Writing a competitive investor proposal is challenging. It really is. And, you need to do it right if you’re going to get funding. This article will teach you everything you need to know, from how to explain your business model, to how to make your business more attractive to investors. If you are reading this, you are probably thinking of launching a tech startup. You are probably excited about the idea, but you are uncertain of how to explain it to investors.
Step 1: Research the investors you want to pitch to
Before you even start writing an investor proposal, you need to know exactly who your audience is. There are a lot of companies out there, and many of them will have a lot of money to invest. If you are planning on pitching to investors, you need to make sure that your business will fit the requirements. Investors will be looking at your business, but they will be also focusing on who will be leading the company.
I have worked with some entrepreneurs, who pitched to an investor, but the investor didn’t like who they were. You should do your research on the investor that you are going to pitch to. With proper research, you will be able to make your investor proposal as convincing as possible.
Step 2: Write an Executive Summary
It is common for tech startups to get confused about what investors need to know, particularly with regards to key data, like revenue and funding amounts. Writing an executive summary will quickly provide investors with the data they need to evaluate your business model and valuation.
Step 3: Write a Launch Letter
Investors don’t want to read multiple pages of copy; they just want to know what you have to say. A launch letter can be much shorter. It’s much easier for them to just see the top line. A launch letter can be very short and quick, allowing them to quickly scan through it or have it printed out.
Step 4: Write a List of Comparable
Concluding this step will introduce investors to your venture, inform them of your market, and show them why you are a “fit” for their portfolio.
Step 5: Give your company’s description
This is the first section that investors see. The description should be brief, yet provide enough information for them to understand what your company does and why it’s valuable. The first paragraph should include who your target audience is and why your company will solve the problem your customers are experiencing. If you have a strategic overview of how your company works, like Apple’s, include it here too.
Step 6: Explain how you’ll solve your customers’ problems
This is where you should explain how your product or service helps your customers. Explain very clearly how your product or service helps your customers. Highlight your unique value proposition and how it sets your product or service apart from the rest.
Step 7: Show the market research behind your business
Market research is one of the most important parts of an investor proposal. Market research is the hardest part of writing an investor proposal. You need to show them the research that proves the market for your product is ready for you to sell your product. You need to show them the results of your market research to get a better understanding of the market. In fact, research is always one of the most important parts of writing an investor proposal.
Step 8: Competitor analysis
If you are the first to market, then you will not have any competition. However, once you’re competing against someone, the math begins to work against you. Before you launch, make sure you’ve done enough competitive analysis to make a reasonable guess as to the price point at which you could secure investment. If you’re trying to convince investors of your valuation range, the best thing you can do is validate that your numbers make sense by doing simple reverse-engineering.
Step 9: Provide context for the investors
When you write an investor proposal, you need to show investors why you are a great product or service. You can’t write a pitch without first giving context. You need to show them that your product is a great idea and why they should invest in you.
Step 10: State how much is your request for funding
You need to disclose your funding request to make sure that if you receive funding, you get it for the amount that you want. To make sure that you get the amount of money that you need, it is important to disclose your funding request. If you do not make this information publicly available, then there is a chance that you will not be given the exact amount of funds that you are requesting.
Step 11: Clarify who you are speaking with
In some cases, the investors will be potential investors, which is great! In other cases, they’ll be representatives of the VC firms. These people may be executives or fund managers, depending on the size of your firm. You need to personalize your investor proposal according to your audience, and for that, you need to know your investors properly.
Step 12: Have the right balance of incentives
Your objective is to get funding. However, it’s also in the investors’ best interest to make sure that your company is successful. In your investor proposal, you should maintain this right balance.
Step 13: Define the timeline of how you will use the funds
In a competitive situation, investors are looking for a great return on investment in the short term. When you write an investor proposal, you should define set up a time frame for how long you plan to use that money. You should then take into account how much of your startup budget you will need and if it can be done in a timeframe of your choosing.
Step 14: Make your case
After you’ve written down all of your details, you need to show how you will use the money. It’s your job to convince the investor that your plan will work. But investors don’t really care how you will use the money. If you haven’t already, ask yourself these questions:
- Will this money solve a problem?
- Will this money allow my company to scale faster?
- Will this money allow us to grow to profitability faster?
- How do we plan to reach these goals?
Remember, your goal is to persuade the investor that your plan is working and that he should invest.
Step 15: Financial projections
Financial projections are a list of estimates and assumptions about all the expected future financial activity of a business. It is also commonly known as a pro forma forecast or forecasted statement of income and cash flows.
These projections show the startup’s anticipated monthly, quarterly, and yearly income statements; balance sheets; and statements of retained earnings, as well as one-time events such as raising debt or equity financing.
For startups with access to investment capital, this is often used to make their pitch more attractive to potential investors.
Step 16: Write a detailed business plan
The business plan is the blueprint for the startup. It is the basis on which investors evaluate you and it is also the essential document that you’ll have to present to them. It will help investors understand how you plan to run your business when you will start and what the key milestones are.
Step 17: Prepare a pitch deck
If you want to impress the entrepreneur you’re pitching, use slides instead of talking. The pitch deck is an essential part of the investor proposal. It gives an overview of the business, its mission, its value proposition and what investors can expect from an investment. This article is specifically for tech startups.
Are you ready to write an investor plan?
In short, when pitching to investors, you want to articulate in your investor proposal that you have a great product in a market with a large amount of competition. You do not need to be in the top spot, but you want to be in the top 3. When you demonstrate that you have a clear plan for execution in your investor proposal, you will be able to show how your business will be profitable. Once you can get your business investor-ready, get ready to stand out from the rest.