Blog Post (with free download)

When preparing to pitch for funding, you should know there are a few specific documents needed for investors. Missing one or more of these will create the impression that you aren’t quite prepared for fund raising, or aren’t familiar with the capital-raising side of business. This can quickly leave a negative impression, and can even botch your chances of getting funded.
A word of caution: even if you are pitching to a family member or a friend, you should have these documents ready to show for two reasons. First, it will demonstrate to your possible investor that you mean business and are taking this seriously. Second, it will give you a head start on hunting for other investors, in case your friend or family member becomes unreliable later.  (You MUST always plan for a backup when dealing with investors, whether they are relatives or not.)
This post will review the essential documents needed for investors. It also includes a checklist with details on each document and what to include to make them investor-grade.

Document #1A: Your Cover Letter

Your cover letter to your investor is the #1 thing new entrepreneurs overlook when fundraising. This isn’t like a cover letter you use when submitting a job application. Instead, it is a persuasive ice breaker to get your investor grounded on your business idea and to guide them into a receptive mindset. The cover letter, if done correctly, can increase the likelihood that your business pitch gets reviewed with careful consideration.
Many people underestimate the daily life of an investor. Investors spend their days sifting through business pitches and plans and proposals. If you send through another standard “fund my business” type of document, then your investor is likely to see your business idea as “more of the same”. However, a cover letter that is tailored to the investor and that is designed to open the conversation will stand out.
Use this cover letter to double as email text, too. It’s a great way to make first contact with your investor, especially if you don’t know them personally.

Document #1B: Your Elevator Pitch

This is “1B” because your Elevator Pitch should always be attached to your cover letter. Your Elevator Pitch should have a short and comprehensive overview of the business opportunity. The equity you plan to offer, the asking amount, the business valuation, etc. should all be listed here. (Be sure to grab the download at the end of this post for more details about what creates a perfect Elevator Pitch document!)
Your Elevator Pitch acts as a standalone Executive Summary for investors. In fact, you can even develop the Executive Summary of your Business Plan to reflect this naturally. (Every Business Plan I develop has an Executive Summary that doubles as a simple Elevator Pitch.) The power in this is it can be separated from your Business Plan and attached easily to your cover letter. Together, your carefully crafted Cover Letter and Elevator Pitch create the door-opening documents that you need for investors. These two documents can be used to contact investors out of the blue, or to butter up an investor who you know personally. Either way, these documents are needed if you plan to start on the right foot with investors.

Document #2: Your Business Plan & Financials 

Make sure you have a well-researched Business Plan ready to hand over to your investor. Your investor-grade Business Plan should be a healthy balance of market trends, statistical analysis, financial scenarios, and risk profiling. It can be easy to try and shortcut this, but remember: your Business Plan should look like the money you are trying to raise.
If you are trying to raise $100,000 dollars, your Business Plan should reflect $100,000 quality.

When an investor looks at a Business Plan, these things can create negative impact:

  • Looking “slopped together” or poorly formatted
  • Having sections that ramble, lacking concise brevity
  • Including sections that are copy/pasted from information online
  • Including too much research, data, or facts and not enough analysis
  • Too much focus on opinion-based strategy instead of data-based decisions

Remember, your Business Plan development is one of the first business moves you make. Investors view your Business Plan as an indicator of your decision making skills. After all, if you don’t use good judgement when having a Business Plan created, how will your judgement work in bigger business decisions?

Try to have this done before you are ready to talk with your investor. Your Business Plan – especially your financials – take time to build correctly, whether you hire a professional Business Plan Writer or you tackle them yourself. You never want to leave an investor waiting, and telling them to pause for a few weeks while you get a Business Plan developed can annoy them and cost you the investment. Have your plan done and ready before you set any investor meetings.
For me, it takes 10 business days to finish a Business Plan. I’ve gotten my finish time way down thanks to hundreds of completed Business Plans – I have a good process now. However, if you aren’t hiring a professional, and you are trying to do this yourself, make sure you give yourself about 4 weeks. You want to make sure you complete your Business Plan without pressure and depending on how much extra time you have, you need to plan for about 40-60 hours of research and effort to create your investor-grade Business Plan properly.
For more help on building SMART financials in your Business Plan, I recommend you check out this Forbes article.

 

Document #3: Your Pitch Deck

The Pitch Deck is something that almost always blindsides entrepreneurs in one of two ways.
Either the entrepreneur tries to create a Pitch Deck without working a Business Plan first, which is backwards and makes finishing the deck more difficult…
or
The entrepreneur never thinks about making a Pitch Deck and isn’t prepared when an investor asks for one.
While the Pitch Deck is an essential document for fund raising, I have to be honest with you: I can’t say it is always an essential document for pitching. Whenever someone comes to me for an “Everything” package which includes an investor Pitch Deck, 50% of the time I steer them away from that if it seems like they probably won’t need a Pitch Deck.
(Then, there’s folks on the other end of the spectrum who think they ONLY need a Pitch Deck. Remember: your Pitch Deck is never an appropriate replacement for a proper Business Plan.)
Bank on including a Pitch Deck in your documents needed for investors if:
  • You are using a broker or capital agency to find an investor
  • You are trying to raise more than $1MM USD
  • Your investor asks for one
…let’s focus on that last bullet! Your investor has 100% discretion on whether he or she wants to see a Pitch Deck. Some investors insist on it, and others couldn’t care less about it. If your investor does want a deck, you can be left scrambling to create one at the last minute. Fortunately, if you have your Business Plan finished, you can complete your Pitch Deck rather quickly. (It takes me 3 business days to whip one up if the Business Plan is already complete.)
One word of caution, however: make sure you avoid treating your Pitch Deck like a replay of your Business Plan. The content should be very selective and should be catered to meet the needs of an investor grade presentation. It is not simply a duplicate version of your Business Plan. You also need to be ready to pitch it like a pro, so be sure to allow yourself time to rehearse it and even consider having someone review it before you present it to make sure it is clear and easy to follow.
Ashley Cheeks

Author Ashley Cheeks

Ashley Cheeks is a Business Plan Consultant. Her core business plan writer expertise is in designing business plans for bank and investor funding. She founded Written Success after years of being a professional business plan writer as a freelance consultant, and working for companies including GE and Fluor. She lives in Houston with her husband, daughter and son.

More posts by Ashley Cheeks

Leave a Reply