What Do Investors Look For In A Business Investment Proposal Plan?

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By Tyra Delos Reyes

You have a unique idea, a prototype, or maybe even some solid revenue forecasts to show that it’s only clear skies ahead. 

And yet that’s not always enough. Investors see hundreds, if not thousands, of proposals every year. 

Most proposal writers give advice from the POV of the business owner, but this time we talk about what it’s like to be on the other side of the table. 

So what do investors actually look for in an investment proposal plan? 

  • A solid leadership team with proven expertise or credibility in their roles
  • Clear investment incentives
  • Transparent financials
  • Proposals that have clear strategies for navigating the market

Key investor considerations, according to investors and founders

Proposal writing is very much a selling game. And just like any pitch, you want to know who you’re talking to in order to tick all their boxes. 

Here are some questions investors ask themselves before taking a bet on someone: 

What does the leadership team look like? 

Sanjay Reddy, co-founding partner of Unlock Venture Partners, says that “Ethics and [the] drive of the founder or management team are more important than anything else.”

This is especially true for early-stage companies seeking funding at the seed stage, where there aren’t tons of financials to represent the business’ success. 

So how do you show investors you have skin in the game? 

  • Talk about previous wins. Bonus points if they’re in the same industry or category your investment proposal is about. You want to show investors that you have experience scaling or growing businesses in this field. 
  • Talk about why you’re doing the business–why are you personally invested in this business? 
  • Showcase that you’re the most qualified person by listing years of experience in the field, successful projects you’ve launched, or relevant roles that demonstrate your expertise.

Sanjay says an “investment-worthy” entrepreneur is someone who “[has] a true belief in their company and determination to deliver a big outcome.”

Nailing down those financials and having a solid exit strategy is crucial, but don’t underestimate the power of sharing your passion too. 

At the end of the day, Investors invest in people first, businesses second.

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Does this investment have growth potential? 

You’ve probably heard the phrase: “If a company isn’t growing, it’s dying.”

From an investor’s POV, it’s a major sign of how sustainable (and ultimately, profitable) a company is. 

Without clear indications for growth, a business can fall behind competitors or struggle to keep up with market changes.

How do you show investors that your business has growth potential? 

  • Proof of consumer interest: Nothing pulls in an investor quicker than a battle tested business idea. Already have your first round of users or customers? Make sure to include them to show that there are people who actually want your product or service.
  • Traction and validation: Include sales figures and any notable upwards trends in sales growth. Your goal is to highlight that this business has a healthy, recurring revenue stream. 
  • Growth trends in the industry: Use stats, studies, and competitor analysis to demonstrate that this is a growing industry–and that you’re inviting them to ride the next wave. 
  • Scalability: You’ve got growth targets, how do you make them bigger each year? Your goal is to demonstrate that their return on investment just gets better overtime.
  • Total addressable market: The TAM provides a snapshot of the maximum possible revenue. A large TAM = significant growth potential, which is incredibly compelling for investors.

How is my investment going to be used and when do I get ROI?

Naturally, investors are going to be paying close attention to how you’ll be using their money–and what that means for them in the future. 

Financial projections vary depending on the company’s stage. It might look something like:  

Early Stage

At this stage, financial projections are largely speculative and based primarily on market research and competitors. You want to include: 

  • Initial costs
  • Burn rate aka how quickly will the capital be spent before generating revenue
  • Revenue forecasts (sales, profit margin)
  • Break-even analysis to show when the business might start turning a profit, given the speculative revenue

Growth Stage

At this point, your financial projections start getting really specific and rooted in the nitty-gritty details of your day-to-day operations. Talk about:

  • Traction and validation
  • Revenue projection: what’s the average customer lifetime value? Are you exploring new initiatives to increase that?
  • Cost of scaling: are you going to scale by increasing production, breaking into new markets, or leveraging smarter hiring choices? 
  • Profitability trends: are your predicted profit margins behaving as predicted? How is this projected to change by the next funding cycle? 

Decline / Revitalization Stage

The business has reached its peak and is starting to plateau. At this stage, investors care about seeing:

  • Plans for restructuring costs (reallocating resources or deprioritizing less profitable initiatives)
  • Plans for diversifying revenue (launching a new product, exploring a new market)
  • Reflection on growth and strategies moving forward: what didn’t work before and how are you going to pivot from here? 

What milestones are you going to hit, and when? 

For early-stage companies, startup founder Brettt Poltzker advises new business owners to “list other benchmarks you will achieve in lieu of revenue.” 

In other words, you’re providing investors with clear incentives when revenue isn’t on the table yet. You could talk about: 

  • Working towards securing a % of the TAM
  • Meeting customer engagement and brand awareness metrics 
  • Developing key partnerships and relationships in the industry 
  • Launching a competitive new product or offering 

Does this proposal include contingency plans and a deep-dive into strategy? 

An investment proposal is a multipronged approach, and sometimes business owners “risk not having a broad enough lens to view all of the dimensions that their startup will exist in”, says Nancy Pfund, managing partner at DBL Partners. 

No one can predict the future, but a strong investment proposal should address how the leadership team plans to navigate risks and market changes. 

That means answering questions like: 

  • How are you going to adapt to new features, products, or services from more mature competitors? 
  • How is your business going to stay afloat when you’re hit with unforeseen costs or economic downturns? 
  • What’s your plan if new tech completely disrupts your sector? Is there a likelihood of this happening before reaching the maturation stage? 
  • What’s your go-to-market strategy to compete with competitors who already have a strong foothold in the market? 

How financially stable and liquid is this existing business? 

Ramiro Atristain-Carrion,seasoned CFO and investor, puts a big emphasis on transparent reporting because it paints a clear picture of the business’s cash flow. 

This transparency isn’t just for show; it’s crucial for understanding how well a business can meet its short-term obligations. 

What to include in financial projections for an investment proposal:

  • Costs, including operating costs (marketing, hiring, R&D/L&D costs)
  • Profit and loss account, which illustrates the revenue-to-cost ratio to reveal the net and gross profit
  • Cash flow statement to show how easy (or not) it is for the business to get access to its funds 
  • Revenue forecasts based on either historical or speculative revenue. Include an analysis on how changes in market trends can affect your profit margins

What to include in a business investment proposal?

  • Executive summary: What are the core elements of your business, and why should someone invest? This section should outline the company’s mission, current status, and the specific investment you’re seeking.
  • Business model: How does your business function and generate revenue? Describe your business model, detailing the key operational processes and your main revenue streams. 
  • Competitive landscape and market analysis: Who are your main competitors, and what does the market landscape look like? Specifically discuss differentiation opportunities and gaps that you can fill in the market. 
  • Unique value proposition: This section should answer why customers choose you over others and how you plan to maintain this competitive edge. Use customer surveys and interviews to drive the point home.
  • Traction and future strategies: Include key metrics like sales figures, customer acquisition rates, and any notable milestones. This de-risks you in the eye of investors. 
  • Revenue model: Explain your revenue model, detailing the different sources of income and how you plan to increase profitability. This section should cover pricing strategies, sales tactics, and any plans for diversifying income streams. Include this section even if you’re an early-stage startup; it’s fine to include speculative figures. 
  • The leadership team: Discuss how the leadership team’s backgrounds, expertise, and roles contribute to the success of the company. 
  • Reason for seeking investment: What specific outcomes do you envision from the proposed investment? Include a table to illustrate how you’ll be allocating the investment funds. Provide a timeline of when investors can expect ROI. 

Investment proposal vs business proposal: what’s the difference?

Investment proposals are focused on providing detailed information on the financial aspects of the business to attract investors–whether historical or speculative in nature. The goal of the investment proposal is to convince investors that the business is profitable and has tons of room for growth.

On the other hand, business proposals often focus on the problem-solution fit. There’s less focus on the financials and more attention to processes, project cost, and scope. The goal of the business proposal is to secure a business agreement, whether that’s a partnership or a sale. 

Pitch like an investor 

At the end of the day, you know your business’ strengths and weaknesses. Chances are, investors do too. 

Instead of resorting to inflated predictions or removing key areas altogether, consider just presenting your story as it is. De-risk yourself by showing that you’re completely aware of where you stand, and that you have a plan for moving forward. 

Download our free investment proposal templates to get started. Join the waitlist to get 30-day free access to our proposal software. 

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