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How do I Write an Investor Proposal?

By Maggie Worth
Updated May 16, 2024
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Businesses and individuals create an investor proposal for one purpose: to elicit investments, usually monetary, from one or more parties. Writing a successful investor proposal is largely a matter of understanding your audience and addressing the concerns and questions it is most likely to have. The proposal is generally written in sections, beginning with high-level summary information and progressing to detailed plan sections. The overall intent is to secure investor confidence and, thereby, investor dollars.

A standard investor proposal usually begins with an executive summary that explains why the funds are needed and how they will be used. While start-up companies often need investors to get off the ground, a privately-held company may seek out investors at any stage of its development. For example, a wedding-planning business that has been run from a person's home might need an investor partner in order to open a storefront. Likewise, a restaurant may need investor funding to open a second location in a nearby town. Executive summaries should be brief and contain only high-level information, because supporting details will be provided later in the proposal. Executive summaries should also capture the potential investor's interest and make her want to be part of your business.

The next section of your proposal should be an return-on-investment (ROI) summary because, in most cases, an investor's primary interest is the financial benefit of investment. An ROI summary commonly tells a potential investor how much he has to invest, how much profit his investment is projected to return, and how long he will have to wait, both to recoup his initial investment and to see a profit. Writing this section can be as easy as stating each of these points of interest as a bullet point. As with the executive summary, supporting details will come later.

The investor's second concern will usually be the likelihood of your venture's success. After all, the investor is taking a risk: if your business fails, he will not recoup his money, regardless of your ROI projections. You can address these concerns by writing a comprehensive business plan.

To feel confident about risking his money in a start-up company, the investor will want to know a number of things, such as who your target market is, how many of those individuals are in close proximity to your proposed location, how you plan to reach them, and who your competitors are. He will probably also want to know what your points of competitive differentiation are and what kind of experience you, personally, have that qualifies you to run your business. In an expansion proposal, the investor will also want to know how long you have been in business, your company's profit history, the details of your expansion plan, and how you have determined demand for the expansion.

In this expansion description, you should also detail how you intend to cope with any increased labor demands and how you plan to let people know about this growth. You will need to write a business plan section that covers all of these points. It will probably be the longest part of your investor proposal, and may need to be sub-divided into logically-titled sections, such as marketing, target market, competitive analysis.

Finally, the investor will want to see a financial plan that supports the numbers presented in your ROI summary. This plan should spell out all costs associated with running your business, explain your current funding, and detail how investor funds will be used. This section is most often presented in a chart or spreadsheet so that information is easy to find and understand.

Occasionally, you may need to address additional issues. For example, you may encounter an investor that has always wanted to own a flower shop and is glad to finance a second location as long as she can run the new store. In this case, you would need to detail the specific role of the investor in relation to the business as a whole. Also remember to include your contact information so that you can be reached easily.

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Discussion Comments
By TeaPotFreak — On Dec 11, 2012

@anon265420 - I don't think you're alone. I know *a lot* of people with great ideas. But ideas, in many ways, aren't the main parts to a successful business. Implementation is a big part of the process. For financing, you need to do the work to convince someone that you both have a great idea and the wherewithal to bring that great idea to fruition. Have you seen the tv show Shark Tank?

By anon265420 — On May 01, 2012

I am full of business plans and ideas, but its implementation is the problem, as well as the financing. All the ideas that I gathered 14 years ago, I have seen banks and telecommunication industries implement not more than two years ago. I still have more ideas but the implementation and the financing scares me. I need your advice.

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