultant, Self Employed) |

Another question to consider when vetting an investor:
What resources do you bring to help the company grow. (Management, financial
backing and expertise, etc.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Before I even ask "are they a fit to us ", I would ask (1) Are they legit investors? (2) Do they even have the money? (3) as Allen and Wayne has pointed out Patriot Act and FCPA.

The Nigerian prince and the British Barrister wanting to send me money and invest comes to mind. I joke of course but it gets the point across.

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