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4 Strategies for Creating a Compelling Business Plan That Actually Attracts Investors — and Secures Funding More than a mere task, read on to learn how crafting a business plan is an opportunity to articulate your business's true potential.

By Mark Hauser • Sep 15, 2023

Key Takeaways

  • A meticulously crafted business plan is the most potent tool in the competitive environment of securing an investment.
  • By understanding and addressing investor concerns, effectively portraying risk management strategies and harmonizing your team's prowess with an engaging narrative, you'll create a blueprint that resonates with a diverse array of investors and paves the way for your entrepreneurial success.

Opinions expressed by Entrepreneur contributors are their own.

According to data from Teten Advisors, the median investor in private companies reviews over 80 opportunities in order to make a single investment . As someone who has been working in private equity and investing for over three decades, I can confirm that this number sounds about in line with my experience.

While the due diligence process is rigorous and involves exploratory and confirmatory checks into practically every aspect of the business, before that process can even begin, an investor must be hooked by a compelling business plan. More than a mere task, here's how crafting a business plan is an opportunity to articulate your business's true potential.

Related: How Startups Can Attract the Right Type of Investors

1. Understanding overall investor expectations

From venture capitalists to angel investors, there are a few key elements that are sought after in a business plan across investor classes. At the heart of every investor's scrutiny is the quest for a clear and viable path to profitability . Your business plan must be able to provide a meticulously outlined roadmap that navigates from the present to a future that is both lucrative and financially sustainable. Investors seek hard evidence of your business model's viability, the scalability of your operations and the potential for impressive returns on their investment.

However, while numbers are certainly persuasive, investors also seek a compelling narrative that communicates not just the "what" but the "why" behind your business. Going beyond metrics, it's essential to showcase your understanding of the market , your customers' pain points and how your solution uniquely addresses these challenges. Essentially, investors want to know that you're not just offering a product or service but contributing to a larger story of transformation and value creation.

It's no easy task balancing factual data and captivating storytelling , and in my time investing I have seen thousands of business plans that skew too far in both directions. It takes finesse, but achieving that balance is what sets apart a winning business plan. Providing a comprehensive overview of your financial projections while infusing the narrative with passion, purpose and a vision for growth captures the essence of investor expectations.

2. Risk mitigation and investor confidence

As investors, we appreciate transparency . It may seem like a business plan should project positivity and avoid pointing out potential problems, but acknowledging hurdles and articulating contingency plans demonstrates preparedness and enhances our confidence in your ability to navigate uncertainties.

Addressing risks isn't just about managing potential crises; it's a testament to your ability to adapt and pivot when circumstances change. Investors seek reassurance that you have a contingency plan in place, a roadmap for resilience that ensures your business can weather unforeseen challenges. A well-considered risk mitigation strategy avoids reactive measures by building proactive tools for strategic decision-making.

Presenting a robust risk mitigation framework within your business plan is not just a formality — it's an invitation for investors to embark on a journey of calculated growth with you. Risks are inevitable, and nobody is more acutely aware of this than investors. What distinguishes an exceptional business plan is not the absence of risks, but rather the transparency and foresight with which these risks are managed.

Related: Here's What's Brewing in the Minds of Startup Investors

3. Showcasing team dynamics and execution strategy

Profiling a team's expertise, track record and ability to execute your vision is an often underestimated but integral aspect of a business plan. Data and financial projections provide a solid foundation, but the people behind the numbers are the ones who actualize a venture's success. In my time in private equity, I've witnessed firsthand the transformational power of a skilled and motivated team .

Introducing key team members not only imparts a human dimension to your business plan but also offers insight into the talent that fuels your organization's potential. A team with a proven track record, complementary skills and a shared commitment to the venture's success is a compelling indicator of your ability to execute your vision. Sharing anecdotes that highlight instances of successful teamwork or innovative solutions can illustrate these dynamics, offering a glimpse into the operational alignment that underpins your execution strategy.

4. Customizing your approach

Investors may all share a common goal — to identify lucrative opportunities — but their paths to investment can differ significantly. By customizing your approach , you not only maximize the appeal of your business plan but also demonstrate your commitment to understanding and catering to the specific expectations of your target investor. Below I will provide a brief general overview of the three investor classes that are most often discussed in the private sector: venture capitalists, angel investors and private equity investors.

For venture capitalists seeking exponential growth and early-stage innovation, a focus on disruptive technologies, scalability and market expansion can be particularly compelling. Addressing their appetite for high-risk, high-reward opportunities and showcasing a well-calibrated strategy for capturing market share can resonate powerfully.

Angel investors , often drawn to supporting the underdog and betting on visionary founders, appreciate personal narratives and the passion that drives entrepreneurial journeys. A compelling backstory, a clear articulation of your dedication to the venture and a keen awareness of the human element can resonate deeply with this investor class.

Related: Are You Approaching Investors With No Business Plan and Fuzzy Profit Projections? Get Real.

Private equity players, on the other hand, often prioritize proven business models, established revenue streams and tangible pathways to profitability. Demonstrating a steady and calculated approach to growth, backed by data-driven insights, can align with their preference for more mature and stable opportunities. Customization doesn't merely involve tweaking language or figures; it requires a fundamental understanding of what drives each type of investor. It's about presenting your venture in a way that resonates with their motivations.

A meticulously crafted business plan is your most potent tool in the competitive landscape of securing an investment. By understanding and addressing investor concerns, effectively portraying risk management strategies and harmonizing your team's prowess with an engaging narrative, you'll create a blueprint that resonates with a diverse array of investors and paves the way for your entrepreneurial success.

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How to Write a Convincing Business Plan for Investors

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Noah Parsons

9 min. read

Updated November 29, 2023

Raising money for your business is a major effort. You need lists of investors to reach out to and you need to be prepared for your investor meetings to increase your chances of getting funded . You need to practice your pitch and be ready to intelligently answer any number of questions about your business. A key to making this entire process much easier is to invest a little time and write a business plan . It’s true — not all investors will ask to see your business plan. But the process of putting together a business plan will ensure that you’ve thought through every aspect of your business and you’re ready to answer any questions that come up during the fundraising process.

  • Why do investors want to see a business plan?

The business plan document itself isn’t what’s important to investors. It’s the knowledge that you’ve generated by going through the process that’s important. Having a business plan shows that you’ve done the homework of thinking through how your business will work and what goals you’re trying to achieve.

When you put together a business plan, you have to spend time thinking about things like your target market , your sales, and marketing strategy , the problem you solve for your customers, and who your key competitors are . A business plan provides the structure for thinking through these things and documents your answers so you’re prepared for the inevitable questions investors will ask about your business. 

Even if investors never ask to see your business plan, the work you’ve done to prepare it will ensure that you can intelligently answer the questions you’ll get. And, if an investor does ask for your business plan, then you’re prepared and ready to hand it over. After all, nothing could be worse than arriving at an investor meeting and then getting a request for a business plan and not having one ready.

Beyond understanding your business strategy, investors will also want to understand your financial forecasts. They want to know how your business will function from a financial standpoint — what is typically called your “ business model .” They’ll also want to know what it will take for your business to be profitable and where you anticipate spending money to grow the business. A complete financial plan is part of any business plan, so investing a little time here will serve you well. 

  • What do investors want to see in a business plan?

There’s no such thing as a perfect business plan and investors know this. After all, they’ve spent years, and often decades, hearing business pitches, reading business plans, investing in companies, and watching them both succeed and fail. As entrepreneur and investor Steve Blank likes to say, “No business plan survives first contact with a customer.” 

If this is true, then why bother writing a business plan at all? What’s the value of planning and why do investors want them if they know the plan will shortly be outdated?

The secret is that it’s the planning process, not the final plan, that’s valuable. Investors want to know that you’ve thought about your idea, documented your assumptions, and are on track to validate those assumptions so that you can remove risk from your business. 

So what do investors want to see in your business plan? Beyond the typical sections , here are the most important things that investors want to see in your plan.

A vision for the future

Investors, particularly those investing in early-stage startups, want to understand your vision . Where do you see your company going in the future? Who will your customers be and what problems will you solve for them? Your vision may take years to execute — and it’s likely that the vision will change and evolve over time — but investors want to know that you’re thinking beyond tomorrow and into the future.

Product/market fit and traction

Investors want more than just an idea. They want evidence that you are solving a problem for customers. Your customers have to want what you are selling for you to build a successful business and your business plan needs to describe the evidence that you’ve found that proves that you’ll be able to sell your products and services to customers. If you have “traction” in the form of early sales and customers, that’s even better.

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Create a business plan that maximizes your chances of securing funding., funding needed and use of funds.

When you’re pitching investors, you need to know how much you’re asking for. Your financial forecast should help you figure this out. You’ll want to raise enough money to cover planned expenses and cash flow requirements plus some additional funding as a safety net. In addition, you’ll want to specify exactly how you plan on using your investment . In a business plan, this section is often called “sources and uses of investment.”

A strong management team

A good idea is really only a small part of the equation for a successful business. In fact, lots of people have good business ideas — it’s the people that can execute well that generally succeed. Investors will pay a lot of attention to the section of your plan where you talk about your management team because they want to know that you can transform your idea into a successful business. If you have gaps and still need to hire key employees, that’s OK. Communicating that you understand what your needs are is the most important thing.

An exit strategy

When investors give you money to start and grow your business, they are looking to eventually make a return on their investment. This could happen by eventually selling your business to a larger company or even by going public. One way or another, investors will want to know your thoughts about an eventual exit strategy for your business.

  • What documents do investors want to see?

Even if investors never ask for a detailed business plan, your business planning process should produce a few key documents that investors will want to see. Here’s what you need to be prepared to pitch investors:

Cover letter

These days, a lot of fundraising outreach is done over email and you’ll need a concise cover letter that sparks investor interest. Your cover letter needs to be very brief, but describe the problem you’re solving for your target market.

Great cover letters are sometimes in a “story” format that hooks readers with a real-world, relatable example of the problems your customers face and how our product or service The goal of the cover letter isn’t to explain every aspect of your business. It’s just to spark interest and get a meeting with an investor where you’ll have more time to actually pitch your business. Keep your cover letter brief, engaging, and to the point.

If you get an investor meeting, you’ll almost certainly need a pitch deck to present your idea in more detail and showcase your business idea. Your pitch deck will cover the problem you’re solving, your solution, your target market, and key market trends. Read our detailed guide on what to include in your pitch deck here and for inspiration check out our gallery of more than 50 Industry Pitch Deck Examples .

Executive summary and/or one-page plan

You might not get a meeting right away. Your cover letter may generate a request for additional information and this is where a solid executive summary or one-page business plan comes in handy. This document, while still short, is more detailed than your cover letter and explains a bit more about your business in a page or two.

Read more about what goes into a great executive summary and how to build a lone-page business plan.

Financial forecasts

Investors will inevitably want to see your financial forecasts. You’ll need a sales forecast, expense budget , cash flow forecast , profit and loss, and balance sheet . If you have historical results, you should plan on sharing those too as well as any other key metrics about your business. Investors will always look deep under the hood of your business, so be prepared to share all the details of how your business will work from a financial perspective.

  • What to include in your investor business plan

When you put together a detailed business plan for investors, you’ll follow a fairly standard format. Of course, feel free to customize your plan to fit your business needs. Remember: your business plan isn’t about the plan document that you create — it’s about the planning process that helps you think through and develop your business strategy. Here’s what most investor business plans will include:

Executive Summary

Usually written last, your executive summary is an overview of your business. As I mentioned earlier, you might use the executive summary as a stand-alone document to provide investors more detail about your business in a concise form. Read our guide on executive summaries here .

Opportunity

The opportunity section of your plan covers the problem you are solving, what your solution is, and highlights any data you have to prove that people will spend money on what you’re offering. If you have customer validation in any form, this is where you highlight that information.

Market Analysis

Describe what your target market is and key trends that are occurring in this market . Is the market growing? Are buying patterns changing? How is your business positioned to take advantage of these changes? Be sure to spend some time discussing your competition and how your target market solves their problems today and how your solution is superior.

Marketing & Sales Plan 

Most businesses need to figure out how to get the word out and attract customers. Your business plan should include a marketing plan that describes how you’re going to reach your target market and any key marketing initiatives that you’re going to undertake. You should also spend time describing your sales plan, especially if your sales process takes time to close customers.

Milestones / Roadmap

Outline key milestones you hope to achieve and when you plan on achieving them. This section should cover key dates for product development, key partnerships you need to create, and any other important goals you plan on achieving.

Company & Management

Here’s where you describe the nuts and bolts of your business. How is your organization structured? Who is on your team and what are their backgrounds? Are there any important positions that you still need to recruit for?

Financial Plan

As I mentioned, you’ll need to create a profit and loss, cash flow, and balance sheet forecast. Your financial plan should be optimistic, yet realistic. This is a tough balance and your forecast is certain to be wrong, but you need to document your assumptions and plans for the business.

Finally, you can include an appendix for any key additional information you want to share. Product diagrams, additional details on how you deliver your service, or additional research can all be included.

  • What comes next?

Writing a business plan for investors is really about preparing you to pitch your business . It’s quite likely that you’ll never get asked for the actual business plan document. But, the process will prepare you better than anything else to answer any questions investors may have.

Create a business plan that maximizes your chances of securing funding

Content Author: Noah Parsons

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

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How to Attract Investors When Creating Your Business

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So, you’ve got a brilliant business idea , and now you need money to get it off the ground. This is where business investors come in handy. Investors are an invaluable resource for entrepreneurs , providing essential financial support for their projects. However, convincing them to come on board with an endeavor can be a considerable challenge. Here, you’ll find 12 helpful tips for attracting and engaging the investment your new business needs.

1. Work on extending your network.

Many entrepreneurs dread the hard sell of approaching an investor. Understandably, they find the process intimidating. One way to avoid this kind of interaction is to cultivate a network rich in potential investors. If you have a pre-existing relationship with potential investors, the dynamic may be different when you approach them. You may even find that interested parties approach you regarding your business ideas. Remember, investors aren’t just investing in your business; they’re also investing in you. That’s why it pays to have heightened visibility and a positive reputation in relevant circles.

2. Show evidence.

When it comes to large sums of money, investors don’t usually gamble on a hunch. Instead, they want hard data that convinces them of your project’s potential. Unfortunately, this can be difficult to obtain at an early stage: after all, you haven’t received an investment for the work yet!

However, it’s not impossible. For example, the results of a successful small-scale pilot or some focused market research findings demonstrating strong interest could be enough to convince an investor.

how can a good business plan attract investors

4. Personalize your pitch.

If you can, research potential investors prior to approaching them. That way, you’ll be able to save time and work smart by focusing on those who are most likely to be interested in your investment opportunity. Maybe they already have a portfolio of investments. If so, you should look at the projects that have successfully attracted them and try to find common themes. Ultimately, you want to understand a potential investor’s priorities so that you can tailor your pitch to their tastes. To attract investors, find the right angle to sell your project directly to them. For example, an investor who consistently funds environmental projects will undoubtedly want to hear about your business’s sustainability measures.

6. Choose co-founders wisely.

Do you have a co-founder? If not, you might want to find one fast. They are a great way to complement your skills and background with anything you might be missing. For instance, maybe you’re the brains behind an incredible new technology, but you don’t have any business acumen. A co-founder with a background in business will make your project even more attractive to investors. If you’re extremely resistant to the prospect of pitching, you might choose a co-founder that can be a confident spokesperson.

7. Refine your business first.

Before you start selling your company to others, make sure it’s in the best shape possible. One way to do so is to participate in a startup accelerator. A reputable accelerator brings many benefits: you can meet mentors, expand your network, and iron out any difficulties you’ve been experiencing while working on your idea. Some accelerators have an excellent reputation, which means graduating from those particular programs could impress and attract future investors!

how can a good business plan attract investors

8. Build a strong brand online.

Investors are guaranteed to research your business before they commit to investing in it, so make sure what they find online is positive. If you can build up a community of supporters before you start pitching, that’s proof of interest in your project. An amateurish web presence won’t inspire faith in your abilities. Your site and social media accounts should be updated and professional to ensure positive first impressions.

9. Think outside the box when it comes to investors.

When you think about business investors, you shouldn’t necessarily visualize rich people in expensive suits. These days, alternative forms of funding are available. Maybe your project lends itself to group funding, for example. There are online platforms designed to facilitate this by matching interested parties with investment opportunities. Pitching on these platforms is a different experience from the traditional investor pitch. For inspiration on your approach, research other projects on your chosen platform that successfully attracted funding and see how they achieved their goals.

10. Don’t overload potential investors with information.

When you’re trying to convince a would-be backer, it can be tempting to provide every fact and figure available about your project. However, important details that could seal the deal may be lost when you prioritize quantity over relevance. Rather than flooding investors with information, make the process as easy as possible for them. Provide relevant details in a concise, accessible format. If you overcomplicate matters, you’ll probably struggle to keep their attention.

11. Emphasize your originality.

Investors have likely seen many pitches, which means they’re probably bored of the same-old, same-old. Of course, you shouldn’t build your pitch around cheap gimmicks, but you should lean into what makes your project unique, embracing and emphasizing your originality. Explain specifically what makes your idea different from others: how will your business conquer its competitors? What does it do that no other business in your sector does? The ultimate goal is to generate excitement. Potential business investors should feel inspired to be part of your project.

12. Spend time on a polished presentation.

A pitch with a potential investor is definitely not the time to wing it. Not only do you risk losing the investment, but you could also damage your reputation, which can have long-term implications for your business. To avoid this, prepare for your pitch and practice your presentation thoroughly. Ideally, you should practice it in front of a knowledgeable audience that can provide constructive feedback. Demonstrate that you’re a professional and that you believe the investor’s time is valuable. This will make them much more confident about going into business with you.

Once you’ve absorbed this advice and put it into action, you’ll be more than equipped to start approaching backers. However, don’t be dismayed if you’re not immediately successful . Persistence is key, and with time and hard work, you’re bound to find the perfect investor for your project.

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how can a good business plan attract investors

How to Attract Investors With Your Business Plan

  • By Jared Bradshaw
  • April 20, 2022

Two business partners shaking hands

Finding investors is never an easy task. However, if you know what an investor is looking for, you can set forth a plan that wins them over.

The reasons for needing investors are simple: Investors provide present and future stability. There is power in numbers, and a compounding effort will provide your company many benefits. 

According to Pocket Sense ,

“A company that achieves positive earnings growth per share and regularly distributes a dividend is often considered a safer, more stable investment than investments in companies that do not pay a dividend.” pocketsense.com

Making the choice to bring on investors is not only smart, it is an effective way to see your company grow, and see a quicker profit. 

With the following advice from Startup Wars , choosing and finding the right investors is a win-win situation.

Spark Interest

The most important thing that your company or startup needs to do is to catch the interest of potential investors. 

You can spark interest by showing a potential investor that your company can grow quickly. Show the potential with their involvement, and establish how your company can handle this growth. 

It’s important to show investors that your company can build a solid profit. With a unique product and strong financial projections, an investor will feel safe in taking that leap of faith.

Your Financials

People say, “It’s all about the numbers”, and that could not be more true when it comes to investors. 

  •  Know your numbers: Potential investors need to visually see that your company can financially perform.  Banks or Venture capitalists want to see the possibility of high returns on their investment.
  • Show your financial stability: Show investors your company’s growth. Discuss your financial plans. Will you be selling shares? Are you borrowing money currently? Will you borrow in the future to generate growth? 
  • Show your debt repayment plan: This is very important. You must present your plan that proves that your business can handle the repaying of your financial obligations.
  • Show your current assets: Investors will need to see if your existing assets can cover all of your liabilities. Discuss your revenue flow.

The Right Fit

Investors often prefer investing in their area of expertise and interest. According to Fundable , the right “fit” for an investor’s portfolio is very important:

“The best way to determine whether your business is a good match for investors is to look at investments they’ve made in the past and see whether there’s symmetry.” fundable.com

Founders discussing data reports

You need to connect with investors. Angel investors need a pure chemistry and personal connection with you and your company. They will be right there in the field with you, so to speak, so they need your chemistry to be a good match.

Your Business Model

What is your company’s strategic value? How do you generate a profit? 

Answering these questions clearly and presenting this to an investor is exactly what an entrepreneur must do after creating a business plan.

At the time your company or startup displays a profit, your company can prove its strategic value to a potential vp investor. A well positioned business model will direct your company to a larger profit.

When speaking with investors, you need to present your business plan. It needs to be solid and clear.  With your model, prove that you are, and will be, profitable. You must show your business continuity plan and disaster recovery plan.

Different investors seek different opportunities. You should be careful to take the time to customize your business plan for each investor pitch. A venture capital fund manager and an angel investor may have quite a different vision of your market and financial worth. 

Create a unique presentation pitch for each type of investor.

Market Potential and Your Market

Both angel investors and venture capitalists will need to see clearly what your target market is. Is it large scale? This will affect the kind of investor you choose to approach.

Discuss your competition and how you can provide a solution to the problems already existing in your market. 

three people working on a project

Investors will need to see your customer base, and the potential for that base to grow. A large and stable customer base proves your value and your market impact. They will also need to see business continuity planning steps, as well as an exit plan strategy.

The Takeaway

In general, a US or global investor looks to invest in a company that will have the potential to grow quickly. They need to see that your company can generate a solid profit, emphasizing the importance of business continuity planning that proves your sources of revenue. 

Always remember that you are building your network, as well as your net worth. Remember that these beginning relationships can greatly affect the long-term success of not only your new business, but also your placement in your industry. 

Evaluate investor partnerships closely to make sure that you are choosing the right ones for your vision. 

With planning, customization, and hard work, you will find the right investor for your growing company.

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Ok, so you’ve got a business idea, and you’re working to make the dream a reality, but you’ve got to consider funding.

After all, you need money to turn your idea into something tangible. You need cash to pay your employees.

If the money isn’t rolling in yet, it’s tough to build a top notch product or service. That’s why many small businesses and startups look for funding and seek out investors.

Before you even begin to consider outside investment, consider how you can launch the company and get to revenue before you have to raise money. Although it seems hard in the short-term, it’ll be better for you in the long-run in terms of your knowledge of the process, and building your own equity.

So, how do you do it?

Why You Should Bootstrap

Bootstrapping means that you raise money without any help from investors. It’s how we got Grasshopper off the ground. If you can build your business without investors, do it this way.

You might bootstrap and keep your full-time job or quit and use your savings to get business off the ground. Begging your parents for money counts as bootstrapping.

Why bootstrap? You’ll retain complete control. That might not sound like a big deal, but when you’ve got investors’ hands in your company, you won’t be able to build the product you dreamed. Things get mucky when you’re playing with someone else’s money.

Here are some of our favorite resources for bootstrapping:

  • Starting Up on a Shoestring | Inc. If you want to bootstrap your business, check out Inc.’s comprehensive list of bootstrapping articles. The list includes tons of stories of entrepreneurs who successfully bootstrapped their businesses.
  • Bootstrapped, Profitable, & Proud | 37signals 37signals is famous for being both bootstrapped and profitable. They have a whole page dedicated to companies who didn’t take money from venture capitalists. Read Rework by founders Jason Fried and David Heinemeier Hansson for more info on bootstrapping.
  • How to Bootstrap your Business | Entrepreneur Erica Ziela, founder and CEO of Sitting Around, explains how moonlighting helped her succeed. She also discusses how keeping her day job allowed her to pour significant cash into her business
  • Bootstrapping Your Startup: 7 Hard-Earned Tips from Real Entrepreneurs | readwrite Real entrepreneurs offer tips and tricks on how to bootstrap a business. These leaders discuss what they’ve learned from bootstrapping, its benefits, and what bootstrapping can do for you.

If you can’t bootstrap, it’s worth learning a little about equity.

The Different Types of Equity

  • Equity financing is when you sell “shares” of your company to outside investors in order to finance your business. When you make money, your investors are entitled to a portion of the profits. This type of equity is best for sole proprietors who need some start up cash.
  • Equity compensation is when you offer your employees a percentage of company profits as part of their compensation package, typically in exchange for a lower than average salary, or occasionally in lieu of salary completely. This type of equity is best for businesses that are in need of human capital more than physical capital. If you already have an office, a coffee maker, a copier, but need a new software developer, this might be the model for you.

Calculating Equity

As you get started, it’s worth understanding how to calculate shareholders’ equity, and it’s important to investors. To figure out your business equity, you’ll need to calculate the assets and liabilities of their business.

Start by determining the company’s total assets- these are things that are in progress, inventory, cash, or other receivables. You’ll also need to figure out your debts and liabilities, including salaries and accounts payable. To calculate equity, you can subtract the liabilities from the assets. Accounting software such as FreshBooks or QuickBooks can help you do this.

How to Negotiate Equity

Often startups and small businesses can’t offer huge salaries, so they offer equity instead. When employees start out, they may negotiate equity to a higher percentage. Any employee who is offered an equity agreement should be sure to read the fine print. If there are aspects that are hard to understand, they should hire a business lawyer to help them through it. This is a very important agreement, one that is essential to understand. Whether you’re a business owner or a startup employee, it’s helpful to understand how equity is negotiated.

Here are a few tips for negotiating equity in a startup:

  • Ask questions. If you don’t know how something works, ask questions. Keep in mind that whoever is offering the agreement will have answers ready, so don’t be afraid to take the agreement to a trusted advisor or a lawyer. This is a case where there’s no such thing as a bad question.
  • Speak the language. People will begin to use fancy words like “vesting,” and you could end up in over your head. Don’t be afraid to read up on equity to understand how it works before accepting an agreement.
  • Consider taxation. Your equity benefits are not free of taxation, so make sure you understand how the agreement will affect your present and future taxes.
  • Negotiate for ownership. Instead of negotiating for money or shares, negotiate for the percentage of the company that you will own.
  • Look for tricky stuff. Sometimes these documents have tricky stuff that isn’t in your favor. Look for repurchase rights for vested shares, termination of stock options, and non-competes.

What is a Royalty?

We’re not talking about kings and queens. In royalty financing, investors lend funds to guarantee a certain percentage of revenue. Usually, these royalty investors get 2 to 6 percent of revenue increases. It’s especially common in industries that are a bit unpredictable, such as in music. This is a great way for entrepreneurs and small business owners to get money without having to relinquish control. The negative side is that these royalties can get very, very expensive.

Royalty Financing

Royalty financing is just another way of getting investment money for a business. Instead of giving away ownership of your company, you can give investors a royalty percentage based on revenue growth in exchange for a hefty loan. As you grow, you’ll pay back these initial loans to the initial investors.

Equity vs. Royalty

Unlike royalties, equity is ownership. if someone has equity, it means they own a part of the company. This seems great, but it means you don’t have as much control of the company as you did before. Now that an investor owns a certain percentage, they will have ideas about the company’s direction. Royalties have nothing to do with ownership at all. Instead, they’re an agreement based on a loan or asset. That means that an investor will give money in exchange for an agreed upon payment, usually based on revenue. If someone uses someone else’s patent, they have to pay royalty fees for its use.

What should you choose? It depends on what your business goals are, how much money you have, and how much control you’re willing to relinquish.

Angel Investors

Too many young entrepreneurs become obsessed with raising angel and venture capital. When this happens, these folks lose sight of the real reason they became entrepreneurs - to launch and grow their company.

Remember that raising money is not a competitive game where you’re out to win. If you focus on the sport rather than building your business, you’ll undoubtedly end up on the losing side.

If you really have no option but to raise money, angels can be a good alternative to smaller VC rounds, but you want to make sure you’re working with the right investor.

Start by learning the three types of angel investors. Then pick the right one.

Angel Investor #1: “I like money and need more.”

There are too many of these “professional angel investors” out there, and they’re the worst. Their only goal is increasing their wealth. This type of investor is actually a person that wanted to be a VC, but couldn’t raise enough capital.

The reason they are so dangerous is that they have too much vested in the small amount of money they give to your business, which then leads to over-involvement and pressure on you for all the wrong reasons.

Should you take their money? No.

Angel Investor #2: “I have so much money, I don’t know what to do with it.”

Every entrepreneur has met one of these investors: it’s the person who has already generated significant wealth and has no real need for more money, and can afford to be a lot less selective in funding ventures. They’re probably in the stage in life when they’re giving back, and part of that can be through angel investments.

This type of investor is ok if you’re looking for just money and maybe some general advice about the start-up process. But don’t expect incredible moral support or stellar advice from this kind of investor on a regular basis - they are likely over-extended in that realm due to their involvement in multiple ventures.

Should you take their money? Maybe.

Angel Investor #3: “I’m passionate about a specific industry, and have tons of connections in it.”

This is the best angel investor, and a selective one, but the kind you should absolutely target. Why? Because this person already has money and isn’t looking to get involved in angel investing to generate more wealth as the ultimate goal. Instead, they’re hoping to serve as a true angel and really come through for your business by offering both funding and insight.

Best of all, they have clear passion for the industry you’re in, and probably the connections that will indirectly help you succeed. They’ll also have something money can’t buy: credibility in your industry and the connections to make good things happen.

Should you take their money? Yes.

Our advice is to look for angels that fall into either #2 or #3. Stay away from #1 no matter how desperate you get.

Startup Incubators and Accelerators

Both startup incubators and accelerators offer seed money, expert mentorship, supplies, and office space to winners in exchange for a share of company ownership.

Giving up company ownership is a huge deal, and it’s not something you want to take lightly. However, if you’re looking for mentorship and a community, joining an incubator or accelerator might be a good idea.

The two are slightly different from each other. Accelerators usually focus on mentoring and refining as a company tries to go to market, while incubators are more involved in getting the ball rolling on making money.

Some of the most popular include Y Combinator , Techstars , 500 Startups , and Capital Factory , among many, many others. These are sometimes specific to certain fields (technology or entertainment, for example), and others will accept applications for all types of ventures.

Given how beneficial they can be, acceptance into incubators and accelerators is typically VERY competitive across all industries.

There are incubators and accelerators everywhere. Just check out this comprehensive list.

Vesting Schedules

If you’ve got a co-founder or other employees that are riding the wave with you, set up a vesting schedule so that they get benefits once they’ve stayed for a while, not right away.

This protects you from any employees who want to jump on to get rich quick , then take off. With vesting schedules, these employees will only own a part of your company after they’ve stuck around for a while.

Cliff vesting – If an employee is part of a cliff vesting plan, they’ll become vested at a specified time (like after staying for 3 years) rather than gradually or incrementally.

Graded vesting – In graded vesting, employees get a certain amount of company ownership over a period of time. Graded vesting is different from cliff vesting because cliff vesting allows employees to become 100% vested after a shorter period of service

More Financial Info

We know a lot about funding and investing, but we strongly recommend hiring a business lawyer to protect you as you go through these processes. Lawyers can help you sort out what’s fair and right as you hunt down money.

Sure, lawyers are expensive, but they’re worth it!

If you’re looking for more info regarding investors, financing, and equity, check out our Equity for Entrepreneurs: A How-to Guide . We dive in deeper there.

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5 strategies for attracting investors to your business.

Entrepreneurs and start-ups on the lookout for venture capital opportunities or when building up to the perfect pitch will undoubtedly be tirelessly working on making their business, not just a viable option for investors, but an attractive one that will yield substantial returns. But attracting investors to your business isn’t always straightforward. What can you consistently work on that will benefit your business and make it stand out to investors? And what will make them want to invest their time, money, and energy in it? Here, we highlight five strategies for attracting investors to your business that, once ticked off your list, will benefit both you and your investors in the long run.

Offer an attractive stake in your business

Have a standout usp.

If your business is offering a product or service with a proven unique selling proposition (USP), investors will be attracted to it like bees to pollen. It doesn’t matter how big or small the scale of your USP is, whether you’ve patented an instantaneous, cheap Covid-19 test or own the only organic, refill food store in Nottinghamshire, if you can prove demand and profit (or potential profit) you should be able to persuade an investor to back you. A history of successful products and/or services and a few business awards will help boost your credibility here too.

Sell that USP

It’s no good just having a fantastic USP. You and your team must also be able to explain what it is in a few sentences in a manner that gets everyone who hears about it excited about it. If you and the rest of your team are constantly and effectively selling your USP, you will create a buzz about what you’re doing wherever you go. Not only will this make it easier for you to find investors, investors may even approach you before you’re ready to approach them. This is because others in your industry will be talking about what you are doing and the media may even pick up on it without you having to go to the expense of hiring a PR or marketing firm.

Build a stellar team

Maybe you’re selling a Software as a Service (SaaS) product to the FinTech sector and you have one of the UK’s, or even the world’s, leading FinTech SaaS experts on your team, or perhaps you’ve enticed someone who was previously on the board of a household name such as Tesco to work with you. Potential investors will clock this and put you on their radars.

Having a team that includes well-respected experts is a smart way of attracting investors and may stand you a better chance of getting funded. If you can show that they are committed to working with your business for at least the next few years, and that the whole management team will be easy for outside investors to work with - that will win you favour too.

Demonstrate admirable corporate social responsibility

Increasingly, investors are looking to invest their money, time and effort into companies that demonstrate that they take their corporate social responsibility seriously. And demonstrate is the defining word here. You can’t just say that you are focusing on being a sustainable and responsible business, you need to provide evidence that you are.

This means, for example, proving that you are taking steps to create a diverse workforce; that you’re constantly auditing your business processes to minimise their effects on the environment and make them more sustainable; that you’re creating jobs for the local economy and that you’re working to support the local community and charitable causes. Evidence of targets that you have set and are reaching, and meeting will help to demonstrate your commitment here.

The more examples of your corporate social responsibility in action that you can show to investors the better. Some investors will only now invest in businesses with ethics that match their own. One value-based tool that your company can use to demonstrate a high level of corporate social responsibility and public transparency is to become a certified B Corporation , often referred to as a ‘B Corp’. 

If you have not focused on corporate social responsibility in the past, own up to it. If you try and hide it, it will surface in any due diligence investors carry out. Acknowledge your mistakes and then explain how far you are going to fix them and make admirable corporate social responsibility an integral part of your business model from now on. Read our guide on why corporate social responsibility matters for your business and take the extra steps you need to attract investors.

Investors put time, money, and effort into a business because they want to see a good return on that investment. If you’re seeking hundreds of thousands of pounds of investment in return for a minuscule stake in your company, the investor will likely retreat on the basis that there’s really not much in it for them. You need to be prepared to give investors a decent stake in your business, so that hopefully when they are ready to exit , typically after between four and seven years, they get back a sizeable amount more than what they put in.

If you have taken on significant debt to grow your business, investors may expect a larger stake in it because the risk may be perceived as slightly higher, but most businesses have some form of debt, so providing it is well managed, it won’t put them off investing.

And it’s not just money you can ask for in return for a stake in your company. You can also ask to benefit from your investor’s skillset and time. Perhaps they are a marketing expert, a sales genius, a financial mastermind, or a combination of all of this and more. Ask them for support in their own areas of expertise so that you can apply this to your business to maximise its potential.

Once you’ve successfully got the right individual interested in investing in your business, make sure that you are clear about what each side is getting from the investment. Don’t sign any terms sheets or investment agreements before consulting your corporate solicitor . By having the right legal support in place ahead of reaching an investment agreement, you can be confident that the terms will benefit both your investor and your business.

If you need legal support in relation to the investment process and drawing up the necessary agreements, our specialist corporate team can help. Contact us today on 0800 689 1700 , email us at [email protected] , or fill out our contact form and we’ll get back to you within 24 hours.

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7 Things Investors Are Looking for in a Business Plan

7 Things Investors Are Looking for in a Business Plan

Will your business idea succeed? Take our quiz - completely confidential and free!

A business plan is a comprehensive document that outlines a company’s mission, goals, finances, revenue, and market data.

The primary purpose of a business plan is to convince banks and/or investors to loan you money, but there are several other benefits.

Business plans help create accountability within an organization, offer a holistic view of the company, and can repeatedly be used as a frame of reference.

Ultimately, a business plan mitigates risk. It summarizes all business areas and details how those areas ( marketing , operations) impact growth.

And there’s no way around it; if you want to fund from an investor, especially if you’re just starting your business , you need a business plan.

Any entrepreneur would be lucky to meet with an angel investor or venture capitalist. But the initial pitch, meeting, and presentation are all the tip of the iceberg.

What comes next is most important.

The potential investor will want a detailed business plan and will conduct due diligence to ensure you’re a worthy investment. With that in mind, here’s what investors are looking for in a business plan:

Strong Executive Summary

The executive summary is the first portion of your business plan and should be captivating enough to give a solid first impression.

Think of your executive summary as your website landing page. If visitors come to your website and can’t find what they’re looking for, they’ll move on to the next best thing.

Your executive summary should introduce the company and explain what you do and what makes you unique. It gives investors a complete overview of your business and should summarize key details in other business plan sections. This section is typically one page long and should be written last.

Start your executive summary by introducing yourself; follow up with an explanation of why your business matters and how it fills a gap in the market or solves a particular problem. Take a business plan example for inspiration for writing a practical executive summary.

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how can a good business plan attract investors

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Complete Financial Forecast

Whether you have no sales or are generating revenue in the hundreds of thousands, every investor will scrutinize your financial plan to determine financial feasibility accurately. This section of your plan needs to be fully fleshed out and leave no grey area or room for further questions.

It’s essential to put yourself in the shoes of an investor. Based on your financial outlook, do you see yourself as a risky or promising investment? Your financial forecast should include the following:

Projected profit and loss statement Projects how much revenue you’ll generate and the profit you’ll make on those sales

Break-even analysis A detailed look at how many products you need to sell to cover fixed and variable production costs

Projected balance sheet Estimate of total assets and liabilities

Cash flow statement Details all cash inflows and outflows

Business ratios Calculations that illustrate the relationship between items (i.e., total sales and the number of employees).

To accurately build out your financial forecast, you must assess your market share (your market research section is also crucial to investors). Start from the bottom by highlighting your total addressable market and the percentage you’ll be targeting. Then you can dive a little deeper by outlining your segmented addressable market and share of the market. Investing sites can also help you better perceive the state of the market and other data for a more accurate forecast.

Want free financial templates for your business plan?

You will find a terrific collection of important templates, including a SWOT analysis, sales forecast template, profit and loss template, cash flow template, and balance sheet template, in this comprehensive guide on how to write a business plan.

how can a good business plan attract investors

Customer Acquisition Costs

Investors want to know how much it will cost to acquire new customers.

Understanding your customer acquisition costs (CAC) helps you grow healthy and scalable and shows investors that you know exactly what it takes to get a customer on board.

Knowing your CAC is more important than ever; the cost of acquiring new customers has increased by 60% over the past five years .

Customer acquisition costs are determined by examining the total cost of sales and marketing necessary to acquire new customers. You can calculate your CAC by dividing the total cost of marketing and sales by the number of customers acquired.

Your CAC can also help simplify your decision-making process, optimize your marketing strategies to focus on customer lifetime value, and paint a complete picture of your payback period (the amount of time it takes to recover the cost of an investment).

Strong Execution

A business plan is like an image. And as the age-old saying goes, “An image is worth a thousand words.”

Similarly, your business plan reveals much about who you are as a business owner. Let’s say that you have strong sales and an optimistic financial forecast. Is your business plan missing the necessary documentation and data points that support this? Is it rife with grammatical errors and improper formatting?

Execution is telling. How you communicate your business is just as important as the details within the plan. A hastily written or ambiguous business plan will result in more questions and hesitance.

If you can’t take the time to write a solid business plan, what else will you take shortcuts on?

The Financial Ask & Answer

The financial ask and answer addresses two crucial questions: How much money are you asking for, and what will you do with it?

The investment you’re seeking should be clear in your business plan (typically mentioned in the executive summary and expounded upon in the financial plan). How you intend to use the money should also be clear and logical.

Investors need to know that you’ll spend their money responsibly and that there’s proof that how you spend the money will result in revenue growth. Every dollar should be allocated to a specific destination for a good reason.

For instance, you cannot ask for a $500,000 investment without explaining how and why you arrived at this number. The business plan in the below example of a functional company called Culina states how much they’re asking for and why. In this case, Culina is raising $15 million to ramp up hardware manufacturing, improve UX and UI, expand marketing efforts, and fulfill pre-orders before the holiday season.

section of business plan

Strong Management

Your business plan should prove that you have a strong management team.

Many investors run their portfolios with a people-first mentality. This means that who you are is just as important as what you offer. Your business plan’s “Management” or “Team” section is great for humanizing your company and highlighting your strengths.

What makes your team especially capable of running and guiding this business toward profitability? What’s your background? Have you won any awards or participated in any incubator programs? Do you have relevant experience (either in running a business or working in the industry)?

Answer these questions to show investors that you’re uniquely qualified to lead.

Thorough Understanding of Your Market

Is there a market for your product or service, how can you reach your market, and what share of the market do you have a stronghold on?

Demonstrating a thorough understanding of your market and target demographic is crucial. Many businesses have failed because they didn’t conduct market research or speak to their customers and clients. Product validation should precede fundraising efforts.

“Market size” is a basic number that every investor looks for. Your competitive analysis , market research, metrics, and customer surveys should all be factored into the equation.

If you’re struggling to understand your market and position, you can start by gathering primary data from the Census and Labor Bureau. Many industries also have formal associations and publish their research online. You can purchase these studies or commission a market research firm to spearhead your research.

An interested investor can make or break your business and should be taken seriously. You wouldn’t rush through an Ivy League college application and shouldn’t submit a hastily written business plan.

Take the time to detail every aspect of your business and consider working with a business plan writer to ensure you communicate your message effectively. If an investor is impressed with your business plan, chances are you’ll score pivotal funding.

how can a good business plan attract investors

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How to attract investors.

Table of Contents

Attracting Investors To Your Startup

Introduction.

image showing startup founder attracting investors for his startup

An investor is anyone who invests money with the expectation of profit. He could be an individual, a company shareholder, a foreign investor, or another company, all of whom have varying risk tolerances, capital, and preferences. Startups are more expensive to establish and operate. That is, when they look for investors to help them finance their operations. Investors help startups raise capital. They also provide valuable contacts, helpful advice, and motivation to work harder to grow your business. Entrepreneurs must demonstrate their ability to outperform other investment opportunities. So, using a variety of strategies can help you gain the support of investors. Here are some ideas for attracting investors to your business.

1. Develop a Strong Business Plan

The first and most crucial step in attracting investors is to create a business plan. A business plan is a written description of your company’s future, a document that explains what your company is all about, the goals you need to achieve, who your potential customers are, what you intend to do, and how you intend to do it.

An executive summary, company overview, management team, market, and competitive analysis, sales and marketing plan, and financial analysis are all business plan components. Potential investors can see where and how they’ll fit into your business with a fully defined business plan , making future partnerships easier to establish. In short, it should be simple to understand and demonstrate a clear strategy for making your business idea profitable.

2. Avoid Herd Mentality

To attract investors to your business, you must ensure that your product offers something new and unique while addressing relevant issues. If you want to invest in investors, doing the same thing as others is not the best approach. Many entrepreneurs take something that already exists and tweak it slightly to stay in a different line.So it is critical to consider ideas outside the box.

3. Ask For Advice

Instead of calling and emailing investors and begging them to invest in your company, try something different, such as seeking their advice. You may be able to build a good relationship with an investor by reaching out to them for advice. It may lead to them being more willing to invest in what you’re doing and allowing them to point out flaws in your business and ways to overcome them.

4. Social Media

Social media can be an invaluable resource for startups looking to attract investors. Investors typically have well-rounded LinkedIn, Facebook, and Twitter social media profiles. Connect with them and inform them that you are a dedicated follower. Investigate their responses and followers and whether they have previously invested in a similar industry. LinkedIn can be used to send cold messages and seek quality introductions, Facebook can be used to maintain relationships with investors , and Twitter can be used to have thoughtful conversations and engage with relevant information shared by investors. Spend enough time getting to know them personally and professionally.

5. Conduct Market Research

Find the right investor who understands your business segments by conducting market research . Start researching them in detail. Collect facts, ideas, and information and gain as much knowledge as possible about pitching and finding an investor. The motive is to show that your idea solves a real problem and market for the product/service. Further, it would be best if you also researched your investors to find information about their past investments and genuine commitments.

6. Scalability

Investors seek opportunities that can rapidly expand and deliver significant returns on their investment. A scalable business model allows a company to grow its revenue without proportional increases in costs, demonstrating efficiency and the ability to capture a larger market share over time. Thus, your startup should be built with scalability in mind.

7. Obtain Customer References

Apart from meetings and discussions, investors like to refer to customer satisfaction regarding your products/services. Investors look to understand whether they are happy customers, what value the company brings to its customers, your procurement process, and what differentiates them from competitors. So, arrange for customers to offer interviews to potential investors when the time comes.

8. Be Realistic With Your Pitch:

Getting attention from investors before you start discussing your business proposal is essential. Pitch after pitch may fail, but don’t be over-aggressive or defensive. Be patient and professional. The investor has to understand accurately when their contribution can begin bringing the return and how you will get them a return on their investment. Most importantly, rehearse your pitch, anticipate investor questions, and have answers ready. Please explain what is unique about your product/services, your targeted audience, and how you intend to acquire customers and show them your exit strategy.

9. Explain Your Financial Statements

Financial statements tell a lot about how you operate the business. Simultaneously, they should be set out professionally in a spreadsheet such as Excel. Firstly show them the revenue model, expected cost, and profit prediction based on market research that you will use for your business to assure them that the money they are investing is worth the investment. Prepare a profit and loss account, balance sheet, and cash flow statement for the first five years. Also, it proves that your business model and financial information are realistic and will become profitable for your startup.

10. Use Brilliant Sales Tactics

After the pitch, it’s time to utilize your experience and knowledge to sell this idea to investors.  Consider storytelling, exciting sales pitches, and soft-selling through networking as some ways to attract investors through sales tactics. Indeed startups must convince investors that people are willing to buy their products or services and should have the potential to shake up the marketplace. You must show them what makes your product or service different from others, which means you must highlight your USP (Unique Selling Point).

11. Have Co-founders

Starting a company alone is overly complicated, so it is essential to have co-founders rely on it, which can be a vast upliftment. Find the right co-founder who introduces you to valuable knowledge, advice, and connections and makes the startup process easier beyond just attracting investors. Nevertheless, having the wrong co-founders can ultimately lead to the failure of your business. So, choose them wisely

12. Solid Management Team

Show that you have an innovative and strategic management team to lead the business. Investors seek a solid team with in-depth talent, skills, experience, and excellent business ideas . When the team members have had achievements in the past, it indicates they can succeed in the future. So, build a team that is efficient and passionate about working hard and contributes to startup success.

13. The Way You Present is Extra Essential

Investors might meet hundreds of people in a month, so you need to be different in those terms to make a difference for them to consider investing in your business. Be exceptionally clear, compact, and audible about the words you are expressing in the event; otherwise, it is doubtful you can break the arrangement. Using the latest ways to present your idea will leave an admirable impression on your investors.

14. Strengthen Your Brand’s Online Presence

Strengthening your startup’s online presence is crucial for attracting investors because they inevitably research your business before making any investment commitment.

Building a community of supporters prior to pitching serves as tangible proof of interest in your project, demonstrating market validation and demand. An amateurish web presence can erode faith in your abilities, while a professional and up-to-date website and social media accounts leave positive first impressions.

15. Expand Your Network

Work on expanding your network. Similarly building a diverse network allows you to access potential investors with varying interests and expertise, increasing the chances of finding the right match for your startup. Moreover, investors often prefer recommendations and referrals from trusted sources, making a strong network an invaluable asset in gaining credibility and trust.

By cultivating relationships with potential investors, you can increase the likelihood of interested parties approaching you who are genuinely interested in your startup.

Attracting investors is an incredible struggle and a time-consuming process. It is especially true for startups because they lack a trade history. Today’s business world is rapidly developing, so if you are looking for ways to attract investors, you must be well-planned and prepared. Need help getting investors for your startups? Trust us to find the right investor for you!

Related topic: Types of Investors every Entrepreneur must know

Attract Investors and Fuel Your Startup’s Future

Transform your startup’s investor appeal with our dedicated services. From financial modeling to business plan writing, we equip you with the tools to attract investors effortlessly. Let’s pave the way to funding success – Book a meeting with our experts!

Strong leadership team, Scalability, Solid financial projections , Familiar Industry, Strong market potential.

To attract the right investors, define your ideal investor profile, research suitable networks, attend events, and customize your pitch to align with their interests. Also, engage on social media and be persistent in your efforts.

Investors primarily focus on assessing the viability and potential of a business when considering an investment opportunity. They look for a compelling value proposition that addresses a market need, a significant and growing target market, and a well-structured business model. Proof of traction, such as customer acquisition and key achievements, is essential, along with a competitive advantage that sets the business apart. Investors also evaluate the team’s capability to execute the plan and realistic financial projections. Additionally, they analyze potential risks and the clarity of the exit strategy.

Main elements any investor look for in a business pitch include a Compelling Value Proposition, Market Opportunity, Strong Business Model, Traction & Milestones, Competitive Advantage, Solid Team, Financial Projections, Risk Assessment, Exit Strategy.

Yes, certain industries or sectors tend to be more attractive to investors. Technology, healthcare, renewable energy, and fintech are examples of sectors that often garner significant investor interest. This is because these industries usually offer high growth potential, innovative solutions, and opportunities to address pressing global challenges. Investors seek sectors with scalable business models, strong market demand, and the potential for substantial returns on investment. However, attractiveness can vary based on market trends and economic conditions, so it’s essential to conduct thorough research before seeking investment in any specific industry.

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5 Effective Strategies For Attracting Investors

5 effective strategies for attracting investors

  At a certain stage in a company’s lifecycle, it reaches a precipice wherein internal growth is capped without the aid of outside funding. When companies find themselves at this crossroad, they must then identify and convince investors to fuel further growth.   But, with so much potentially at stake, how can a business go about attracting investors the right way? Today, we will discuss five effective strategies you can leverage to bring fantastic partners into your corner.  

Strategy #1 — Investors Want a Roadmap

  Companies and individuals invest to make money—lots of it. For companies to take on such risk, they need to be convinced that the venture has the potential to at least 10x their initial investment. Otherwise, what is the point?   The more business results you have, the easier it is to convince investors to cast their lot. Ideally, you should have all of your financial statements in order and the investment deck fully prepared.   While big ideas can be effective, the company’s numbers are often the biggest determinant of investor interest. They want to know that their investment will not only be repaid in full but multiplied. They need to see that your business model will function at scale and what those potential numbers could be.   To convince them to risk their capital, you must prove that the model works, and then provide a clear argument as to how you will utilize their money to grow the business. Topics to cover during a pitch meeting include:  

  • Your historical company numbers
  • Balance sheet
  • The total money required
  • How that money will be utilized
  • Competitor and market analysis
  • Your unique value proposition

Strategy #2 — Target the Right Investors

  A partner is much more valuable than a blank check.   The ideal investor will not only provide capital, but also add tangible value to the company as it continues to grow. You want someone who can strengthen the product, leverage their network of professional relationships, and partner with you throughout the business’ lifecycle.   And remember, not all investors will be the same.   Some provide early-stage, smaller capital injections, while others provide larger funding for later-stage growth (a Series A, for instance). The type of investor you target will largely depend on where your company is in its maturity and how much equity and control you are willing to give up in exchange.   With that being said, common options include:  

  • Venture capitalists
  • Private equity firms
  • Friends and family
  • Angel investors
  • P2P lenders

Strategy #3 — Leverage Networks and Referrals

  Instead of targeting the hard sell, a common strategy for smaller companies is for its entrepreneurs to network and soft-sell their start-up in a more organic way. According to Diana Goodwin, founder of AquaMobile Swim School :   “If you’ve been building a great business, getting out and networking within the local startup and investing community can be a great way to meet investors. Most of my meetings with investors developed by being out at an event and mentioning my business.”   Networking is one of the most natural methods you can utilize to inform other professionals and investors about your business and the potential opportunities it may offer. If your industry holds major events or conferences, this is a unique chance to meet other players within the space, learn more about the industry, and introduce your idea to key investors.   A soft-sell pitch that is well executed could land you in a major investor meeting. So, be open about discussing your plans and goals. And do not worry about coming off too strong. Just be observant and thoughtful. If the parties you are chatting with are interested, they will keep the discussion alive.  

Strategy #4 — Offer Stocks with Dividends

  One investing option that might entice a reluctant partner is to provide a stock offering that isn’t limited to just company equity, which only provides value if the company eventually sells. An alternative is to provide investors with a stock that pays dividends, so investors are enticed by immediate cash flow returns.   Offering immediate returns instead of a long-term ROI could make investing in you a much more attractive option. But for this to work, you need to have a clearly structured compensation strategy and timeline.  

Strategy #5 — Speak to a Larger Purpose

Make no mistake, investors want ROI. It is the sole reason they make high-risk investments.   With that being said, the opportunity to make more money is only a facet of their entire purpose. For many individuals at this stage, they want a product or service that they also believe in—and the value it provides the world.   So, in addition to demonstrating the economic viability of the business, it is also essential to emphasize your company’s:  

  • Mission statement
  • Potential positive impact on the world

  As Inc.com notes: “Blake Mycoskie of Toms Shoes attributes his ability to raise a seed round and build a $400-million company to his commitment to provide a free pair of shoes to the underprivileged for every pair sold. He didn’t have any big technical shoe innovations.”   Toms was one of the first companies to embrace a one-for-one, charitable business model. This helped the company build a buzz via word of mouth and social media campaigns. It also gave investors a sense of purpose and satisfaction that they would be able to make money and fund a noble cause.  

CFO Hub—Helping You Attract Investors

  Finding investors is half the battle. After you’ve identified them and carved a route in, the next step is to convince them that you are, in fact, worth the risk. For that, remember to:  

  • Provide a clear financing roadmap
  • Target the right investors
  • Leverage your network
  • Offer investment packages that offer immediate returns
  • Highlight the larger purpose of the business

  To that end, do you need help finding and attracting investors? How about establishing your investing documents and roadmaps?   Here at CFO Hub, we pair growing businesses like yours with CFOs and Controllers that complement the needs of the business. With the right person(s), you can craft an excellent pitch, create a vetted criteria of partners, and eventually attract the perfect investor.   Interested in learning more? Contact us today for a free consultation.

how can a good business plan attract investors

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Business Plan Advice

As a budding entrepreneur, when you think about what relationships you’re going to need to support you on your journey, you probably think about the importance of building better customer relationships or the importance of building relationships with your key resources. However, there is one kind of crucial relationship that’s often overlooked: the relationship with your initial stakeholders. Investor relations, particularly during the very early days, are the very foundation of practically all successful organizations. 

Investor Relations

Building a good relationship with investors, right from the very start, is critical, especially if you’re planning to rely on outside investments to launch, develop, and grow your idea from concept to reality.  One of the best ways to build a good relationship is to ensure that you’re communicating your message in the very best way; that you’re presenting your business plan in a way that attracts attention, gets investors excited about you and about what you do, and that puts you both on the same page.

business-owners-build-business-plan

But it’s not always as simple as that. The problem is that while you may be offering something unique, investors can’t always see how you differ from the rest. After all, the number of new startups is rising rapidly, with reports suggesting that in 2010, there were 560,588 businesses in the US under one year old . Today, that figure stands at 804,398, so investors are seeing more business plans than ever before. 

The secret to standing out, attracting attention, and building the right relationships, with the right people, is creativity; presenting your business plan in an innovative and creative way that not only lets you communicate your idea and share your message but also ensures you’re heard and understood. 

Creativity in Investor Relations

Investor relations are already beginning to become more creative. Some entrepreneurs have been boldly moving away from the tried-and-tested business plan and embracing the more modern pitch decks, for example. But this isn’t necessarily the right approach. The truth is that both the traditional business plan and the more condensed lean startup business plan are highly effective ways to get your ideas down in a structured, valuable way. The secret to attracting, engaging, and building relationships with stakeholders isn’t in redesigning the business plan; it’s in redesigning the way that you present this plan to investors. 

Here are three simple yet effective ways to mix up your presentation strategy for a bigger impact:

1. Look Beyond Reality

Isn’t realism the foundation of any good business plan? In a way, yes. Investors will always want to see a realistic overview of your financials. But the problem with realism is that when you’re at a point where your idea is just that - an idea - you haven’t really got all that much reality to base your business plan on. 

So have a bit of fun with it. Run with it. Rather than just presenting the real facts and figures, and looking at the most likely possibilities, use your presentation as a way to set foot beyond reality and get your potential investors excited not about what you will do, but what you could do. In your presentation, don’t be afraid to ‘go big’, acknowledge the bigger picture, and incorporate fictional aspects alongside your real data to demonstrate the wider potential of your idea beyond the restricted confines of reality. 

use-mind-mapping-to-fine-tune-business-pitch

The best way to present this ‘big picture’ potential is through mind mapping . Why? Because a mind map - a brainstorming diagram that features a central idea surrounded by associated concepts - allows you to go off on tangents without losing sight of the core notion. While other types of brainstorming software like digital whiteboards and online sticky notes can help you to build your business plan, the strong visuals and simplicity of mind maps are great for actually presenting these ideas in a clear, impactful way.

2. Become a Storyteller

The standard business plan consists of a range of facts and figures, all connected through narrative. But the problem with basing your business plan on these facts and figures is that data isn’t unique. Investors may well have heard 5 other business plans earlier in the day, each presenting the same information. 

A better and more creative way to present your ideas is by turning the traditional business plan around, building it on narrative, and interspersing this narrative with your data. Why? Because data sets can be seen by anyone. But your story is your story. By presenting your idea in a more personal way, you’re giving your business plan something that no other person could possibly give it: you. So, while facts and figures are important, communicating this data through storytelling is an even more critical factor. 

There are a number of different ways to become a good storyteller. One is to use your real-life experiences building your product or service and transform these experiences into a strong narrative. Another way is to create your own protagonist from scratch, walking your potential investors through your journey through the fictional yet relatable and relevant experiences of your target audience.

3. Go Off-Script

Not for the faint of heart, this third creative technique involves presenting your elevator pitch - your quickfire overview of you and your business idea - and nothing else. Instead, following your introduction, you transform what should be a business presentation into one giant Q&A session, going 100% off-script. 

Turn the traditional pitch into a new and unique opportunity for your potential investors to take the lead, asking their questions rather than just listening to your answers. One of the biggest problems with pitches today is that they are over-rehearsed, and it shows. When investors ask questions, they want their questions answered. What they don’t want is pre-generated auto-responses that have been molded to try and fit the question. And yet, most of the time, that’s exactly what they’re getting. 

two-business-professionals-meeting

While it’s important to practice and to be prepared for practically every scenario, a more creative and authentic way to present your ideas is by listening to what’s being asked and coming up with your own answers to specifically meet these questions in real-time. It’s a nerve-wracking technique without a doubt, but it’s one that helps you stand out through greater transparency, openness, and honesty. 

Finding the Right Approach

Standardized presentations are outdated. Why? Because it’s becoming increasingly clear that not all investors are looking for the same thing, so a blanket approach isn’t going to cut it. Research shows that, while some investors prioritize financials , others look more at the market, and some base their decisions on investor fit. Attracting and engaging today’s investors means utilizing different approaches based on each different investor. This highlights how important it is for entrepreneurs to research their audience. 

Is an investor creative? Are they quiet, careful, and committed to the bigger picture? Then visual presentation ideas like mind maps could be the key to success. Are they driven equally by emotion as they are by logic? Storytelling could be the solution. Are they more of the spontaneous type? Going off-script could be what it takes to have an impact. Remember: your business idea and data may not be unique…but you are. By taking a creative approach, you’re giving investors something no one else can:

An Easier Way to Prepare Your Business Plan -The Business Model Canvas The Business Model Canvas (BMC) is a one-page business plan that allows you to test and validate the key parts of your business in a manageable format.

Business Plan Presentation Template Use this template when creating a presentation for your business plan.

Copyright © 2023 SCORE Association, SCORE.org

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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How to Attract Investors to Your Business Plan?

Before you look for investors, it is important to refine your business first. That is to say, you won’t want to present something unpolished and foggy. It will not only degrade your company’s reputation but also you as well.

What do investors look for before investing in your business? Words from real investors:

As per Karin O-Connor, former Managing Director of Hyde Park Angels, an investor would like to invest in businesses that tap a big market, a big pain point, something that customer is really eager to have solved for them, and the solution that seems to make sense.

It is equally crucial to judge the entrepreneur, based on his/her presentation, whether they have experience and confidence in executing a business. Entrepreneurs must not be over-defensive or over-enthusiastic to the point they don’t understand the business projections and risks involved.

If you’re a startup entrepreneur and trying to get money and business progresses very quickly. And aim to gain huge within a few weeks. Then you are likely going to miss the deal if you are attracting investors. In fact, you shouldn’t want to make that process quickly if you want to move forward with investors.

Particularly, building good relationships and maintaining consistency are the words of a wise business process. Because when you try to make things overnight, it is likely to fail in the long run. And investors would never be interested in short-term gains.

If you do these 08 things, then investors will Walk Away:

The investors are going to reject your business plan if you:

1. Not building your background before investors are interested in listening to you:

Nothing happens by chance. It occurs by the plan. That is to say, things do not work like, someday you felt to put your business ideas to investors, and you made a cold call, email, or reach out to their location. Do you think they are even going to respond to you? Not at all. Investors are not only investing in your business but they are also investing in you.

Your high visibility and positive reputation in your business circles show real evidence of your credibility. It is called investor trust building through references. The primary reason that will attract investors is to at least let them listen to you.

2. Don’t need a team:

Building a startup is a team spirit. If you say, you are the sole founder, not backed by any other stack holders, that would be fine. However, if you don’t need a team of staff or employees and pretend to be a one-man army, you may be successful as an individual but would fail to attract investors.

No matter whether you have all the experience & knowledge and are a brilliant founder if you’re going solo, then you would lose the investor round.

3. You are trying to make quick cash:

Investors are interested in those who want to bring something large, huge, and enduring. If you are fluctuating in your business idea and trying out ways to make quick cash, then investors are not going to believe you. The venture capital business model is not going to work that way.

You should think about building a market, going yourself many options, and making money as much as possible. So, it is how you build a sustainable business long-term to give you as many options as possible.

So, anybody who tries to sell something fast is quite ingenuous about how the business system works.

4. Creating a sense of urgency:

If you managed to attract a lot of investors, and you provide each of them with a short timeframe to decide, else you would move on with the next one and would repel investors who are forced to decide things hastily.

Investors take time to decide based on market opportunities, and business durability rather than doing things up in hurry. They would rather walk away than close a deal without whom they cannot be partners.

Att6racting an investor is very much about timing. Having some sense of urgency when you are closing the investment, is fine. But it should not be a part of your initial conversation.

5. Encouraging investors to sign an NDA(Non-Disclosure Agreement):

The moment you encourage investors to sign an NDA document that indicates a lack of trust. That might be problematic in terms of building working relationships.

Being an entrepreneur, if you think that somebody can easily steal your idea and replicate that, investors won’t find you and your business to be strong & reliable, if you need too many boundaries to secure your business.

6. You don’t need a sales team:

You are so confident that, your product can sell itself without the need of a sales team. If you have a great product, it earns some short-term gains. But there is no way you can get profits in the big numbers and big deals specifically if it is a big enterprise application.

Well, it is a myth that, especially software product companies consider marketing and sales a waste of time. And if as a founder think, then you are likely to run a limited value business.

To conclude you will need a sales team if you have product-led growth to maximize that potential.

7. You just need investors’ money:

You are not enough resourceful but you just need money to invest. Then, that will totally turn off.

Being an entrepreneur, you are basically saying that you cannot do anything with investors’ money, then you are not really resourceful. Of course, funding can help you make things faster, easier and better. But if it is just impossible for you to progress without external inflows, then investors remark it as a non-serous business.

The best founders do something out of whatever they have.

8. You have no competition:

When you say you have no competition, it’s usually one of two things and none of them are very good.

First, no competition very often means no market. If nobody else finds this market attractive, maybe there is no market.

Any market will either have competition or get competition. Otherwise, it’s pretty unlikely that it’s a great market.

When someone says that they have no competition, investors are slightly nervous because, on the one hand, they want founders to be fearless and ambitious, but they also want them to have just a slight edge of paranoia.

You know, if there really isn’t competition now there will be in the future, right? If what you’re doing is valuable and interesting. So it will be. Therefore, it’s always good to find someone who’s thinking around corners.

However, no competition makes investors worry that you’re not the kind of business that they can invest in.

Top 11 Things You Mush Have in Business Plan for Investors

Most businesses fail because they don’t have any direct plan of action. As a founder, if you fail to recognize the correct business plan, you will end up doing more harm than good. Therefore, you must know how to plan things right.

1. Business Summary:

It is a great place to start with a business plan. Your ideas must be in a clear and polished way that draws the reader’s interest and attention. Basically, you are selling your idea to draw in funds from investors. And that should be worth it.

Whether you are giving it to an investor or banker, it needs to be short and crisp. But not longer than a page.

In this section, you must answer a few questions clearly. They are:

  • Why should your business exist?
  • What is your business mission?
  • Why should investors be interested in your business?
  • Why your business is going to be successful?

So, the business summary is a good place to include all these points and hook them into the document.

2. Which product or service you’re going to sell:

Now, opportunities are all over the place. Now you must figure out how you’re going to execute and create a plan around that.

  • What are all opportunities to make money and create a business?
  • Ask yourself the question, what products and services do you see as most viable?
  • Is there a product or service that you feel solves a problem?
  • What is your solution to that need or problem?
  • What are the potential downsides and upsides of the business?

3. Sales & Marketing Plan:

The next thing is the sales and marketing plan. It includes how are you going to get your product or service and actually tell people about it.

It is like sharing your message, connecting with people, running display ads on Facebook and Google, or maybe even mail.

  • All these different forms of marketing, this is what you need to iron out in this part of your business plan.
  • How you are going to actually tell people that you offer this service or this product, and why is it so great?
  • How can you tell them about the need they have for what you are selling?

Now, the sales part. There are many different ways to sell things. You can do it in person, like in a retail store, you can do it over e-commerce, or online. You can do it direct to consumer or you can go through a wholesaler or a distributor.

There are so many different ways to figure out sales. And that’s gonna really be determined by your business plan and govern everything to do with the business. For example, if you are doing direct-to-consumer, you don’t need to go get retail stores and get a bunch of real estate involved and salespeople to sell in person.

It’s going to be a completely different model. So this is very important to figure out, how you communicate your message and how it is going to transact with people, direct-to-consumer, through a wholesaler, through a distributor.

There are so many different avenues of sale. You must answer these questions in your business plan for investors.

  • How do you tell people that they need your product or service?
  • How do you communicate your message with people?
  • How will they transact with you? What business model will you use and what are your sales projections?

4. The potential downsides and upsides:

Most investors realize that what they want you to see is that you’ve actually thought about the potential downsides and upsides of what your product or business is going to become.

They want to see what you’ve actually thought, what happens if the labor market changes, what happens if technology changes, and the further out you’re thinking, they actually start to see.

It never is smooth sailing. So there are a lot of components, to preparing a business plan.

5. Do market research:

Do market research and then analyze that data to make sure the product or service you’re offering to the market is actually going to be accepted and people are interested in buying it.

For example, you might be wanting to sell custom t-shirts and make a business around that.

And so you may collect all of that data you’re going to talk to people, or survey people, maybe do some market research around who accepts what type of shirts and, is it or some other apparel? Is it a sustainable business? Which is the best printing method you should opt for customized t-shirts? Should you go for print on demand?

These are all different types of data points you need to know. When you do your market research make sure that your product or service is going to be purchased.

6. Do market analysis based on data collected:

Ask yourself, have you talked to people and surveyed people? What data points have you studied? What types of market analysis have you done? What customer demographics are you looking for? What kind of location or physical location will you need?

7. Prepare an Organizational Chart:

The next thing we need to think about is company organization. So, a lot of times when we look at company organization, we’re thinking about an org chart.

In fact, when you first start your business is the fact that your name. It might fill in multiple boxes at the beginning. And this is the kind of traditional hierarchy of a business that you look at.

Maybe, the top part, of this position is going to be the CEO. Then maybe you have an office manager over here.  So for example, you have different positions underneath the CEO’s level position. And then underneath each of these people, you’re also gonna have probably employees down the road.

This might be, five years down a road plan. But what’s going to happen is, when you first start your business, you’re probably going to fill in a lot of these boxes.

So what you should do is prepare an organizational chart. What are the positions that you need? And then, fill out next to it.

So, what are the crucial points to be included in the organizational chart?

  • What are the positions and then who is responsible for actually carrying out those functions within the business? That might change, and that will change as the business grows.
  • What is your business hierarchy?
  • What positions are offered at your company?
  • What positions will you need to be filled and when?
  • Who’s responsible for what, and how will they get the job done?

8. Unique Sales Proposition:

How do you define a unique sales proposition and how do you make yourself stand out in your business?

A unique selling proposition, has to do with the owner himself. Like your age can be a unique selling proposition, your experience, your level of expertise in a certain area. That’s really your USP or unique selling proposition. So, how long should your business plan be? – If you are going to a bank or to a lender, or trying to get an investor, they’re probably gonna want something that’s quite a bit more substantial, like 30 or 40 pages.

9. Financial projections:

Ask yourself the following and use the above section of the business plan to build out the financial projections.

  • How much do customer acquisition cost?
  • What is the industry average of customer acquisition?
  • How much will each customer bring into the company?
  • What is the industry average?
  • What are your financial projections over time?
  • How will sales and profits grow?

10. What’s after financial projections?

It’s the real thing, it takes money to make money. So funding this operation and funding the business plan is really important. And to me really important for an investor they’re going to know this stuff.

How are you going to actually get the money to make this all happen? Create the product, create the service, buy trucks or equipment, the real estate, the office space, whatever you might be needed, how you define it.

You can bootstrap it. That means you’re coming up with the money yourself. Maybe even going into debt, using debt to fund, finance the business.

Or you can go ahead and get an investor that’s going to give you angel round or a seed funding and give you the money, investing in the business. And there are different ways that you can get the money. It’s a matter of what’s going to be the best thing for the business. Is the business high growth where you want investors and they’re gonna be getting equity in exchange for money? Or is this something you wanna bootstrap or maybe going to get a loan from your local credit union where you can actually do this without having to go to investors, ’cause?

11. Funding:

Are you catering your business to the funding type you are seeking? What is the MVP or minimum viable product? How much money do you need to get started? How soon can you make money and make this a profitable business? You also wanna outline the money needed and plan how the money will be spent.

Final Words:

If you’re going to an angel round or sophisticated, like VC, venture capitalists, they’re gonna be wanting to see every single data point. Where did these numbers come from? Where did these industry averages that you came up with, and where did they come from?

You’re going to have to have a lot of proof behind that. So a lot of times, most small businesses get started with bootstrapping or loans from a local bank. It is just the easiest form of doing so. And usually, the requirements of all that business plan being exactly ironed out is less stringent than if you were trying to go raise funding from a venture capitalist or an angel investor.

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Can Duolingo Stock (NASDAQ:DUOL) Generate Multi-Bagger Returns?

February 16, 2024 — 04:23 pm EST

Written by Marc Guberti for TipRanks  ->

Duolingo ( NASDAQ:DUOL ) has everything a growth investor would want, except it also has a high valuation to keep things interesting. The educational app is branching beyond languages into subjects like math and music. Duolingo is riding on the tailwinds of innovations in education and can generate multi-bagger returns. It’s the go-to app for people who want an interactive way to learn a new language.

I am bullish on Duolingo’s long-term prospects but am watching from the sidelines for now. A good dip or a better valuation may tempt me to initiate a position.

how can a good business plan attract investors

Strong Revenue and Earnings Growth

Duolingo is rapidly expanding and gaining market share. The company posted 43% year-over-year revenue growth in the third quarter and increased its bookings by a higher percentage. Total bookings were up 49% year-over-year, while subscription bookings increased by 54% year-over-year.  

In another positive development, Duolingo flipped to profitability. The company reported net income of $2.8 million in the third quarter compared to an $18.4 million loss in the same period last year. 

The switch to profitability is an exciting moment for growth investors. Many software companies that become profitable expand their margins rapidly. A higher net income reduces a stock’s P/E ratio and makes it more enticing for long-term investors. 

Users continue to flock to the platform based on a 47% year-over-year increase in monthly active users. Additionally, daily active users went up by 63% year-over-year. These metrics indicate a financially robust company that is gaining more traction.

Valuation Concerns

Duolingo’s recent profits have resulted in a forward P/E ratio of 95x. It’s a lofty valuation that may scare away some investors. Some growth investors also consider a stock’s price-to-sales ratio. Its P/S ratio is currently 17.5, but it’s not the best metric for determining a stock’s value.

Duolingo doesn’t offer much of a margin of safety at its current price. While the stock has dropped by roughly 30% from its 52-week high of $245.87, it's up 92% over the past year. 

The educational app’s stock seems like a long-term buying opportunity for investors who have a five-to-10-year time horizon. The company has maintained 42-43% year-over-year revenue growth for several quarters, and profit margins should expand considerably this year. Further, a 115% year-over-year increase in net income indicates that valuation concerns can go away in a few quarters. 

Expansion Into Multiple Subjects

Duolingo made a big announcement near the end of 2023 that expanded the company’s total addressable market. The company used Duocon 2023 as a platform to promote its multi-subject future. Less than a month after the conference, Duolingo launched math and music on its app.

The firm can expand into many subjects and reach more users in the process. Not everyone wants to learn a new language, but some people may use Duolingo in the future to learn about American History, science, math, and other core subjects. 

Incorporating broader subjects complements Duolingo’s existing business model very well. Someone may decide to learn Spanish through Duolingo after going through some music lessons. Active users who are learning a new language may sharpen their skills in non-language subjects. 

Duolingo is operating its enterprise in a profitable manner. The company has the resources to tap into more subjects and attract more users to its app. These investments can help Duolingo generate more revenue growth and attract new users when it reaches market saturation for people who want to learn new languages.

Giving people more things to do can also increase the number of daily active users. This user base saw higher year-over-year growth than monthly active users. Daily active users also help the company increase revenue and profits. 

Is DUOL Stock a Buy, According to Analysts?

Duolingo is currently on hold, according to analysts, but it hasn’t had much coverage from analysts in the past three months. The stock has only been publicly traded since mid-2021 and has an $8 billion market cap. DUOL currently has four ratings, which include one Sell and three Holds, giving it a Hold consensus rating. That’s not the best group of ratings for a growth stock, but the average DUOL stock price targe t still suggests modest upside of 5.5%.

how can a good business plan attract investors

Two analysts gave no price targets and suggested that investors hold the stock. One hold came in with a $230 price target, while the analyst with a sell rating suggested a $160 price target. The higher price target suggests an upside of roughly 24%. 

The Bottom Line on Duolingo Stock

Duolingo offers enticing growth prospects due to rising revenue, expanding profit margins, new subjects, and a growing user base. The stock checks a lot of the boxes that growth investors look for.

The only concern is the DUOL's 95x forward P/E ratio. If the valuation was lower, the stock would be a compelling pick in the near term. However, it becomes more enticing if you have a five-to-10-year horizon for the investment. Therefore, Duolingo looks like a promising buy-the-dip opportunity overall. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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  • Your investment portfolio should be spread across many types of assets — and real estate can be one.
  • If you don't want to be a landlord, REITs offer an easy way to invest without a huge time investment.
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There are many ways to invest, and one that has grown in popularity recently is real estate investing . This may conjure up images of "Selling Sunset" and million-dollar properties.

But Charles Clinton , cofounder of online investment platform EquityMultiple , says there are many ways to get involved in real estate investing as a way to diversify your investment portfolio and potentially be an additional source of income.

Clinton has five tips that anyone considering real estate investing should remember.

1. Use real estate as one component of a diversified portfolio

Clinton says that people include real estate investing as part of a portfolio across asset types, also known as a diversified portfolio. Part of the diversification process is deciding what kind of real estate investment is right for you since each time comes with its own risks. 

“Assess what’s right for you based on your personal goals and risk tolerance,” Clinton says. “What role do you want to play in the process, and how much of your portfolio do you want to dedicate to real estate?”

2. Consider REITs for a hands-off approach

You might be interested in investing in being a partial or full owner of a property that’s an apartment, single-family home, industrial warehouse, or commercial building.

The cost to invest in and maintain a property can vary depending on the location and market conditions. This can include a high investment in money and time, though you can also invest in real estate using real estate investment trusts, which won’t require you to be a landlord.

3. Think carefully about the location of your property

You also have the option of buying a physical property and renting out part or all of it; however, choosing property for real estate investing is very different from choosing where you want your current or forever home.

“You choose your home where you want to live and work, but there’s no guarantee that it will appreciate in value,” Clinton says. “If you’re investing in property, you’re not limited to where you want to physically live or work.”

4. Look for high-value opportunities

Another consideration is how to invest in real estate that’s being built in an intentional way.

“The goal of investing in real estate is to make money and usually that involves increasing rents,” Clinton says. You can also invest in buildings that are increasing the quality of the tenant experience with additional amenities so that increase is justified.”

5. Remember, you can't predict the market

In a market where interest rates are rising and property values are down, Clinton says that this can be a good time to invest. But at the end of the day, you can’t predict the market.

“Unexpected things can happen at any point, and you can’t isolate your portfolio from all of the possible changes,” Clinton says. 

Watch: From affordable housing to money transfers for immigrants — a $1 billion impact investor explains how she makes money while making the world a better place

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Google’s Gemini is now in everything. Here’s how you can try it out.

Gmail, Docs, and more will now come with Gemini baked in. But Europeans will have to wait before they can download the app.

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In the biggest mass-market AI launch yet, Google is rolling out Gemini , its family of large language models, across almost all its products, from Android to the iOS Google app to Gmail to Docs and more. You can also now get your hands on Gemini Ultra, the most powerful version of the model, for the first time.  

With this launch, Google is sunsetting Bard , the company's answer to ChatGPT. Bard, which has been powered by a version of Gemini since December, will now be known as Gemini too.  

ChatGPT , released by Microsoft-backed OpenAI just 14 months ago, changed people’s expectations of what computers could do. Google, which has been racing to catch up ever since, unveiled its Gemini family of models in December. They are multimodal large language models that can interact with you via voice, image, and text. Google claimed that its own benchmarking showed that Gemini could outperform OpenAI's multimodal model, GPT-4, on a range of standard tests. But the margins were slim. 

By baking Gemini into its ubiquitous products, Google is hoping to make up lost ground. “Every launch is big, but this one is the biggest yet,” Sissie Hsiao, Google vice president and general manager of Google Assistant and Bard (now Gemini), said in a press conference yesterday. “We think this is one of the most profound ways that we’re going to advance our company’s mission.”

But some will have to wait longer than others to play with Google’s new toys. The company has announced rollouts in the US and East Asia but said nothing about when the Android and iOS apps will come to the UK or the rest of Europe. This may be because the company is waiting for the EU’s new AI Act to be set in stone, says Dragoș Tudorache, a Romanian politician and member of the European Parliament, who was a key negotiator on the law.

“We’re working with local regulators to make sure that we’re abiding by local regime requirements before we can expand,” Hsiao said. “Rest assured, we are absolutely working on it and I hope we’ll be able to announce expansion very, very soon.”

How can you get it? Gemini Pro, Google’s middle-tier model that has been available via Bard since December, will continue to be available for free on the web at gemini.google.com (rather than bard.google.com). But now there is a mobile app as well.

If you have an Android device, you can either download the Gemini app or opt in to an upgrade in Google Assistant. This will let you call up Gemini in the same way that you use Google Assistant: by pressing the power button, swiping from the corner of the screen, or saying “Hey, Google!” iOS users can download the Google app, which will now include Gemini.

Gemini will pop up as an overlay on your screen, where you can ask it questions or give it instructions about whatever’s on your phone at the time, such as summarizing an article or generating a caption for a photo.  

Finally, Google is launching a paid-for service called Gemini Advanced. This comes bundled in a subscription costing $19.99 a month that the company is calling the Google One Premium AI Plan. It combines the perks of the existing Google One Premium Plan, such as 2TB of extra storage, with access to Google's most powerful model, Gemini Ultra, for the first time. This will compete with OpenAI’s paid-for service, ChatGPT Plus, which buys you access to the more powerful GPT-4 (rather than the default GPT-3.5) for $20 a month.

At some point soon (Google didn't say exactly when) this subscription will also unlock Gemini across Google’s Workspace apps like Docs, Sheets, and Slides, where it works as a smart assistant similar to the GPT-4-powered Copilot that Microsoft is trialing in Office 365.

When can you get it? The free Gemini app (powered by Gemini Pro) is available from today in English in the US. Starting next week, you’ll be able to access it across the Asia Pacific region in English and in Japanese and Korean. But there is no word on when the app will come to the UK, countries in the EU, or Switzerland.

Gemini Advanced (the paid-for service that gives access to Gemini Ultra) is available in English in more than 150 countries, including the UK and EU (but not France). Google says it is analyzing local requirements and fine-tuning Gemini for cultural nuance in different countries. But the company promises that more languages and regions are coming.

What can you do with it? Google says it has developed its Gemini products with the help of more than 100 testers and power users. At the press conference yesterday, Google execs outlined a handful of use cases, such as getting Gemini to help write a cover letter for a job application. “This can help you come across as more professional and increase your relevance to recruiters,” said Google’s vice president for product management, Kristina Behr.

Or you could take a picture of your flat tire and ask Gemini how to fix it. A more elaborate example involved Gemini managing a snack rota for the parents of kids on a soccer team. Gemini would come up with a schedule for who should bring snacks and when, help you email other parents, and then field their replies. In future versions, Gemini will be able to draw on data in your Google Drive that could help manage carpooling around game schedules, Behr said.   

But we should expect people to come up with a lot more uses themselves. “I’m really excited to see how people around the world are going to push the envelope on this AI,” Hsaio said.

Is it safe? Google has been working hard to make sure its products are safe to use. But no amount of testing can anticipate all the ways that tech will get used and misused once it is released. In the last few months, Meta saw people use its image-making app to produce pictures of Mickey Mouse with guns and SpongeBob SquarePants flying a jet into two towers. Others used Microsoft’s image-making software to create fake pornographic images of Taylor Swift .

The AI Act aims to mitigate some—but not all—of these problems. For example, it requires the makers of powerful AI like Gemini to build in safeguards, such as watermarking for generated images and steps to avoid reproducing copyrighted material. Google says that all images generated by its products will include its SynthID watermarks. 

Like most companies, Google was knocked onto the back foot when ChatGPT arrived. Microsoft’s partnership with OpenAI has given it a boost over its old rival. But with Gemini, Google has come back strong: this is the slickest packaging of this generation’s tech yet. 

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IMAGES

  1. Creative Ways To Write A Good Business Plan For Potential Investors

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  2. Tips to Help you Write a Good Business Plan: Step by Step Guide

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  3. 5 Effective Strategies For Attracting Investors

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COMMENTS

  1. How to Write a Business Plan That Attracts Investors

    April 8, 2022 Successful businesses are built on paper before they set foot in the real market. Building a business requires working simultaneously on multiple projects, and it's easy to get overwhelmed. When that happens, a business plan becomes a guiding light, helping entrepreneurs and leaders work from chaos to clarity.

  2. Eight Key Strategies To Get Investors Interested In Your Business

    4. Offer A Stock That Pays Dividends. Offer a stock that pays some dividends so that your investors get cash flow instead of just long-term equity. The immediate rewards, in terms of dividends ...

  3. 15 Ways Startup Founders Can Attract Investors

    1. Increase Traction Working with Founder Institute, a leading pre-seed accelerator, I've had the honor to meet and help hundreds of founders throughout the last eight years. The one thing that...

  4. How to Write a Business Plan For Investors

    1. Executive Summary The Executive Summary is an introduction to the main ideas that you will discuss in the rest of the plan. If an investor read only the Executive Summary and nothing else, you'd want them to be able to walk away with a clear understanding of the main highlights of your business and why it's exciting.

  5. 4 Strategies for Crafting a Business Plan That Attracts Investors

    1. Understanding overall investor expectations From venture capitalists to angel investors, there are a few key elements that are sought after in a business plan across investor classes....

  6. How to Write a Convincing Business Plan for Investors

    Updated November 29, 2023 Raising money for your business is a major effort. You need lists of investors to reach out to and you need to be prepared for your investor meetings to increase your chances of getting funded. You need to practice your pitch and be ready to intelligently answer any number of questions about your business.

  7. 15 Ways To Find And Attract Investors Remotely

    1. Choose Your Networking Platforms Carefully First of all, choose the right platform (s). Forbes Council and LinkedIn are great places to find the right people.

  8. How to Attract Investors When Creating Your Business

    1. Work on extending your network. Many entrepreneurs dread the hard sell of approaching an investor. Understandably, they find the process intimidating. One way to avoid this kind of interaction is to cultivate a network rich in potential investors.

  9. 7 steps to create a business plan that will wow investors

    Step 3: Customers. Olivia has done her research, which is the fundamentals upon which any business plan should be based. People love statistics. Olivia found statistics describing the growth in plant-based eating in the past decade, as well as the growth of flexitarian dietary choices.

  10. How to Attract Investors With Your Business Plan

    April 20, 2022 Finding investors is never an easy task. However, if you know what an investor is looking for, you can set forth a plan that wins them over. The reasons for needing investors are simple: Investors provide present and future stability. There is power in numbers, and a compounding effort will provide your company many benefits.

  11. How to Attract Investors and Funding for Your Business

    Bootstrapping means that you raise money without any help from investors. It's how we got Grasshopper off the ground. If you can build your business without investors, do it this way. You might bootstrap and keep your full-time job or quit and use your savings to get business off the ground.

  12. 5 strategies for attracting investors to your business

    Offer an attractive stake in your business. Investors put time, money, and effort into a business because they want to see a good return on that investment. If you're seeking hundreds of thousands of pounds of investment in return for a minuscule stake in your company, the investor will likely retreat on the basis that there's really not ...

  13. 7 Things Investors Are Looking for in a Business Plan

    A business plan is a comprehensive document that outlines a company's mission, goals, finances, revenue, and market data. The primary purpose of a business plan is to convince banks and/or investors to loan you money, but there are several other benefits. Business plans help create accountability within an organization, offer a holistic view ...

  14. How to Write a Business Plan That Investors Will Like

    Here are eight sections that a business plan should include: Executive Summary: This is an overview of the rest of your business plan. It will summarize things like your mission statement, plans, goals, structure, and financial needs. Keep this section short. Company Description: This section will identify the key parts of your business model ...

  15. Editorial: Writing a Business Plan to Attract Investors

    A business plan is the road map that shows investors the path the entrepreneur plans to take to success. An incomplete map will not give the investor a full picture of where the entrepreneur is going or the plan to get there and will probably cost him or her access to funding. Cox: There's just no way anybody is going to lend you any money ...

  16. Five Ways for a Small Business to Attract Investors

    1. Use your resources As a small business owner, networking is an important component of starting and growing your business. Leverage your own social network — your family and friends.

  17. How To Attract Investors?

    startup-tips How To Attract Investors? Get started Attracting Investors To Your Startup Introduction 1. Develop a Strong Business Plan 2. Avoid Herd Mentality 3. Ask For Advice 4. Social Media 5. Conduct Market Research 6. Scalability 7. Obtain Customer References 8. Be Realistic With Your Pitch: 9. Explain Your Financial Statements 10.

  18. 5 Effective Strategies For Attracting Investors

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  20. 3 Creative Ways to Present Your Business Plan to Investors

    2. Become a Storyteller. The standard business plan consists of a range of facts and figures, all connected through narrative. But the problem with basing your business plan on these facts and figures is that data isn't unique. Investors may well have heard 5 other business plans earlier in the day, each presenting the same information.

  21. 10 Strategies That Attract Investors

    Innovate to Succeed. Choose projects that are innovative - Run of the mill projects seldom attract investors. Investors are investors because they like the thrill associated with it. Have a solid business plan prepared by the best market research companies. It adds credibility to your ideas and builds confidence in investors.

  22. ATTRACTING INVESTORS WITH A BUSINESS PLAN

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  23. How to Attract Investors to Your Business Plan?

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  27. 5 Tips From a Real Estate Investing Expert on How to Get Started

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