I get asked the same questions in every pitch meeting - what's your group like, what is your process, and what's your typical investment size?

Put more simply: how do I get you to write a check? Rarely are there more probing or detailed inquiries; an FAQ would come in handy.

Most founders I meet, particularly at the seed stage, focus squarely on the benefits of taking money - a full bank account, access to advice, a network of helpful connections - and ignore the expectations.

Aside from the vague, distant responsibility to return capital, few demonstrate a clear understanding of exactly what their investors anticipate is promised to them.

Why? They just never asked.

You'll be forced into uncomfortable and confusing discussions later if you fail to explore expectations upfront.

You thought he'd be fine with a moderate pace of growth, while he anticipated moving through your product roadmap twice as fast. She planned for an acquisition in 2 to 3 years, while you're working towards paying dividends in 4 to 5.

Oops.

Every investor introduction is an opportunity to evaluate whether a person or fund's goals are aligned with your own, a critical factor to consider when crafting your fundraise. Know where you're both headed, even if it's impossible to tell exactly how you'll get there.

At a minimum, you should always as a potential investor:

What is your ideal exit scenario for my company?

A thoughtful investor will take a second to answer this, rather than blurt out, "IPO!"

The most likely exit is an acquisition, and people may have very different preferences in size and timing depending on whether they're an angel, family office, or fund.

Even at the earliest stage, talk through potential scenarios - do they want lots of $20 million exits in their portfolio, or does every opportunity need to be at least $100 million?

Where do you expect me to be in 12 months?

Whether a revenue target, unit economics, number of signed contracts, executed partnerships or users, you need to agree now what metrics on which you're to be measured.

If you're focused on top line revenue and your investors only care about unit economics, that won't work. If their answer is nowhere near where you reasonably expect you can be, walk away.

What's your least successful investment?

I happen to love answering this question, because it's an opportunity to talk through a case study on when things go bad, and see how an entrepreneur reacts to various decisions made over time.

Investors, just as much as founders, need to be comfortable with failure in order to avoid and overcome it. You want resiliency on both sides - be sure you're in the trenches with a trooper.

Published on: May 31, 2016