Investment Case Summary

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.






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






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






Rate of return to investor through standard investment appraisal methodology