If you ever need financial help on a project or enterprise, investors can be the best option to consider. But in order to attract their investment, you need to write a killer investor proposal.
Not sure what goes into your investor proposal? Here is everything you need to know:
1. Follow the Right Structure
What does this mean? Make sure that your investment proposal is laid out:
- Executive Summary -- This is a paragraph or two describing the overview of the proposal, laid out in simple bullet point or list format to make it easy to read. This is meant to grab their attention.
- Company Summary -- This includes all the pertinent company details (name, address, legal structure, industry, products, services, subsidiaries, etc.) an investor would need to know before investing.
- Products and Services -- Get into more detail here, including inventory, production costs, selling prices, sales forecast for two to four years, and supplier credit terms.
- Facilities -- Where is your office? What type of construction is it? Do you own or lease it? What about equipment--both owned and leased? Detail any costs for facilities and equipment, as well as the value of facilities and equipment that you own.
- Use of Funds -- What are you going to use the investment for? Product development, increasing inventory, working capital, marketing, etc.
- Marketing -- How do you currently market your product? How will the investment help you market your product more efficiently? These are vital details. Include sales data, market research, competition analysis, etc.
- Management/Ownership -- Who is the owner, founder, CEO, manager, or boss of the company? What is the management structure like? List all the employees, their titles/positions, and their projected wages for the following two to four years.
- Financials -- The investor will want to see a balance sheet, a cash flow forecast, an inventory schedule, a Profit&Loss statement, and a sales forecast to understand the financial side of your company.
- Investment Exit Strategy -- Should the investor find that his/her investment isn’t paying off, what is their exit plan? This is a MUST for the investment proposal, as it will give the investor a way to back out "in case"-it’s there as a fail-safe for them.
All of the aforementioned elements must be included in the investor proposal, and in this specific order.
2. What to Ask for
When writing an investor proposal, you need to make sure your request is as lean as possible. ONLY ask for the amount of money that you actually need.
While it may be tempting to ask for more money than is required, investors are not going to hand you money just because you’re asking for it. They are only going to invest the amount that they feel will be sufficient in order to earn them the return that you are offering. If you inflate your proposal, they’re likely to see through it and your proposal will look very unprofessional.
3. Tips for Writing a Killer Proposal
- Make it about what THEY can make -- Investors want to know "what’s in it for me?" Your proposal should contain data to prove that you can back up your offer, ensuring them that what you are asking for will pay off.
- Keep it simple -- Only provide relevant data. Keep the proposal as simple as possible--remember your investors are busy people. Limit jargon, lay it out in an easy-to-read format, so it will be easily scanned by the investors.
- Do your homework -- Be sure that you know what industry sector your company is in, what the total market share is like, and what you can realistically achieve.
- No hesitation -- You need money from them, so don’t be afraid to ask for it. Make sure your proposal shows your confidence in your company. As long as you have the data to back it up, you can ask without fear or timidity.
Writing the perfect investor proposal is vital in developing and expanding your company’s plans. Investors can really break or make your future projects. If you follow these tips you will write an investment proposal that works like a charm.
What is your experience with investors? Have you ever written a proposal before? Let us know in the comments section below.