Investing in Your Business: how to prepare and raise capital
The succinct OnePager
OnePager is a one-page description of a startup, a teaser of your project or product that you don't have to study for a long time to get to the bottom of. It is important to convey the key idea of your project, show the size of the expected market; describe the personnel requirements; indicate the amount of expected investment; outline the benefits an investor can receive.
Reasons for rejections
Based on the experience of Eifos Hub, we can identify four main reasons why an investor most often rejects a potential borrower's proposal:
OnePager is a one-page description of a startup, a teaser of your project or product that you don't have to study for a long time to get to the bottom of. It is important to convey the key idea of your project, show the size of the expected market; describe the personnel requirements; indicate the amount of expected investment; outline the benefits an investor can receive.
Reasons for rejections
Based on the experience of Eifos Hub, we can identify four main reasons why an investor most often rejects a potential borrower's proposal:
- Overestimating the size of the market and its prospects.
- An unattractive market (‘non-trending’) that has a low investment multiplier.
- No unique selling proposition and competitive advantage.
- Investor is not interested in the area and industry.
Presentation of financial data to the investor
Get to the numbers right away. Investors are busy people and value their time. Discuss financial issues with reference to the current stage of the project and its performance. It is best to present a business plan with key data: market valuation, expenses, revenues, earnings, profitability and profit. It is important to go from more to less: first of all, show the overall benefit that the investor can get from their investment. Argue and back up your words with figures and calculations. If necessary, go into more detail, emphasising possible risks.
Get to the numbers right away. Investors are busy people and value their time. Discuss financial issues with reference to the current stage of the project and its performance. It is best to present a business plan with key data: market valuation, expenses, revenues, earnings, profitability and profit. It is important to go from more to less: first of all, show the overall benefit that the investor can get from their investment. Argue and back up your words with figures and calculations. If necessary, go into more detail, emphasising possible risks.
Are you meeting with investors and getting rejected? At the same time, you sincerely do not understand why they do not want to give you money.
What is an investor really interested in, apart from profit and return on investment? What drives them and what do they look for in startups and businesses? Until you figure this out, you will continue to act at random. And your chances of getting funding will tend towards zero. Long before you start looking for an investor, you need to prepare thoroughly and do some serious ‘homework’.
Where to start?
To get your project noticed, it is important to tell the right story about it and how you are going to multiply the investor's money, and to do this:
Amount and terms
Before going to an investor, it is important to clearly define how much money you want to raise and on what terms. Otherwise, you may waste a lot of nerves and conclude an unfavourable deal. Set clear goals, discuss specific figures and methodically go through possible options. Don't waste time and reject anything that doesn't meet your criteria.
Investor List
Make a list of investors who have already invested in similar market segments. Usually, investors prioritise the areas they want to invest in. It makes sense to approach those who work with the area and market you are interested in, as they have a better understanding of its dynamics and trends.
Pay attention to investment funds that are actively looking for new projects in your segment. Study their portfolios to understand which companies they have supported in the past.
What is an investor really interested in, apart from profit and return on investment? What drives them and what do they look for in startups and businesses? Until you figure this out, you will continue to act at random. And your chances of getting funding will tend towards zero. Long before you start looking for an investor, you need to prepare thoroughly and do some serious ‘homework’.
Where to start?
To get your project noticed, it is important to tell the right story about it and how you are going to multiply the investor's money, and to do this:
- Answer the question, ‘What is the competitive advantage of your idea?’ (product innovation, team, expertise).
- Prepare a short proposal letter and send it to potential investors.
- Create a presentation, describing clearly and concisely all the key points of your project. It is important to demonstrate the starting point A, where the project will be at the beginning of its journey (product, revenue, team). And then show where you plan to take the project by attracting investment - point B.
- Formulate a clear offer: how much money you want to raise and on what terms.
Amount and terms
Before going to an investor, it is important to clearly define how much money you want to raise and on what terms. Otherwise, you may waste a lot of nerves and conclude an unfavourable deal. Set clear goals, discuss specific figures and methodically go through possible options. Don't waste time and reject anything that doesn't meet your criteria.
Investor List
Make a list of investors who have already invested in similar market segments. Usually, investors prioritise the areas they want to invest in. It makes sense to approach those who work with the area and market you are interested in, as they have a better understanding of its dynamics and trends.
Pay attention to investment funds that are actively looking for new projects in your segment. Study their portfolios to understand which companies they have supported in the past.
Market Analysis. TAM, SAM, SOM, PAM
The size of the market is not infinite. Any product or service has a limited number of buyers. The TAM, SAM, SOM, PAM market size methodology helps you calculate ROI, evaluate prospects, and prepare a business plan. Each metric corresponds to a market segment. The segments are nested within each other.
Total Addressable Market (TAM) is the total market size. TAM takes into account the widest range of consumers: potential customers, competitors' customers, and those who do not yet use similar goods or services. TAM includes everyone who has a need for a product. It does not matter whether they are ready to buy the product right now or not. TAM shows the ideal situation in which a product has managed to occupy the entire market.
Served Available Market (SAM) - The available or actual market capacity, the portion of the TAM that can be served. SAM shows how much money competitors' customers spend to solve their problem. SAM takes into account both direct competitors with a similar product and analogues that are used instead.
Serviceable Obtainable Market (SOM) is the achievable market size, the part of SAM that can be realistically occupied. It shows the sales volume that can be achieved now. SOM takes into account the opportunities and constraints that the business has at the moment: marketing strategy, promotion budget, channels of attraction. SOM will be even smaller than SAM, but closest to reality.
Potential Available Market (PAM) - potential market volume. The indicator takes into account not only the current state of the market, but also possible changes in the future - growth or decline. PAM is calculated based on the size of the target audience, those who may be interested in the product.
Investor rejection is a common and often painful situation in the history of any startup. But you should not think of it as a defeat. Take a step back and assess the situation. Analyse the reasons for the rejection, change your fundraising strategy and keep working.
Investor rejected your idea? LLC "EIFOS HUB" can help you analyse the reasons for rejection. We will adjust your business strategy and provide expert support in attracting investment.
The size of the market is not infinite. Any product or service has a limited number of buyers. The TAM, SAM, SOM, PAM market size methodology helps you calculate ROI, evaluate prospects, and prepare a business plan. Each metric corresponds to a market segment. The segments are nested within each other.
Total Addressable Market (TAM) is the total market size. TAM takes into account the widest range of consumers: potential customers, competitors' customers, and those who do not yet use similar goods or services. TAM includes everyone who has a need for a product. It does not matter whether they are ready to buy the product right now or not. TAM shows the ideal situation in which a product has managed to occupy the entire market.
Served Available Market (SAM) - The available or actual market capacity, the portion of the TAM that can be served. SAM shows how much money competitors' customers spend to solve their problem. SAM takes into account both direct competitors with a similar product and analogues that are used instead.
Serviceable Obtainable Market (SOM) is the achievable market size, the part of SAM that can be realistically occupied. It shows the sales volume that can be achieved now. SOM takes into account the opportunities and constraints that the business has at the moment: marketing strategy, promotion budget, channels of attraction. SOM will be even smaller than SAM, but closest to reality.
Potential Available Market (PAM) - potential market volume. The indicator takes into account not only the current state of the market, but also possible changes in the future - growth or decline. PAM is calculated based on the size of the target audience, those who may be interested in the product.
Investor rejection is a common and often painful situation in the history of any startup. But you should not think of it as a defeat. Take a step back and assess the situation. Analyse the reasons for the rejection, change your fundraising strategy and keep working.
Investor rejected your idea? LLC "EIFOS HUB" can help you analyse the reasons for rejection. We will adjust your business strategy and provide expert support in attracting investment.
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