The extended slide deck and business proposal will expand upon the information that the investor already has seen in your earlier short form deck. It should provide additional, more detailed information to allow the investor to decide whether or not to progress the idea to due diligence. Due Diligence is where they will test out all of the information to verify facts stated, examine the risks involved and further influence their decision on whether to invest or not.
Similar to the short form slide deck, we get asked to provide a template and again there are no magic templates that will guarantee success. And remember, all businesses are different. Investors are different too, so what interests one may not interest another.
The slide deck and business proposal should be a medium for you to further sell your idea to the investor. It should provide detailed information, but most of all should excite the investor and encourage them to want to progress the file to the due diligence stage.
Here are some of the topics that should be considered when preparing your extended deck and business proposal. It could again be the case that not all are relevant to your business; pick out the ones that might be useful to you.
Preparation and getting your business proposal right
You have the choice between uploading an extended slide deck or a business plan. Either way, you have to make sure the information is easy to read. For the extended slide deck, make sure that the graphics reflect the message being sent and that the text is relevant to that slide. For a written business plan, include headings, paragraphs, tables and graphs if appropriate. You must attempt to keep the reader interested throughout the whole of the reading.
Try to avoid the use of industry jargon – not all readers of the proposal are as conversant with industry language as you are. Avoid the use of acronyms without first explaining what they stand for. Do you know what a PIP is?
It's a Programme Implementation Plan, but you could possibly have been guessing for ages if you hadn't been told. Small things like that frustrate a reader. Try not to do that!
What is the purpose of your business proposal? Is it primarily to raise finance? What type of finance? If it's equity then you should tailor the output to an investor's point of view, i.e. a return on their investment after a period of programmed development and a sale to maximise their investment – usually via a trade sale for cash.
If you are using the slide deck or business plan to approach a lending institution (bank) for funds then you need to tailor the information slightly differently – they are interested in the business's ability to repay. You should prepare the information with this in mind.
An investor may have to see a lot of decks and read a lot of business plans. The more concise and to the point that a proposal is the better. The deck or plan should only serve to get you, the promoter, in front of an investor to make your pitch for funds in person!
For the extended slide deck, make sure the first slide sets the tone with the most relevant five or six points included. It should contain all of the information that you would want to convey if you only had one slide on show. This can also be used as a holding slide at the end of the deck.
Make sure that your executive summary (the most important part of the plan) is no longer than 2-3 pages and that the whole plan is less than 25 pages using a font size 12. Oh, and don't use the executive summary to introduce new ideas – they should have been addressed in the main body of the text. Write the executive summary last.
Make sure that what you say in the proposal is correct. Use your prior trading experience, provide external data and research results to back up what you say.
Don't fall into the old trap of overstating the size of the market. When estimating the size of the market, if you achieved 100% of the market sales would your turnover be what you claim the market size to be? Really?
Also don't fall into the "we'll achieve 5% of the global market" trap. How are you going to do this? That's what the reader wants to know!
Don't rush the job. If it is prepared in a hurry, it will look like it has been! Get it ready and then leave it alone for a few days before revisiting it. Get someone else to look at it – it's amazing what a second pair of non-industry eyes will do!
Often, promoters will look at the first draft of their slide deck or business plan after a year or so and be amazed how amateurish it looks. Your first attempt will probably be the same! Don't be put off, everything can be improved with a bit of work.
Try to attract the investor's attention
Detail the strengths of the business. Explain how your business idea will benefit the investor.
List the key strengths of the business in relation to the competition. What makes your business different from all the others?
Do you have a key selling point that differentiates you from the competition? State it!
Who are the key people in the business? If there are only one or two, that's fine. An investor will want to see that you recognise that there are gaps in the company and that you plan to do something about that in future.
Do you have any external advisers that can sit on the board? Let the investor know about this in the plan. Tell the investor what experience that the management team has, especially their experience in starting up new businesses, if any.
Any photos of the team members should look similar in format.
Remember investors invest in good people.
A common failing in a business plan is to concentrate on the product. This is because the promoter is comfortable talking about the product that they know all about. You have to get out of the comfort zone and identify the need that your product addresses.
An investor will, of course, want to know what the product is, but it would be better to describe the benefits of the product. Sell the sizzle, not the steak! Identify why the product is stronger than what's currently out there!
Have you considered all the risks to the business? Will you be able to cope if a competitor reacts to your new product by say, dropping their prices? Remember investors expect there to be risks.
A risk identified is a risk that can be managed. Have all the regulatory approvals been set in place? Is there Intellectual Property issues?
Investors are usually impressed by a management team that recognise key risks, identify ways to mitigate the risks and address them in the business proposal.
Put real achievable milestones into the business case. If you plan to hire someone to carry out sales and marketing, then state when you hope to achieve this by.
An investor will look favourably on a proposal that has clearly defined stages of development. However, it's important to act on these milestones and not just put them in for the sake of it.
There are usually three ways in which an investor can realize their investment – Initial Public Offer (IPO) – sale of shares on the open market, a buy back of own shares and a trade sale for cash. Investors usually will want to see a trade sale for cash stated in the business plan as it's the easiest and quickest way for them to see their return realised.
There may be regulations associated with an IPO and there will be a conflict of company valuation with share buyback (the investor will want a high value and the company will want a low value) so the best policy is to state the aim of a trade sale for cash.
Getting the financials right
If your company has been trading, include the accounts in the financial appendices. If you have taken advice on preparation of the financials, make sure that you understand the numbers. Include projections, but be realistic about them. Don't forget to state the assumptions used in the projections.
The first year should be set out monthly and the next few years (2-5 years) quarterly or annually. Include a cash flow statement as this will enable an investor to get a feel for the level of cash burn and the maximum funding requirements.
Make sure that the financials add up! State what the breakeven point of the business will be.
Bringing the product to market
Traditionally, the weakest sections of any business proposal are the marketing section and the route to market. Will there be a pilot scheme to win initial customers? Will there be direct or indirect sales? Are there license issues? Can the product / service be franchised? How is the product going to be promoted? Who are the key customers and how are you going to get them to take your product as opposed to another? Will there be incentives?
Set out the pricing and discount plans.
Don't forget to address the possibility that competitors may react to your product. Take a good deal of time with this section.
The business proposal needs to address the amount of funding required to bring the product to market and to state the amount of equity actually being sought.
Funds that have already been secured to date should be outlined. Will there be a further round of funding sought? Don't forget to build in an element of headroom. And remember to state what the funds will actually be used for.
If you have any questions about Seedcorn eligibility or rules, or InterTradeIreland funding services in general, please get in touch.
Connor Sweeney will handle your enquiry. You can get in touch directly by email firstname.lastname@example.org, by phone 028 3083 4113, or by using the form below.