What should I check before accepting money from a private investor?

Short answer

Before accepting money from a private investor, I check whether the investor understands the opportunity, whether expectations fit the proposed relationship, and whether the business is ready for scrutiny. I treat the conversation as a two-way evaluation: the investor is assessing the business, and the business is assessing fit with the investor. I ask about the investor's experience, goals, decision process, and expectations for communication and involvement. I also prepare clear, accurate information about the team, operations, finances, structure, and service providers. These checks help surface misunderstandings early and give both sides a clearer basis for considering next steps.

Checklist

Confirm the investor understands the business, its assumptions, and the possibility of loss. Explain the opportunity plainly and answer questions directly.
Ask what the investor expects from the relationship, including updates, access to information, and any involvement in decisions.
Learn whether the investor has experience with your sector and type of opportunity. Familiarity can reduce the time needed to explain basic industry context.
Clarify who is making the decision and whether anyone else, such as a family member or committee, needs to review the information.
Prepare current, consistent materials on the company, team, operations, financials, and proposed structure.
Review the experience and responsibilities of key service providers, since investors may ask about the people supporting the business.
Keep a record of investor questions and provide accurate answers supported by relevant documents.
Set a process for handling follow-up requests so that answers are timely and consistent.
Make sure each party has a clear understanding of what remains to be decided and what information is still needed.
Bring qualified legal, tax, and financial professionals into discussions about the terms and documentation. This page is general education, not professional advice.

From my talks

"Nowadays, investors are doing due diligence on the service providers used by investment funds as much as they are doing their due diligence on the funds themselves."

Capital Raising Book

Common scenario

A private investor asks detailed questions about the team and the professionals supporting the business. I would make sure the company has a concise, current team overview and can explain each provider's role and relevant experience. I would track every question, assign someone to prepare the answer, and review it for accuracy before sending it. If an answer is not yet available, I would identify what needs to be gathered and give a clear follow-up plan.

What to do next

Prepare a current information packet covering the business, team, operations, finances, service providers, and proposed relationship.
Ask the investor about their goals, experience, decision process, information needs, and expectations for communication or involvement.
Track open questions and follow-ups, and have qualified professionals review matters that require legal, tax, or financial expertise.

Work through it with the pitch deck grader. See all private investors questions.