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Financing Your Growing Business – Part 2 – The Investment Proposal

January 12, 2011 - Tags: Financing

Shutterstock 9521440This is the second post in a three-part series this week on how to obtain private sector funding for your growing business.

To develop a strategy designed to attract potential investors to provide growth capital for your business, you will want to focus on their requirements. Investors tend to look for businesses with good potential for growth to ensure an excellent return on investment and smooth access to their money when the time comes.

Potential investors may want to see:

  • A situation analysis that shows internal strengths and weaknesses, as well as any external opportunities and threats that your business faces
  • A valuation that measures return on investment or the difference between what your business is worth today and its future worth. Expert advice can help here.
  • An exit strategy that allows them to get their money out of your company

To attract the interest of investors, a compelling investment proposal is important. Your business plan is for internal use, but the investment proposal is a vehicle to sell your ideas and raise funds. Your proposal works as a pitch and details:

  • The nature of your business
  • Its history and potential for growth
  • Your objectives and the funding needed to attain them
  • The offered collateral
  • The repayment strategy.

Tips on writing an investment proposal include:

  • Use the correct investment terminology to build credibility; do your research.
  • Show your idea's value and how it makes money; be convincing.
  • Keep it simple by opting for clarity over jargon or too many technical terms.
  • Be clear about your funding needs: where is the money going?
  • Only include information that is relevant to the proposal.
  • End with a strong call to action; let the reader know what steps come next.

What value does your proposal hold for investors? Why should they invest in your business over others? See our section on the Investment Proposal for details on what yours should include and how to write one that is effective.

We'll discuss the next step, negotiating with investors and working through the deal, in our upcoming blog post. In the meantime, visit our section on Grants and financing for more information on Accessing equity financing.

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