The 12 Commandments to Follow When Introducing Investors

In business, as in everything else, communication is key. If you want to give your project the best chance of obtaining financing, there are certain key points that I like to call the 12 financing commandments that you must follow, questions that you must answer even before your investors do. If you present them clearly and concisely, you will have a spectacular presentation.

1) Who is the applicant (legal name, either you or your company or the company that will be created specifically for this project) and exact location (full postal address and full contact details)

2) The ownership of the company must be crystal clear and if the company is controlled by a holding company: who are the directors of the holding? Investors should know who the people behind the corporation are, along with full contact details.

3) Brief description of your project (maximum 10 lines)

4) Detailed project cost (no fancy graphics needed, just tell it like it is)

5) Cash invested by directors (ie you or partners in the project)? Do you have “skin in the game” and if you don’t bring cash, what do you bring and what is the value of what you bring (a patent, for example, can be worth much more than cash)

6) Do you have extra cash that you can invest or are you completely broke after investing your first money? (Don’t lie, they’ll find out. Tell it like it is)

7) In addition to the money you have invested, what is the “as is” real value of your project if you sold it tomorrow?

8) How much money are you looking for and under what structure (debt only, equity only, or a combination of each?)

Note: make sure your numbers add up if you are looking for an equity partner. If you say that your project is worth $ 1 million and you are looking for $ 5 million and you say that the investment will be worth 20% of your company, your calculations do not add up and that will make you look greedy, and like someone who failed. from math class in high school.

The deal offered has to make sense.

Same reasoning: If you declare a value of $ 1 million for your project and want to borrow $ 5 million, what will your investor’s guarantee be to cover the $ 4 million gap?

9) You need to present a detailed use of funds and a disbursement schedule, which once again has to make sense. If you are requesting $ 100 million to build a hotel, you will not need the lender / investor to deposit $ 100 million into the bank account in a one-time deal (a good dream, isn’t it?), But rather the lender / The investor will match the financing disbursement with the construction (implementation) of the project.
The same reasoning applies to all other types of projects.

10) Exit strategy. You need to be very clear about repayment of advances (either equity or debt) and you need to back it up with very strong supporting documents! (in any case, you must submit a detailed and professionally prepared business plan)

11) Clearly and logically define the strengths and weaknesses of the project (maximum 5 lines). Again, honesty is the best policy. If your investors find you lying about your project’s weaknesses, you won’t get a second chance to present it.

12) Finally, what is your experience (as promoter of this project) in the business line related to the project; Are you going to start a company that you know nothing about and hope to ‘make it work’ or are you a professional in your industry and you know what you are talking about?

Sometimes we are tempted to hide the downsides of a project, or at least minimize them, but that will work against you. Rather, if you clearly present your project and everything related to it and make investors understand that you know the risks and are ready for them, that will make you seem like a much stronger candidate. These 12 commandments can be broken down and used in most other types of presentation, whether it is for the expansion of a company, the presentation of a new business idea or even the presentation of the position and vision of the future of a company. .