So you founded your start-up, raised your initial funding and already acquired some customers. Time for raising some serious funding to get your company to a new level? There are a few obvious yet crucial questions you need to be ready to answer before you talk to any angel or venture capitalist. While the list can go on forever, there are top 6 questions that Richard Allan Horning identified. Richard is one of the most highly regarded Silicon Valley attorneys with over 40 years of experience representing technology companies. (Check our previous post where Richard shares his insight on patents.)

The first question to be asked is: What is the opportunity here? In other words, who are your customers that would pay you for your solution and how big is the market size? This question should be an absolute no-brainer since start-ups are looking for answers to it from day one.

Question number two: Is this a product looking for a solution or are you approaching a real, existing problem? This question tries to pin point what is the problem your business is trying to solve and whether it does so efficiently. There is a big difference between companies that build a cool solution and those that solve a problem. The latter ones are more successful.

The third question is: Can this business scale? In other words, can your company grow exponentially without 1:1 ratio of adding bodies? If your sales directly depend on the number of people you employ for doing sales, you need to get a lot of repeat customers or else spend a lot of money and time growing.

The fourth question is: How are you protecting your technology and what is your business advantage? Protecting technology naturally comes from either unique know-how or patents. Having a business advantage can refer to many things: being the first to offer that kind of product or being the most popular provider, for instance.

Question number five is: Who are you? As Richard points out, this is probably the most important question of all. Investors always want to know: if they give you the money, how can they be confident that you'd implement it well? You can prove your abilities by track record if you've already built a company before in a smaller market. Investors also ask: is your team complete? If it is not, they may want to help fill out the team by adding someone 'with grey hair' (i.e. someone with a lot of business experience). Think Eric Schmidt being added to the Google team at the VC investment round.

The final question is: What is your exit plan? People who invest serious money into companies are interested in making more money, not in supporting lifestyle businesses. A few start-ups go public after some time, but the majority get acquired by someone. Therefore, start-ups need to know who can potentially buy their company: Intel, Cisco, large media chains etc.

As a closing remark, Richard comments: 'There is a lot of interest from investors in new ideas. To address the US market and get capital from US investors, the almost universal rule is to have your company based there. One of the main reasons: investors add contact lists and connections from US to the start-up. They don't want to wait for the company's managers to travel to the US to meet the investors and Board members and update them in face-to-face meetings. The team also needs to sell and market their product directly in US. The R&D can stay at home.'

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