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Lauton U: How to Put Together a Funding Package That Will Get Investors Excited About Your Project - The Basics (Part II)

Topic: Financial LiteracyPublished September 3, 2009

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In Part I, we discussed those components that are found in great funding packages.rnWe covered the key features of the Business Plan, Executive Summary, Proforma and the Resumes of Principals. We also discussed how to make them stronger and more compelling to investors.rnToday we will conclude our discussion on this topic by covering these remaining areas: 5. Breakdown of funds already invested in the project rn6. Detailed use of funds rn7. Comprehensive Exit Strategy rn8. Relevant Intake Form V. Breakdown of funds already invested in the project Investors are always interested in seeing where your level of commitment stands. The most effective way of demonstrating this is in detailing how much of your ownmoney you’ve risked in the project.rnA word of caution here: Nothing will douse an investor’s enthusiasm for your project faster than finding out that you don’t have any skin in the game.rnTheir thinking here is, “How great can this project really be if you’re not willing to risk your any of your own money?”rnDespite what some may think, investors are not guinea pigs. They are not interested in testing your ideas with their money. That is not how it works.rnBe as detailed as possible here. Explain the level of progress achieved so far with your initial investment. If there were setbacks, describe them and what you have done to overcome them. This builds trust in your leadership and further demonstrates how passionate and committed you are to the success of your project. Besides, shrewd investors will always ask you about this somewhere down the line. Rather than try to bury any missteps along the way, be honest and straightforward. VI. Detailed use of funds Investors want to know, down to the penny, what you plan on doing with their money. Present them with a detailed list of the following and, where necessary, tabulate the information in terms of weeks, months and years. • Capital expendituresrno Property – land, building(s)rno Machinery and equipmentrno Other fixed assetsrn• Non- Capital Expensesrno Pre-operational expenses – Studies, marketing, research, legal expenses etc.rno Production and related expensesrno Selling and distribution costsrno Administration and maintenance costs Such clarity and detail will be welcomed by your potential investors.rnTo score additional points with them, look into the costs of business operations similar to yours. Then you can show how your operation improves upon that level of performance and efficiency. This will demonstrate to our funding partners that you have considered your competition’s role in your venture and are ready, willing and able to compete effectively against them. rnVII. Comprehensive Exit Strategy Having a strong exit strategy is paramount. It needs to be clear to your prospective investors that you not only have a way for them to come in, but also have a solid strategy to get them out. This could be anything from refinancing your project to a full scale Initial Public Offering (IPO).rnBear in mind, however, that investors will look to see how viable your exit strategy really is. If yours isn’t rock-solid they won’t give your project another thought.rnA great way to demonstrate the viability of your exit strategy is by highlighting market demand for your product, service or solution. The stronger the demand, the more reasonable it will be in your potential investor’s mind that there is a profitable future for your venture. This will help potential investors feel more secure in your exit strategy.rnAs the old saying goes, “money talks”; more so than usual when it comes to investors. So, the perfect way to establish confidence in your market demand is with pre-sales, pre-leases, contracts with deposits and the like. rnShowing prospective investors that you have clients that are already committed to buying your product, service or solution will convey to your potential funding partners, in a very powerful way, that you have something real to offer. VIII. Relevant Intake Form These are available on our online submission platform after you register. They serve to give our funding sources a quick snapshot of all of the key aspects of your project. Our funding sources use them to quickly determine whether they would be interested in taking a closer look at your deal. As noted earlier, the funding sources you will be approaching look at hundreds upon hundreds of projects every single day. So you can be sure they won’t read through your project package until they have first reviewed your Intake Form.rnAnd there you have it. We hope that this run through has made it clear in your mind how you need to put a project package together that will get investors as excited about your project as you are. rnFor more information or supportrnBefore you complete your investor package, take time to also read Top 7 Ways to NOTGet Commercial Funding - Part 1 and Part 2. These will give you a clear sense of what investors expect from you and what turn-offs to avoid. rnFeel free to contact us if you need any help in putting together your investor package. Your success is our success and we are ready to help ensure yours any way we can. When you are ready to submit your funding package just register it on our site. You will be able to submit all of your documents and prepare the relevant Intake Form.rnYou will only be able to log into your account once we have activated it. So take time to follow all of the steps indicated very carefully. You’ll have access to live tech support by calling 646.417.5302. You can also check out our FAQs for more information on solving any issues you encounter.

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