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What are the documents required before raising funds
The documents that are required to be prepared before you plan to raise funds for your startups are financial plan, investor presentation, executive summary and teaser documents.
Let us understand as to why these documents are asked by investors and why do the founders of the startup need to prepare them and what do the compromise of and how it is written.
Every founder of the startup has to justify why funds are required and for what purpose will it be used and what is the end result expected out of it. These things need to be answered with justification hence the financial plan gives all the details of how long funds will be required when is fail fast, when do you need to pump in more funds and how long the funds will last, what the sales forecast and at what price and clarity on funds to be raised trench wise.
The financial plan is of more focus these days as a lot of startups have good business models but couldn’t prove the financial viability in spite of funding it couldn’t grow beyond a certain point.
Once you have a financial plan you get clarity on break even the logic behind the sales and the rationale to it.
Then comes the investor presentation, which should have templates on timeline growth, the team, the concept, the business model, the revenue streams, the market that is available, the current scenario of the market with various players at present.
The investor presentation should have secondary research to justify the market and if it has any revenue generation it needs to be shown to provide proof of revenue.
Then comes the executive summary with business description and details of the team along with market points and current pain points of the market and factors responsible for growth.
Then the final is the teaser document, which is just one-pager to give investors very brief information, which will ensure that the investor gets more curious and asks for more information. Usually, in the teaser the name of the company is not mentioned.