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The 12 Commandments To Follow When Presenting to Investors

February 15, 2012 | Comments: 0 | Views: 151

In business, as in everything else, communication is key. If you want to give your project its best chance at getting funded, there are certain key points that I like to call the 12 Funding Commandments that you must abide by, questions you must answer before even your investor(s) asks. You present these clearly and concisely, you've got yourself a killer Presentation.

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

2) Ownership of the company has to be crystal clear and if the company is controlled by a holding company: who are the principals of the holding? Investors must know who are the individuals behind the corporation, along with full contact details

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

4) Detailed cost of the project (no need for fancy graphs, just tell it like it is)

5) Cash invested by the principals (i.e. you or partners in 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 instance can be worth much more than cash)

6) Do you have additional cash 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) Further to the money you have invested, what is the actual value 'as is where is' of your project if you were to sell 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 figures add up if you're looking for an equity partner. If say your project is worth $1M and you're looking for $5M and say that investment will be worth 20% of your company, your math doesn't add up and that will make you look greedy - and like someone who flunked out of math class in high school.

The deal offered has to make sense.

Same reasoning - if you declare a $1M value for your project and you want to borrow $5M, what will be your investor's collateral to cover the $4M gap?

9) You need to present a detailed use of funds and a schedule of disbursement, which once again has to make sense. If you are applying for $100M to build a hotel, you will not need the lender/ investor to dump $100M into the bank account in a one shot deal (nice dream, though, isn't it?), but rather the lender/ Investor will match the disbursement of the funding to the construction ( implementation) of the project. Same reasoning goes for all other types of projects.

10) Exit Strategy. You need to be crystal clear about the repayment of the advances (whether equity or debt) and you have to back it up with very strong supporting documents! (in any given case you need to submit a detailed and professionally prepared Business Plan)

11) Define clearly and logically the strengths and weaknesses of the project (maximum 5 lines). Again, honesty is the best policy. If your investors catch you in a lie about the weaknesses of your project, you won't get a second chance to present it.

12) Lastly, what is your experience (as promoter of this project) in the line of business related to the project; are you going into a venture you know nothing about and hoping to 'make it work' or are you a professional in your industry and you know what you're talking about?

Sometimes we are tempted to make to hide the downsides of a project, or at least downplay them, but that will work against you. Rather, if you present clearly your project and everything about it and make the investor(s) understand that you know the risks and you're ready for them, that will make you look like a much stronger candidate. These 12 Commandments can be broken down and used in most other types of presentation, whether for the expansion of a company, presenting a new business idea, or even presenting a company's standing and future vision.

Gilles Herard, Jr is a seasoned Merchant Banker and has been in the banking industry for nearly 40 years. He worked early in his career at the Toronto Dominion Bank (Canada) and later on joined Manufacturer Hanover (MH) of New York as Senior Credit Analyst. He eventually created his own Firm, Capital Corp Merchant Banking Orlando, where he syndicates and structures funding for top companies worldwide, all the while investing his own firm's funds into the projects.

As the head of Capital Corp Merchant Banking Orlando, Mr Herard has become a leading figure in international middle-market project financing and engineers all funding structures for projects at Capital Corp. Mr Herard has received numerous awards for his work and other contributions.

Source: EzineArticles
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