For early-stage founders, securing investment isn’t just about raising funds — it’s about finding the right partners who will support and champion your vision. This is especially crucial for women founders, who face unique challenges when navigating the venture capital world. In 2023, less than 2% of the $170 billion invested in U.S. startups went to women-owned companies. Pattern matching and gender bias play significant roles in these funding disparities, making it even more essential to assess whether a potential investor is a good fit for your company.
When founders are raising money, it’s tempting to think of it as a one-sided process where the investor holds all the power. However, the most successful fundraising efforts are more like a two-sided interview. While investors are evaluating your business’s potential, you should be equally discerning, assessing whether the investor is the right fit for your company.
In the early stages of your company, especially at the pre-seed and first-money stages, you’re not just looking for capital — you’re seeking a partner who believes in your vision and can help you navigate the challenges ahead. Just as an investor will scrutinize your business model, traction, and leadership, you should evaluate them based on their experience, values, and ability to support your growth.
By treating fundraising as a mutual vetting process, you can avoid potential mismatches and ensure you’re bringing on an investor who aligns with your goals and values. A great investor will provide more than just funding; they will bring mentorship, connections, and strategic advice to help your business succeed.
Since 2017, The Startup Ladies have gathered invaluable insights to help women founders ask the right questions to potential investors at the pre-seed and first-money stages through their monthly “Startup Investing 101” programming.
This guide will help you evaluate investors beyond just their financial capacity — it will enable you to assess their values, goals, and willingness to support women-owned ventures.
What Are the Pre-Seed and First-Money Stages?
Pre-Seed Stage
The pre-seed stage is often the earliest point in a startup’s lifecycle when founders seek external funding. At this stage, the business is typically in its ideation or product development phase. Founders may not yet have a fully developed product or a significant customer base. The funds raised during this phase are usually used for validating the business model, building a prototype, conducting market research, or assembling an early team. Investors in the pre-seed stage understand that the company is high-risk, as the focus is on proving that the business concept has the potential to succeed. Often, these investors include friends, family, angel investors, or early-stage venture capital firms.
First Money Stage
The term "First Money" stage, a term coined by Kristen Cooper, CEO and founder of The Startup Ladies, refers to the first round of external funding a founder takes after the company has been operational for some time. By this stage, the business is generating revenue but faces challenges in scaling because it lacks the resources to grow beyond its current capacity. Many businesses at this stage are "too small to scale" — they generate enough income to survive but not enough to expand operations, hire additional staff, or invest in growth initiatives. First-money investors provide the financial boost needed to help these companies scale and grow beyond their initial limitations.
The key difference between the pre-seed and first-money stages is that, in the first-money stage, the business already has traction, customers, and some revenue but needs more capital to unlock its full potential.
Key Questions for Women Founders to Ask Potential Investors
1. Is the problem we’re solving one that you think is worth supporting?
This question tests whether the investor genuinely believes in the core problem your business addresses. Alignment on this foundational issue is critical for long-term support.
2. Have you ever invested in a startup before?
Understanding an investor’s experience in startups can give you insight into their level of expertise and what value they can bring beyond just capital.
3. Why did you decide to become a startup investor?
Knowing the investor’s motivations for entering the world of startups will help you gauge if their goals align with your business's needs and values.
4. What are your personal goals for being an investor?
An investor with clear personal or professional goals for their investments will likely be more thoughtful and engaged in helping you succeed.
5. What is your appetite for risk?
Startups are high-risk ventures, and you want an investor who is comfortable with the volatility that comes with early-stage companies.
6. Have you ever invested in a woman-owned business?
This question helps gauge whether the investor is familiar with and open to supporting women-owned companies. A "no" answer doesn’t disqualify them, but it opens the door to a deeper conversation about their readiness to support diverse founders.
7. Have you ever worked for or with a woman CEO? If yes, how was that experience different from working for or with male CEOs?
This can reveal any gender biases the investor may have, consciously or unconsciously. It also provides an opportunity to discuss leadership styles and their views on diversity in leadership.
8. What do you think are the advantages and disadvantages of being a female founder?
This question allows you to see if the investor is aware of the systemic challenges women, particularly diver women, face in business, and how they plan to support you through them.
9. What do you most value in a leader?
Their response can tell you if they value traits that align with your leadership style, such as resilience, empathy, or decisiveness.
10. What do you most value in teams?
Since the investor may have influence over hiring or team dynamics, understanding what they value in a team will show if they align with your company culture.
11. What kind of information would be meaningful to you as we move forward?
Every investor has different preferences for receiving updates. Understanding what metrics, milestones, or communications they find valuable will ensure a smoother relationship post-investment.
12. What is the best way to communicate with you?
Clarifying the preferred communication channels upfront will avoid misunderstandings and create a framework for effective collaboration.
13. What is your process for evaluating if you will invest in a startup?
This gives you insight into their decision-making process, allowing you to better understand how they view your opportunity and what criteria are most important to them.
14. What are your expectations for investing in my company?
Clarifying expectations around returns, timelines, and involvement is critical for ensuring that both parties are aligned on what success looks like.
15. What is the range of investment you could consider right now?
Understanding the scope of their financial commitment can help you plan accordingly for the funding round and future capital needs.
16. If you were to invest, would you be transferring funds from: a personal account, trust, LLC, corporation, or something else?
This question provides clarity on the source of funds, which can sometimes influence the speed and complexity of the investment process.
17. Would you consider a follow-on investment?
Knowing whether the investor is willing to commit beyond the initial round can help you determine if they’re in it for the long haul or just a one-time investment.
18. Given what has happened with some West Coast banks in the recent past, do you foresee any issues securing funds from your bank for this investment?
With the volatility in financial markets, this practical question ensures that they have access to liquid capital to back their commitment.
19. What is your timeline for making a decision on this investment?
Understanding their decision-making timeline helps you manage your expectations and plan your fundraising efforts accordingly.
20. Do you know anyone who would be interested in our product/service?
Even if the investor doesn’t end up investing, they might have valuable connections within your industry or customer base.
21. Can you introduce me to anyone who may be interested in this investment round?
Introductions can be as valuable as capital. Networking is crucial at the pre-seed and first-money stages, and investors often have connections that can help close your round.
Why These Questions Matter
As a woman founder, you may face more skepticism or bias from investors than your male counterparts. Asking these questions puts you in the driver’s seat, helping you understand the motivations, experiences, and expectations of potential investors. It ensures you select partners who not only provide capital but are aligned with your values, understand the unique challenges you face, and are willing to support your long-term growth.
By being proactive and thorough in your questioning, you can find investors who will truly be your allies in building your business. Not all money is equal — the right investor will add value beyond the dollars, providing mentorship, connections, and a commitment to seeing your vision come to life.
Remember, raising funds isn’t just about closing a deal; it’s about building relationships that will fuel your company’s success for years to come. By asking these key questions, you’ll be well on your way to finding the right investment partners.
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