Investment project business plan
What are investors paying attention to?
To come up with an idea to start your own business, to assemble a team of enthusiasts and release a prototype of a product is not an easy task. But all this is still a flower compared to finding an investor and trying to convince him to invest in your project.
But it is quite possible to cope with this, if you correctly draw up a business plan and present the project in a favorable light. How to do it? It is enough to be aware of what exactly investors want to know about you and your company.
What is interesting for the investor?
It is very important to present the company as a whole to the investor. The main issues that need to be addressed to the investor in the classic version have the following structure:
– The problem,
– Solution and product,
– The market,
– Business model,
– Achievements at the moment,
– Why do we need investments,
– Investment size,
– Possibilities of prospective exit and ROI.
Moreover, for younger companies where the product is not yet available, the team is of key importance, it can be presented immediately after the product, the third paragraph. In the presentation of the team, in addition to expert areas, it is important to show coherence, experience of previous projects together and “emotional involvement” in the project – it is great if the founders have a personal story that motivated them to solve the problem. This may be a professional experience, or it may be a problem that the founder, his friends or close people in life encountered.
If the team has already attracted investment, it is important to present the results and achievements, traction for the previous months rather early. In Russia and Eastern Europe, in general, it makes sense to focus on revenue indicators (even if they are achieved by additional, one-time projects in manual mode, which can then be automated), in the USA and England it makes sense to focus on the rapid growth of users and project scalability.
The main mistake to avoid is a story mainly or only about the product.
Entrepreneurs always love their product, strive to talk about it in as much detail as possible, but it is important, if not more important, for an investor to understand the team, market and ways to monetize the product.
Investors generally understand that a product or idea is only a small part of what makes up a good company. Persistent execution, a smart team and a competent business model are much more important.
It is very useful to have a Twitter Pitch of the product – a product description in 140 characters, this is useful in a spontaneous meeting with the investor.
There is such a thing as investor-readiness, which includes both a well-developed presentation and a deep understanding of the founders of the financial model and plans of the company, the ability to say what investments will bring and operate with numbers, as well as the validity of hypotheses. In particular, about the size of the market and planned market share (how do we achieve these numbers?).
You need to understand the assessment of the company now and at the time of the proposed exit, but they do not need to be included in the presentation, but be prepared to answer this question and justify the assessment. The assessment justification can be either a financial model, or a comparison with similar companies in the industry, or the opinion of an expert or investor who has already invested in the company.
The length of the presentation varies from 1 minute (investor speed dating, pitching events) to 20 minutes (meeting in the investor’s office), you need to be able to tell all the main things without going into details, arouse interest, and leave the rest to questions. Complex questions need to be accumulated; over time, the base of answers that work best is accumulated.
An excellent solution is to start the answer with the words: “this is a very good question.” They give you the opportunity to think, and the investor will be pleased that he asked the right, relevant question, and what you thought about him.
“Do not be late or reschedule the meeting,” many investors are surprised at how many transfers are taking place, despite the fact that you need this meeting, first of all;
– Find out in advance the composition of the participants, their interests, professional experience and previous investments, this will help both to maintain a conversation and answer questions, and suggest why this investor is interested in what kind of synergy with his portfolio projects; investors will definitely appreciate it;
– In a technological project – take a service station or a co-founder with you, you will look much more professional if the investor has a technical background;
– This is no longer a new topic, but you should not ask the investor to sign a confidentiality agreement before presenting or sending a business model. The value of the idea is so small, and the cost of legal work for investors is so high that such a question speaks mainly about the small amount of experience with the founders. Most investors have their own code of ethics and will not disseminate your information, even if they invested in a competing project.
If you doubt the honesty of the investor, do not present him your project.