Here are the basic questions I usually ask any new business startup:
- What is the one thing that they will sell that others will pay for?
- Who are those potential clients and how easy are they to reach?
- Where would those clients be found and who or what are the substitute competitors?
- Why would they choose this product over the others and how safe is that advantage?
- How much does it cost to set this up, how much does it cost to reach a single client and are there economies of scale?
- How many clients/sales does it take to reach break-even?
- Say I give you this investment today, what are the immediate things it will be used for?
Do these numbers/answers seem reasonable to you and is some benchmark available that allows you to see how likely this is?
Remember, particularly in Internet-based advertising ventures, the client may be indirect. The person who clicks on a Google context-based link is not directly Google's client. The person who decided to host AdWords code on their site is the direct client.
You're also going to want to see a Gant chart or some process chart indicating exactly what needs to be done, at what cost and by whom. Answers to these questions give a sense of not only how seriously they are taking the business, but also how organised.
My final question: who is your first client?
They need either someone who is going to contract the service, or have a clear indication of where income is going to come from, on their first day of trading.
Their task is to sell their idea to you by proving that it will return on your investment and be profitable. From the strength of these answers you can gauge the value of your investment to them, how critical it is, how risky the opportunity and - ultimately - the stake and returns you should expect.