It isn’t easy to write a competitive investor proposal. It’s the truth. To receive funding, you must complete the project correctly. You’ll learn everything you need to know in this article, from how to explain your business model to how to make your company more appealing to investors. If you’re here, chances are you’re planning to start a tech company. You may be unsure of how to communicate the concept with potential investors.
Step 1: Research the Investors you Want to Pitch
Before you even begin writing an investor proposal, you need to know who your audience is and what they care about. It’s possible that a large number of businesses will be interested in investing in your project. In order to attract investors, you must ensure that your business is a good match for them. Investors will examine your company, but they will also pay attention to the people in charge.
In my experience, I’ve worked with entrepreneurs who presented to an investor, but the investor didn’t like their personality. When preparing to make a pitch to a potential investor, do your homework. Your investor proposal will be more persuasive if you conduct thorough research.
Step 2: Writing an Executive Summary
For tech startups, it’s common to be unclear about what investors need to know, especially when it comes to important numbers like revenue and funding. So, for example, investors can quickly assess your business model and valuation by writing an executive summary.
Step 3: Creating a Launch Letter
You don’t have to sift a mountain of copies to get your message across to investors. A launch letter can be a lot more concise. The top line is much easier for them to read. In order to make it easy for them to scan or print it out, a launch letter should be short and simple.
Step 4: Create a Comparable Chart
Investors will better understand your business and the market you serve if you successfully complete this step.
Step 5: Describe your Business
Investors will see this section first. What your company does and why it matters should be conveyed in a succinct yet informative manner. It is important to identify your audience in the first paragraph and explain how you can help them. You can also include Apple’s strategic overview here if you have one.
Step 6: Describe How you Intend to Help your Customers
Your product or service’s benefit to customers should be explained here. Give examples of how your product or service benefits your intended audience. Highlight your product or service’s unique selling point and how it sets it apart from the competition.
Read Also: Spectrum Mobile
Step 7: Show your Business’s Market Research
An investor proposal’s most critical component is market research. Investor proposals require a lot of market research. If you want to sell your product, you’ll need to show them the research that shows there’s a demand for it. To get a better grasp of the market, you must show them the results of your research. In fact, thorough research is a critical component of any investor proposal.
Step 8: Competitor Research
You won’t have any competition if you’re the first to market. But, on the other hand, the math starts to work against you as soon as you’re in a race against another person. In order to secure investment, it is imperative that you conduct a sufficient amount of market research prior to launching your product. You should validate your numbers by doing simple reverse-engineering if you want to convince investors that your valuation range makes sense.
Step 9: Investors Need to be Given a Context for their Decisions
Investors want to know why your product or service is superior to the competition, and that’s what you have to demonstrate in your investor proposal. Without context, it’s impossible to write a pitch that will resonate with your audience. Instead, show them why they should invest in your product and why they should back you.
Step 10: Specify the Amount of Money you’d like to Raise
To ensure that if you do receive funding, you receive it in the amount you requested, you must disclose your funding request. To ensure that you get the funding, making your funding request public is critical. It’s possible that you won’t get the money you’re asking for if you don’t make this information available to the general public.
Step 11: Clarify Who You are Speaking to
Great news! In some cases, the investors will be potential investors. Other times, they’ll be VC firm representatives. If your company is large enough, these people may be executives or fund managers. You need to know your investors well in order to tailor your investment proposal to their needs.
Step 12: Make Sure you’ve got the Right Incentives in Place
In order to achieve your goal of obtaining funding, you will need to take certain actions. On the other hand, investors have a vested interest in ensuring that your company succeeds. Therefore, you must maintain this equilibrium in your investor proposal.
Step 13: Set a Timeline for how you Intend to Make use of the Funds
Investors in a competitive market are looking for a quick return on their money. If you’re writing an investor proposal, you should specify how long you intend to use the funds you’re asking for. Then, consider how much of your startup budget you will need and whether or not it can be completed in a timeframe of your choosing.
Step 14: Make your case of the Process
Once you’ve gathered all of your information, you’ll need to demonstrate how you intend to spend the grant funds. Educate the investor about the benefits of investing in your idea. It doesn’t matter to investors how you plan to spend their money. The following questions should be asked if you haven’t already:
Is there any Benefits to this Money?
Is it possible for my business to grow more quickly with the money I’ve received?
Do you think we’ll be able to reach profitability more quickly now that we have this money?
How do we envision achieving these objectives?
Keep in mind that your goal is to persuade the investor that your strategy is effective and that he should invest.
Step 15: You’ll Create Financial Projections
This list of financial activity estimates and assumptions is referred to as a “financial projection.” An income and cash flow forecast is another name for this document, which is also known as a “pro forma forecast.”
Projection of startup’s monthly, quarterly, and yearly income statements; balance sheets; and statements of retained earnings, in addition to one-time events such as raising debt or equity funding.
Startups frequently use this with access to investment capital to enhance the appeal of their pitch to potential investors.
Step 16: Create a Comprehensive Business Plan
An entrepreneur’s business plan serves as a blueprint for the company. When it comes to evaluating you, it’s the most important document that you’ll have to hand over to investors. As a result, potential investors will have a clearer picture of how and when to expect things to move forward for your company.
Step 17: Put together a Presentation Deck
You should use slides instead of talking if you want to impress the entrepreneur you are pitching. An investor’s proposal would be incomplete without a pitch deck. In this document, the company’s mission, value proposition, and what investors can expect as a result of their investment are described in detail. Tech startups are the target audience for this article.
Are you prepared to draft a business plan for investors?
To put it simply, when pitching to investors, you want to show that you have a great product in a competitive market. Being in the top three is more important than being number one. You will be able to demonstrate your company’s financial viability to potential investors if you can show that you have a well-defined strategy for implementing it. Prepare to stand out from the crowd once you’ve made your company investor-ready.
