The success of an offer is determined by how attractive your investment proposal really is. When you develop and determine the basic terms of your security offering, you will have to go back to your business plan and have another look at your financial planning section. This will give you guidelines of what you have available and what you possibly could offer to potential investors.
It is absolutely essential to have a clear idea of what potential gain you can offer to investors. You will have a clear picture of what you can “play with” if you look at your project’s financial forecasts. Why should investors place funds into your project and not into another one, or into another investment opportunity and asset class altogether?
So write down your Investment Proposal.
Your investment offer should be described in a 3 or 4 line summary covering issues such as the minimum subscription (Tranches of the Security) maturity date, capital guarantee (if any other than the project’s collateral), the coupon and coupon payment date(s) if this is what you want to offer, and an entry fee if you seek to charge any. Is there an early redemption option offered and if there is no capital guarantee, then you will have to describe the collateral on which the security is based and which should ultimately secure the investor’s funds.
To find out if your investment proposal will attract investors, here is a very simple method:
(1) Draft and scribble the terms of your offer on a piece of paper.
(2) Put that piece of paper on the other side of your desk.
(3) Get up and take a seat at the opposite side of your desk.
(4) Take that piece of paper and have another look at the document and this time, think like an investor.
(5) Ask yourself this question: “Would you place your hard earned money into this offer on these terms?”
If YES, then place the order for SECURITIZATION immediately. If no, then you will have to work on the offer once more.
Sometimes, it is the uniqueness of the product or service that attracts investors. Another time it might be the high income potential in the opportunity and another time, it might be just the right balance between risk and profit ratio which make your offer “take wings and fly…”
If you spotted “problems” when taking a seat in the investor’s chair reviewing your offer, sometimes you can make adjustments by offering a higher investment return, or adding some kind of additional guarantee or collateral.
If you need help, talk to us. We are always available with a great financial strategies team and with ideas to solve potential problems and overcome almost any hurdle to achieve the ultimate goal: To get you in funds!