In a world dominated by economic principles, people are looking for different ways to raise capital to achieve their goals. Funding is one of the hardest and most important processes when it comes to establishing a start-up business.
Fortunately, the market balance relies heavily on supply and demand, and since there is a high demand for organizations that provide funding, financial institutions whose job is to provide capital started becoming highly available. Investors like banks and loaning institutions rely on the success of your start-up business so you could repay their investment plus other benefits. These institutions do rigorous analysis to calculate the risks associated with such a project.
The reason many start-up entrepreneurs are so eager to get their funding from behemoths of the industry is not just because the capital will catapult their business into being operational, but also because of the technical expertise provided from such organizations.
Since their profit is directly related to the success of your startup, they are always eager to help by providing the necessary skills and additions to your company. To begin such a process, you need to make the investors extremely interested in your project, and the best way to do that is by creating a start-up funding proposal.
Banks and investment institutions get thousands of funding requests every day. It’s not practical to drown themselves in heavy paperwork every time they receive a start-up plan. A funding proposal presents the main goals and objectives of a start-up business and highlights them by using a meticulous evaluation of the project’s progress.
A proposal should contain a description of the nature of the business, managerial information, and how the project is going to be executed. The executive summary is considered one of the most vital elements of a funding proposal. It’s the first thing that catches the eyes of investors as it allows them to easily gauge their interest in your project.
The summary doesn’t need to reference other parts of the proposal and should be enough to highlight the core of your business plan. While the funding proposal executive summary should be straight to the point with all relevant details, important information must not be skipped as it can be a major deal-breaker in many cases.
While the executive summary was considered to be the most popular form of inclusive summarization, pitch decks seem to be gaining a lot more traction thanks to the new channels of communication and design available. Pitch decks use slides to accurately and individually lay out different aspects of the funding proposal.
Following advice from Slide Heroes, it’s important to focus on audience identification, then determine the audience’s questions, and provide a clear answer to it in your pitch deck. It’s quite important to keep quality over quantity in mind when you’re creating your pitch deck to see how involved they are in your sector.
A funding proposal helps you put objectives into perspective by explaining the final result you’re trying to achieve. The purpose of the project should always be clear in the proposal. Going into specifics is very important as that can provide enough credibility for investors and loaners to fund you, like listing certain actions and programs intended to be done in a limited time frame. It doesn’t have to be completely detailed, but anything that costs money should be accounted for like workshops, training, and marketing.
It’s also important to link the development that’s expected to happen to the activities behind it, so stakeholders and investors can directly see the relationship between the activities and the business.
After clearing the objectives and making sure that your specific goals are known to the investor, a work plan must be described in some detail with the steps you’re planning to take, and then presented. Since risk management is one of the major pillars of investment, it’s important to use the funding proposal to answer an investor’s question before they even ask them.
Identifying major elements of risk and then devising methods to reduce it can go a long way for your start-up. The proposal should also contain a list of all partners and organizations that you’re planning to work with and what their roles are.
It’s imperative to highlight different communication strategies with stakeholders to keep them in the loop. These strategies should make it easier for stakeholders to be able to keep up with new developments in your business through team meetings, quarterly meetings, press releases, reports, and other channels.
Your proposal should provide insight into how you’re going to gauge your business’s effect compared to the objective. All of this should be always presented with a timeline that can help funders know whether everything is going according to the plan not. Your budget should always be included in your start-up funding proposal as well.
Connecting with Funders
Those who fund and invest in your start-up would like to know what kind of benefits and advantages you will be offering to those around you. Make sure you have enough details about the social impact of your start-up and how it affects the market. Your proposal can contain success stories in the form of photos and press releases that can help your funders make an informed decision.
If you’re not optimistic about your objectives and goals in your funding proposal, it will be very hard to convince funders to back a plan that you don’t quite believe in. Proposals can help you build special relationships with each funder to help them feel more connected to your project and make the experience more personalized. The closer your funding proposal brings you to your core funders, the better and more secure your funding is going to be.
Getting funding approved by an investor is indeed a great step, but to ensure that you’re getting locked with the right investor, your funding proposal has to be on-point. Start-ups are known for their high probability of failure, which makes a lot of investors quite cautious when they’re approaching them. Your start-up funding proposal should help minimize such fears and get you the funding you need.
Interesting related article: “What is business finance?“