The documents you need to approach investors

The documents you need to approach investors Valithea AdvisoryStartups and SMEs alike are often clueless as to what documents and information are needed to approach investors.

These documents vary depending on the purpose (whether you’re looking to give away minority shares, to receive a loan or to sell your company) and on the type of investor that you’re approaching (VCs and other institutional investors, business angels, strategic investors).

Also, when companies require a business plan for internal planning purposes, or to introduce the business to a potential business partner, the document will look quite different in some sections compared to a business plan that you would send to an investor: the latter is a sales document and all information included should be adjusted for that purpose.

Generally, SMEs are able to hire consultants to prepare professional documents – usually a blind teaser (omitting the name of the company and with no recognisable information) and an information memorandum with detailed information on the company, history and financial transaction sought.

Startups, on the other hand, draw up their documents without much external help, they may outsource some work but they cannot purchase the whole advisory package: they need to know what documents they need, or can benefit from, before outsourcing any activity. In order of importance, these are your business plan, pitch deck, and investment teaser.

All startups start compiling a business plan early-on, because they know that in many cases it is fundamental to have one to receive an investment. However, what is often forgotten is that the purpose of it is to sell your company, covering all the points with basic information just to have it ‘done’, does not bring you very far. As a startup founder, you need to motivate the receiver to invest in you, just showing that you have an average company and that it can somehow be profitable is not sufficient. Even better if the business plan is interesting to read, stick to an easy to read document around 25-30 pages.

More importantly, you should get the investor to open your business plan. As much as your product may be interesting, investors have limited time and receive a lot of requests. You should give them a reason to spend time on your business plan. If you have not met the investor before or have not been introduced, you may decide to send an email to a general address, which is often the case with institutional investors. Here you should include your elevator pitch, so craft your message to the investor in a way that presents your product, company, traction, team and potential in a short and effective way. Tell the investor why you are contacting them specifically, maybe referring to their past experience and investments: they would appreciate the attention.

Still, before looking at your business plan, they might want to read your pitch deck, which summarises your business concept and milestones in 10-15 slides. The pitch deck should be simple, focused on key information and sell the upside potential of your business. This is also a presentation that you can use if you decide to pitch at startup events.

You may not always need a teaser: this is also a short summary between 2-4 pages that explains the key features of your startup in a beautifully crafted document. You may use it instead of a pitch deck in an email, upload it on your website, or print it out to hand to potentially interested parties at a startup event.

Especially if you are sending information about your business to an investor that has never heard of you, your introduction should be of top quality and should get their attention. Otherwise your business plan or even your pitch deck will not even be looked at. An introduction can go a long way, it draws some attention on the part of the investor and more consideration for the materials that you send – but how important this is depends on the investor – and you will still need to sell your company as a good investment.


Featured image: Jochen Höller, The Boom, 2015, Mario Mauroner Contemporary Art, Vienna

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