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

You could have a great idea for a new startup. You may be planning to buy into a business with a great profit potential. You may have an established business that requires additional funds to take it to the next level or a sensational project that you could get off the ground if you just had enough capital for it.

If you’re like most of the clients that work with us, you are brimming with excitement over your new plans and are looking for a way to get the right investors excited about it too. You know that project funding does not come easily, especially in today’s risk averse environment. To make it worse, you are competing with hundreds, if not thousands, of other business owners who are also looking to raise capital for their projects. Your greatest fear is that you might become a victim of that ancient Mongolian curse, "May you have a great idea and not be able to convince anyone of it!"

We understand all of these challenges. This is precisely why we have decided to put together a series of posts that will address the key to your success – a project package that will get funding sources fired up about your venture.

Today we will just be covering the basics; those components of a strong, attractive project package that are a must, regardless of the nature of your enterprise. Future posts will elaborate on those parts that are specific to startups, development projects, existing companies, the acquisition of an existing company and the acquisition or refinancing of income producing properties.
Components of a Funding Package for Investors and Lenders
Whatever your business idea is, the funding package you prepare for investors or lenders has to contain the following:

1. Business Plan
2. Executive Summary
3. Proforma
4. Resumes of Principals
5. Breakdown of funds already invested in the project
6. Detailed use of funds
7. Comprehensive Exit Strategy
8. Relevant Intake Form

Let’s look at the first four components and what each of these needs to accomplish and how to make it happen. We’ll finish up with the last four in our next post.I. Your Business Plan

As the principal of your project, you have created a vision of where you want to take it. But, as Vance Havner would tell you, “the vision must be followed by the venture. It is not enough to stare up the steps – we must step up the stairs.” Your business plan is your very first step.
Potential investors are looking to ally themselves with action oriented companies. Your business plan is not merely a document you need in order to convince funding partners about the feasibility and attractiveness of your project. It is your opportunity to show them that you are a serious, practical and knowledgeable leader who is committed to achieving success in your endeavor no matter what it takes.
Because of this, even if you hire consultants to compose your business plan on your behalf, you need to be closely involved in every aspect of its preparation. You need to ensure it articulates your vision with energy and accuracy. To guarantee your business plan does exactly that, we encourage you to review a previous article we put together that goes deeper into this subject: Fundamentals of a Well Written Business Plan.

II. Executive Summary

Consider the executive summary as the opening paragraph of a novel. Or the first few minutes of a thriller. The job of the executive summary is to grab a potential investor’s attention and to intensify their interest in your project. If the executive summary is drafted in the right way, an investor will feel compelled to go through the rest of your funding package as well.
To start, your executive summary needs to contain a clear, concise description of your project. This should be done, whenever possible, in just a few short sentences. Remember your goal here is to whet their appetites and leave them wanting more.
With that taken care of, proceed to the heart of your executive summary. Here, you will address the following core issues:

• What milestones have been accomplished thus far?
• What is the profit potential?
• What are the risks involved?
• How strong is market demand for your product, service or solution?
• How much has been invested to date?
• How much is needed and how will it be spent?
• What is your exit? (more on that in our next post)

Your closing paragraph needs to demonstrate to your potential investors why it makes perfect sense for them to participate in your venture right now. Make sure everything you claim is backed by hard facts.III. Proforma

Your Proforma is a compilation of financial statements that have one or more assumptions or hypothetical conditions built into its data. You will hear this term used together with balance sheets and income statements.
You will be asked to provide the following:
• Income statement
• Balance sheet
• Cash flow statement
• Description of the assumptions made to arrive at the projected figures
Your income statements will give investors an idea of the income, expenses, and net profit for a given period. The balance sheet is a snapshot of the assets and liabilities your business has. The cash flow statement shows the source of monies coming in and how they are being expended.

IV. Resumes of Principals

Here you will provide a summary of all of your related skills sets, talents and experience as well as a list of successful past ventures.
Your resume and that of your team can make or break your project. Investors are looking for a proven track record of success. However, this doesn’t have to always fall squarely on you. Just make sure you have brought in the right talent to make up for any shortcomings in your resume.
Your goal here is to demonstrate that you have a dynamic team in place that is more than capable of seeing this project through to the very end.

In Our Next Post
That covers today’s half. Don’t forget to join us next time where we’ll discuss the last four aspects of a basic project package.
You will find more keen insights in our articles on Top 7 Ways to NOT Get Commercial Funding - Part 1 and Part 2. Proceed without reading them at your own peril!
For More Information or Support
Feel free to contact us if you need any help in putting together your investor package. After all, your success is our success.

When you are ready to submit your funding package register it on our web site. You will be able to submit all of your documents and prepare the Relevant Intake Form.Please note that you will only be able to log into your account once we have activated it. So 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.