Investor Checklist
- Evaluate The Opportunity
- I have listed and defined my personal objectives for this investment.
- I know my probable return on investment (ROI).
- I know the payback period for the investment.
- I have discussed this project with other current and potential investors.
- I know how long this opportunity has been available.
- I understand the financial plan and believe the assumptions and projections are reasonable. If No, has the plan been reviewed by independent professional advisors?
- Is the marketing plan realistic?
- I understand when the business is expected to become profitable.
- I know when I can expect a return on my investment in interest or dividends.
- I know how and when I will get my capital back.
- If I am purchasing equity, I know what I am purchasing (common shares, preferred shares)
- I know if there are warrants or share options attached.
- If I am purchasing debt, I know if it is subordinated debt? Convertible debt?
- Evaluate The Risk
- I know how much I could lose and the risk of loss on this investment.
- If the project involves development of a new product, process or other technical innovation, is there independent confirmation that it works?
- All the regulatory requirements have been met. (Environmental, planning, patent searches, etc.)
- I know what the funds raised will be used for.
- Is the business operational now?
- If it is losing money, I know the burn rate.
- I know how much my investment will be diluted as a result of the founders getting an interest for their sweat equity.
- I think the founders have invested an appropriate amount of cash in the project.
- I know what level of involvement is expected of me.
- If I want to be on the board of directors, am I entitled to representation?
- I understand the legal structure of the investment. If No, I have had professional advice on the prospectus.
- I know if some or all of my investment is secured by assets.
- Could I be legally bound to put up more money in the future?
- I understand the legal structure of the venture and the significance of the structure on my current and future risks.
- Is adequate insurance in place for assets, key personnel and directors?
- Are all tax filings (income tax, payroll, etc.) Up to date and have these filings and related assessments been reviewed?
- Evaluate The People
- I know and trust the people who are making the sales pitch to me. Or I have confirmed their reputation with credible third parties.
- I know what and how the promoters are being paid (if anything).
- I know the history of the key implementers of the business plan.
- I know the terms of employment, contractual and salary agreements for the key personnel.
- I know the reputations of the current shareholders, officers and directors and key professionals to the project.
- Has a lawyer conducted corporate and personal searches on those involved in the opportunity?
