When investors ponder whether or not to give you money, they ask themselves a couple of questions:

How do we know if you are executing your plan successfully? How we they know that they can trust you and that you can deliver on results?

Those questions aren't as easy to answer as you think. Investors will monitor your progress during the fundraising process, so you need to measure results during this process--particularly the milestones that reduce risk and increase value.

The average time that it takes to raise financing from institutional investors is about six months, which is plenty of time for investors to track your short-term results and progress.

The two big buckets of risk in a startup or growth company are technology or product risk and market risk. The two go hand-in-hand.

Accomplishing each step of the development process--whether you're in pre-product development, successfully creating a prototype, or running an alpha or beta test--reduces product risk risk and increases investor confidence (and the value of your company).

Similarly, your revenue stage can measure market risk for investors--whether you're in pre-revenue, where you don't sell anything yet, or actively earning money from selling your product. Most institutional investors will not invest in a company pre-revenue. The more you can demonstrate that your business model works, the better chance you have of raising outside capital.

So what does this mean for you as an entrepreneur? Here are the questions from any smart investor that you'll need to answer, either explicitly or implicitly:

1. Product

Does your product work in the target customer's application how you promised and how they want it to work?

2. Market

Can you win a critical mass of customers purchasing products? Make sure you can provide information that validates your customer acquisition costs and a customer's lifetime value.

3. Product-Market

Can you convince investors that your business model is feasible? That includes revenue, gross margins, and operating margins at levels where you can reasonably extrapolate a financial picture that validates your business model assumptions.

4. Competitive

Can you beat the already-existing competition? Beating competition, substitute products, and new entrants validates the strength of your competitive position in the market.

5. Operational

Can you scale product deployment into high volume manufacturing with quality and reliability? Show that you have few customer complaints, and none that disrupt product sales.

6. Legal

Are you being attacked through litigation? What is the risk assessment on this? Have you taken the proper steps to reduce risk in this area?

7. Intellectual Property Protection

Have you have done a good job protecting your intellectual property with patents, trade secrets, copyrights, and trademarks? Have you adequately used non-disclosure agreements?

8. Employment

Do you have excellent human resource policies, government compliance, training, employment contracts, non-disclosure agreements, proprietary invention agreements, and executive employment agreements?

9. Team

Do you have a strong team with key core competencies and advisers with credibility, functional, technical, market and domain expertise?

All of these things show that your company has less risk, especially if your potential customer base is large and growing fast. Reducing risk is how you get a larger valuation.

Smart investors will track your progress towards your key milestones. It'll establish a track record and build trust. That's essential with investors--even if you have to initially borrow it from your advisers.