How to prepare an investment project that will interest the investor

Many entrepreneurs believe that the main thing in attracting investments is to find a person with money. In practice, the opposite is true. There are quite a lot of investors today, but there are significantly fewer quality projects ready for financing.

Even a promising idea may not receive support if it is poorly packaged, does not contain financial calculations, or does not answer key questions of a potential investor.

This is especially true when entering the international market. Chinese, Arab and European investors review hundreds of projects each year and make decisions based on clear criteria rather than beautiful presentations.

We will discuss how to properly prepare an investment project to significantly increase the chances of successful financing.

What is an investment project

An investment project is not just a description of a business idea.

This is a set of documents and materials that allow the investor to understand:

• What exactly does he invest in?
• how much money will be required;
• What will be the mechanism of return on investment;
• What are the risks;
• How much the project is capable of generating profit.

In fact, an investment project should answer the main question of any investor:

“Why is this project worth my money?”

Where does preparation begin?

The first mistake many entrepreneurs make is to start with a presentation.

In fact, the work begins much earlier.

It should be clearly defined:

• project objective;
• the amount of investment required;
• implementation stages;
• launch time;
• key benefits;
• target market.

Without understanding these parameters, it is impossible to prepare high-quality investment documentation.

Market research

Every investor wants to know if there is a real demand.

Therefore, a market analysis is needed.

It's important to show:

• market size;
• the dynamics of its growth;
• major trends;
• level of competition;
• free niches;
• potential customers.

It is not enough to say that the market is “very promising”. All conclusions must be supported by statistics, research and analytics.

Business model

The investor is not so much interested in the idea as the mechanism of earnings.

The draft should describe in detail:

• source of income;
• sales channels;
• production model;
• cost structure;
• key partners;
• competitive advantage.

The clearer the business model, the greater the trust in the project.

The financial model

The financial model becomes one of the most important documents.

It shall contain:

• volume of investments;
• cost structure;
• revenue forecast;
• operating expenses;
• net profit;
• cash flow;
• payback period;
• profitability indicators;
• Screenplay analysis.

All calculations should be realistic.

Inflated forecasts almost always cause distrust among professional investors.

Project team

Very often investors say:

“We invest not only in ideas but also in people.”

It is therefore important to present:

• founders of the project;
• management team;
• production specialists;
• financial experts;
• consultants;
• key partners.

A strong team can significantly increase the investment attractiveness of the project.

Risk analysis

There are no perfect projects.

Investors understand that there are always risks.

It is much worse if the author of the project pretends that they do not exist.

It is necessary to honestly show the possible risks:

• market;
• production;
• financial;
• legal;
• currency;
• logistics;
• technological.

Most importantly, describe ways to minimize them.

Investment presentation

After preparing the entire analytical base, an investment presentation is created.

It should be concise and answer the main questions of the investor.

As a rule, the presentation includes:

• description of the problem;
• proposed solution;
• market;
• business model;
• financial performance;
• team;
• the amount of investment required;
• terms of cooperation.

A good presentation is not overloaded with text and focuses on numbers, graphs and understandable structure.

Adapting the project to a specific investor

One of the most common mistakes is to use the same presentation for everyone.

Different investors pay attention to different aspects of the project.

For example:

• industrial investor evaluates production capacity;
• Venture Fund – the scalability of the technology;
• State funds – social and economic effect;
• Chinese investors see prospects for long-term cooperation, localization of production and entry into the Asian market.

Therefore, investment materials should be adapted to a specific audience.

This is especially important when dealing with Chinese investors.

The Chinese market has its own characteristics.

When considering projects, great attention is paid to:

• practical feasibility of the idea;
• long-term prospects;
• reliability of partners;
• transparency of the financial model;
• compliance with state priorities;
• opportunities for industrial cooperation.

In addition, it is important to take into account the cultural characteristics of negotiations, quality translation of materials and the correct presentation of the project.

In many cases, it is the preparation for negotiations that determines the final result.

Common mistakes in the preparation of the project

Most often, investors refuse not because of a weak idea, but because of insufficient preparation.

The most common mistakes are:

• Lack of a financial model;
• unrealistic forecasts;
• weak market analysis;
• Lack of a development strategy;
• unexamined risks;
• Overloaded presentation;
• Lack of understanding of the needs of the investor.

Most of these mistakes can be corrected before negotiations begin.

Preparing a project is an investment in future success

Modern investors choose projects not by the principle of “interesting idea”, but by the quality of their preparation.

The more detailed the business model, financial indicators, market analysis and development strategy, the higher the likelihood of attracting financing.

This is especially true for international investment platforms, such as CIFITYHundreds of projects from around the world are considered in a few days.

Preparation of an investment project is not a formality, but an important stage that allows you to turn a promising idea into a real object for investment. And it is the quality of this preparation that often determines whether a project will become part of a major international deal or remain only a good idea.