Steps to Growth Capital Self-Study GuideStep 5

5.2 Why the Investment Proposal Is Important

Without an investment proposal, risk capital investors won't even consider granting you a meeting. They're just too busy. So it's more efficient for them to scan your proposal (along with the dozens of others piling up on their desks) for a worthwhile investment opportunity. That's why you provide them with just enough information to pique their interest and secure that first meeting.

Five Minutes to Make Your Pitch

With many investment opportunities to consider, investors need to size up your company fast — in about five minutes. If you present "the deal" quickly and concisely, and they like it, they'll dig deeper into the document. But you have to hook them in those first few minutes. Otherwise, your proposal will probably be ignored.

Investors will spend less than one minute on each of the areas below.¹ Then they'll probably scan the proposal looking for product literature, graphs, unusual exhibits, samples, letters of recommendation and letters of intent.

What Investors Want to Know

As you begin to prepare the proposal, try to see your document through the investors' eyes. Consider whether you already have company information in written form that you could use to address these investor concerns:

• Characteristics of the Company and the Industry
  
• Terms of the Deal
  
• Balance Sheet
  
• Calibre of the People in the Deal
  
• What's Different About This Deal

Characteristics of the Company and the Industry

Terms of the Deal

Balance Sheet

While the most recent balance sheet exposes facts, and all projected balance sheets are based on hopes, investors will only look at the most recent balance sheet to get answers to these questions:

Calibre of the People in the Deal

What's Different About This Deal

¹ Joseph R. Mancuso, How to Prepare and Present a Business Plan (Englewood Cliffs, New Jersey: Prentice-Hall, Inc., 1983), p. 14 [back]

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