How to prepare, position and present your business to potential investors — while retaining the flexibility to grow, expand or pursue new opportunities.
Define Your PurposeKnow exactly why you need capital
Get Investor-ReadyOrganize your financials and your story
Find the Right FitConnect with aligned investors
Getting Ready: 8 Steps to Prepare Your Raise
1
Start With the Purpose of the Investment
Define exactly why you are seeking capital and how it could create additional value.
Opening a new location or entering a new market
Purchasing equipment or technology
Hiring key employees or expanding operations
Funding an acquisition or strengthening working capital
2
Determine How Much Capital You Need
Build the request from a realistic operating plan, not a number that sounds attractive.
Prepare a clear use-of-funds schedule
Consider a reasonable contingency reserve
Connect the request to measurable business objectives
3
Understand What You Are Offering
Seeking an investor can mean giving up equity, economic rights or decision-making rights.
Equity ownership
Strategic partnership
Preferred or structured equity
Convertible instruments where appropriate
4
Understand Your Business Value
A realistic valuation determines how much equity you give up for the investment.
Historical financial performance
Cash flow and profitability
Growth rate and future potential
Assets, intellectual property and brand strength
5
Prepare Your Financial Information
Credible financial information is one of the strongest signals of investor readiness.
Profit and loss statements and balance sheets
Cash-flow information and tax returns
Current debt and obligations
Forward-looking projections with documented assumptions
6
Build a Strong Investor Presentation
Make it easy for someone unfamiliar with the business to understand the opportunity.
What the business does and the problem it solves
Market size, customer profile and competitive advantage
Growth strategy and management team
Capital sought, use of funds and key risks
7
Create an Effective Investor Listing
Create interest without disclosing sensitive information prematurely.
Industry and general location
Business model and stage
Amount of capital sought and primary use of proceeds
Growth opportunity and type of investor sought
8
Identify the Right Investors
The largest check is not necessarily the best investment partner.
Individual or angel investors
Strategic industry investors
Private investment groups
Investors with relevant operating expertise
Negotiating and Closing the Deal
Once investors are interested, preparation shifts from pitching to due diligence and negotiation.
Prepare for Investor Questions
Expect serious investors to challenge assumptions.
Why are you raising capital now?
How will the investment increase enterprise value?
How dependent is the business on you as owner?
What could prevent the growth plan from succeeding?
Evaluate the Investor
Due diligence works both ways — understand who you would be working with.
Investment history and reputation
Source and availability of funds
Expected involvement in management
References from other founders or owners
Protect Confidential Information
Release sensitive details progressively as the relationship becomes more serious.
Use summaries at the initial stage
Consider confidentiality agreements when appropriate
Limit access to customer lists and trade secrets
Negotiate More Than the Valuation
Terms can materially affect your future control and economics.
Ownership percentage and voting rights
Board representation and distributions
Founder compensation
Exit rights and liquidity provisions
Use Qualified Professionals
Investment transactions involve securities, tax, accounting and contractual issues.
Business or securities attorney
CPA or tax professional
Business valuation professional
Common Mistakes to Avoid
Many investment efforts fail because the business is not prepared.
Seeking money without a clear use-of-funds plan
Using an unsupported valuation
Disclosing confidential information too early
Choosing an investor only for the amount offered
Investor Readiness Checklist
Ready to Find an Investor?
EasyBizSale helps business owners present investment opportunities, connect with the marketplace and take the next step in their business journey.
This guide is provided for general educational and informational purposes only. It is not legal, tax, accounting, securities, investment, valuation or financial advice, and it does not constitute an offer or solicitation to buy or sell any security or investment. Investment structures and fundraising activities may be subject to federal and state laws and regulations. Business owners and investors should consult qualified legal, tax, accounting and financial professionals regarding their specific circumstances. EasyBizSale does not guarantee funding, investor interest, transaction completion or investment performance.
