37 investors, a mixture of business angels, venture capital providers, incubators and banks were asked to provide information to Ibis on what they commonly incorporated in their summaries of particular investment proposals.

The results were very varied. All investors required details of project, market and management, venture capital providers were also interested in exit, valuation, risk assessment and worst case scenarios. Business angel networks were the least sophisticated in preparing detailed investment case summaries; banks were most interested in levels of security provided, gearing and interest cover.

In total 34 items were mentioned which would be incorporated into an investment case summary. These are listed below with a brief comment of what is normally included.

 

Element

 

What it includes

 

Funding stage

 

Definition of funding required – seed corn, early stage, second round, expansion capital, MBO,MBI

 

Purpose of funding

 

Describes the use of funds

 

Current and other proposed funding routes

 

Describes current funding structure of company; includes any other new funding proposed

 

Key shareholdings

 

Structure of ownership

 

Company description

 

Describes what company does – technology, market it services

 

Tangible assets

 

Lists current assets

 

Intangible assets (inc IPR)

 

Lists other assets, such as brand value. IPR value

 

Market size and growth

 

Order of magnitude of market, rate of growth

 

Market drivers

 

Key forces shaping the market and how proposal is influenced

 

Speed of market change

 

Identifies diffusion dynamics of market; key buyers

 

Global potential

 

Defines how easy it will be to expand the company to service a wider market

 

Seasonality, long term cycles

 

Defines stability of market growth and revenues over investment horizon

 

Pricing/ market profitability

 

Defines how constrained the company will be in managing pricing and levels of return that can be expected in the market

 

Management team

 

Defines how effective the management team is and what gaps need to be filled to implement the company plan

 

Extent of project development

 

Describes the stage of project development for companies in early stage investment

 

Business model

 

Defines how the company will reach the market; how it will make money; how this compares with other successful models

 

Business strategy

 

Describes mixture of strategic options which are currently used by the company and future plans

 

Competitive advantage

 

Clear definition of competitive advantage: does it really exist?

 

Main competitors

 

Lists main competitors

 

Barriers to entry

 

Defines barriers to entry in market and how competitive exclusion can be achieved

 

Key performance indicators

 

Defines what performance measures need to be focused on for achievement of the plan.

 

Key risk elements

 

Defines what risk exists and how it is managed; includes market beta

 

Downside potential (break up asset value)

 

What value would be left on worst case scenario

 

Cost base

 

Describes how cost base is managed and how it could be reduced if plan values underachieved

 

Break even

 

Describes sensitivity to volume; ease of break-even achievement

 

Forecast EBIT period end

 

Defines earnings before tax and interest at planned investment end

 

Dividend policy

 

Defines payout policy during period of investment

 

Valuation at period end

 

Measures company valuation at end of investment period using agreed price/ earnings ratio

 

Investment sought

 

Value of investment and mix of funds required

 

Interest cover

 

Revenue cover for interest component

 

Gearing

 

Debt equity ratio over the period of the investment and implications

 

Equity share offered

 

Percentage of equity offered

 

Exit potential

 

Types of exit available at the end of the investment period

 

IRR/NPV

 

Rate of return to investor through standard investment appraisal methodology

More information on the way in which Ibis can contribute to your business plan development is provided at Advantage Ibis 

More information on the Ibis approach is also available on the FAQ page..