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Some basic documents that you need to have before you start a fundraising round.

Attracting investment is a complex process. Its success depends on many. factors. Hence, there is no silver bullet that 100% ensures that you get funding. But some principles will make the process smoother.

So, what you need to have before starting the process of attracting investment:

  1. Executive Summary/One-pager;

  2. Pitch Deck;

  3. Financial Model;

  4. Capitalization Table.

So having professionally prepared documents and a clear understanding of the business and its prospects is half the battle.

So what are these documents, and why are they needed?

Executive Summary/One-pager.

An executive summary is a short introduction and synopsis of your strategy. It ought to describe your business, the issue it solves, your target market, and budgetary features.

Pitch Deck.

A pitch deck is a brief presentation, often created using PowerPoint, Google Slides, etc.

A pitch deck is a short presentation that provides investors with an overview of your business.

It usually focuses on showcasing your product, sharing your business model, looking into your monetization strategy, and introducing your team.

You will usually use your pitch deck during face-to-face or online meetings with potential investors, customers, partners, and co-founders.

Below are essentially the slides that you want to include inside your presentation:

  • Problem;

  • Solution;

  • Market;

  • Product;

  • Traction;

  • Team;

  • Competition;

  • Financials;

  • The amount being raised;

A pitch deck can help you:

  • Prove the value of your business in difficult economic times;

  • Simplify complex ideas so your audience can understand them (and get on board);

  • Differentiate your business from its competitors;

  • Tell the story behind your company (and make the story exciting).

Financial Model.

A Financial Model is a summary of a company’s revenue and expenses. Using historical data, a Model allows the business to track KPIs such as gross and net margin and forecast future performance based on critical metrics such as customer cost of acquisition.

For startup founders and small business owners, the Financial Model is a fundamental tool for managing the business and making educated business decisions about the company’s future.

The core parts of a financial model.

At the highest possible level, every model can/should be divided into three sections: 1) inputs/drivers, 2) calculations (projected financial statements), and 3)outputs. The better one is at segregating these sections, the easier it will be to audit and amend the model while minimizing errors and optimizing on time.

Cover Page (Tab): Project code name, a description of the model’s intent, the author’s contact information, and any applicable disclaimers.

How to Use (Tab): Formatting (all hypotheses and instructions on using the model and describing what is contained on each page, color code, formatting).

Drivers Tab: Inputs and assumptions

  • Time series,

  • Sales / Revenue Plan — one of the source pages for fin models, your products/services, and flows income;

  • Expenses — one of the source pages for financial models, there are three main categories of costs — R & D (development costs product), S & M (sales and marketing), G & A (general and administrative expenses);

  • Personnel plan (one of the source pages for Costs page, development plan teams, salaries, bonuses, etc.;

  • Marketing costs and sales;

  • CAPEX;

  • Equity.

Model Tab: Calculations (i.e., the three financial statement projections, valuation, and calculations).

  • Calculations;

  • Income Statement;

  • Cash Flow;

  • Balance Sheet;

  • Valuation.

Outputs Tab: A clean, neat summary of the essential highlights of the model:

  • Dashboard Summary;

  • Unit Economics Metrics;

  • Return analysis;

  • Use of Funds, etc.

Sensitivities Tab: The range of scenarios, sensitivities, and data outcomes that management will rely on as they transition into their decision-making process.

Capitalization Table.

A capitalization table, also known as a cap table, is a spreadsheet or table that shows the equity capitalization for a company. A capitalization table is most commonly utilized for startups and early-stage businesses, but all types of companies may use it. In general, the capitalization table is a detailed breakdown of a company’s shareholders’ equity.

Cap tables often include all of a company’s equity ownership capital, such as shared equity shares, preferred equity shares, warrants, and convertible equity.

The cap table should be designed in a simple and organized layout that clearly shows who owns certain shares and the number of outstanding shares. The most common structure is to list investors/security owners on the Y-axis, while the type of securities is listed on the X-axis.

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