How are you going to obtain funding from investors for your startup ? It isn’t easy to secure capital while managing day-to-day business.
Thankfully, certain tools such as a startup funding proposal can help to optimize your fundraising strategies. Alternatives to pitching to raise finance for SaaS companies, like Founderpath, are options when appropriate and money can reach your account in 24 hours, but sometimes raising money from investors is appropriate. Founderpath helps SaaS professionals and many early-stage founders like you to generate funds within 24 hours or a maximum of 9 days.
If you are ready to grow and compete, this article will help you explore startup funding proposals. You can even see a sample at the end of the article.
An introduction to a startup funding proposals
Simply put, a startup funding proposal is an overview of the business and the reasons behind why your startup requires funds. A well-written funding proposal helps founders explain to investors:
- the aim of their business
- their business operations
- the reasons behind funding requirements
- the case for why an investor should help
It is a written representation of your startup and a way to communicate your funding requirements professionally. A startup funding proposal also helps investors understand the reasons behind the amount of funds you aim to raise and how their help may make a difference to your business. A proposal also allows investors to evaluate whether their investment will prove beneficial for them or not.
Structuring your startup fund proposal
Do you know that about 90% of startups fail, and 10% meet failure within their first year? One of the main reasons for this is that they don’t get the funds required to build their ventures. One option for financing your SaaS startup is Founderpath, that offers upfront payments based on the value of your customer subscriptions.
Start with summarizing your project
Start your proposal by summarizing your business simply. If an investor doesn’t wish to fund a SaaS business, this allows them to avoid wasting their time.
In your summary, mention:
- the purpose of your startup
- its current position in the market
- your projected customer growth
- your investment requirements.
You can also briefly mention any potential limitations or challenges your startup faces.
Financial position and current performance
Move on to explaining the current financial position and performance of your venture. You can start by listing your assets and liabilities and highlighting their weaknesses and strengths.
If you have financial reports, share them with the investors so they can understand the proper standing of your startup. With a free account, Founderpath provides tools for.
- Customer metrics
- Business metrics
- Integration with SaaS services
- Convenient customer hub to track invoices and subscriptions/payments
List any existing partners and investors
List existing partners and investors and briefly introduce both these parties in your proposal with their contributions and investments to your startup.
Introduce your team
Your startup is your team.Introduce your team members, even if only briefly. You can introduce investors to their skill sets and backgrounds and also provide links to their LinkedIn profiles for anyone who may want to know more.
Sales goals and the market
An investor won’t fund your startup until they are clear about your sales goals and the effort you put into meeting them and competing with similar ventures in the market. To elaborate on these points, make sure to highlight your customer acquisition plans and business model, pricing details of your products or services, revenue goals, targets and any customer testimonials available or shared online.
Share your operational feasibility
Be honest in your proposal and don’t hesitate to share your limitations. If you run a remote team, make sure that your potential investors know the problems related to running one.
Make a chart of your projected expenditures and explain how these may affect your revenue. If possible, share the exact costs of your competitors to draw an evaluation and comparison. Operational feasibility can help investors understand your startup’s prospects and the efforts you plan to put into making these costs as low as possible.
Expected Investment Requirements
Get a report from a third party covering the current valuation of your company. Founderpath can help you get the reports and insights you require to know your worth. Based on the data provided, explain your investment requirements and the percentage of equity you are happy to give up.
You can also mention various categories for which you plan to use your funds. And finally, don’t forget to highlight the multiple ways investors can benefit from this investment.
Different Types of Business Funding Proposals
If you want to impress the investors, it is imperative that you spend time creating the appropriate sample investor proposal. Here are the various types that may suit your situation.
This proposal is often a document created using certain design tools or word processing software. It helps you pen down all the aspects of your startup and communicate its needs. You can use it to communicate your present and future growth through charts to enable a visual presentation.
It can also be customized according to your brand and its purpose and offers great insights into your business operations.
Startup Investment Proposal Pitch or Presentation
Unlike a traditional proposal, presentations or pitch decks are one of the best ways to grab the attention of investors present. It can be conducted online or face-to-face, allowing it to be interactive and much more informative than a startup fund proposal document.
For a pitch to be successful, practice your presentation skills. Engage your audience with:
- Confident body language
- Project your voice
- Know your facts and figures
- Be prepared for questions
A startup investment proposal should also be well-written to prevent the people listening from getting lost. If you speak fast, unprofessionally, or are not well-versed enough regarding your industry, the pitch may fail to create a mark.
An email proposal is quite similar to a traditional one. It may also have the same content.
An email proposal doesn’t have as many diagrams or charts as a traditional one. It is concise and usually straightforward to retain the reader’s attention.
An email proposal often works best with an introduction to the investor by someone known to them. However, if you know your industry-relevant investors, cold emails may also work wonders.
Tips to Design a Successful Cold Email Proposal
Here are some steps to make your cold email proposal stand out.
- Perform proper research before reaching out to investors. Seek any connections that you may have in common and look for ways that you can reach out to them easily.
- Use your subject line smartly. Avoid grammar mistakes and make it as attention-grabbing as possible. If you require funds, make sure that your subject line highlights that.
- Start your email with a brief introduction. Sound professional and formal.
- Briefly introduce your revenue model and highlight your venture’s USP.
- Conclude the email with a call-to-action that shouldn’t be too salesy.
- If you have a pitch available, attach the link to the presentation for more information.
Another common category of startup fund proposal is the 1-on-1 that can be scheduled or unscheduled (chance encounters of the ‘elevator pitch’ variety). Again, these proposals should be interesting, short and attention-grabbing and are often used in events covering various networks.
If you attend such programs and conferences regularly, make sure that you have a 1-on-1 proposal always ready to deliver in your head. The tone of the proposal should be conversational and must be delivered using simple words. Potential investors should understand your purpose properly without losing interest.
Should you always use a startup funding proposal template?
If you haven’t designed a startup proposal before, you may get confused when creating one. In that case, a startup use of funds template may come in handy. It usually provides an outline that allows you to structure your proposal properly.
In some cases, templates may get complicated too. For example, if it wasn’t directly created for your industry, you may end up adding details or sections that might be unnecessary.
For that reason, select your template for relevance. If possible, get help from other founders in your industry to find an appropriate template.
Whether you run a SaaS company or any other venture at its early stage, funding it throughout its initial and growth stage is essential. Without raising capital, it might be impossible to see it flourish and develop into a successful business.
Startup funding is complex and often based on your relationship with investors. A well-created and visually impactful business funding proposal can help you connect with the people who may be interested in providing you with all the funds you need.
To get some insightful business metrics about your Saas business sign up for a free account at Founderpath. Founderpath offers up front financing within 24 hours based on your future SaaS subscription revenues
Start Up Funding Proposal Sample
- The purpose of your startup: Example Saas is the Uber of the insurance industry. With Example SaaS allows your company to purchase insurance on demand for your specific needs and timeframes.
- Its current position in the market: Example SaaS is a new entrant in the Example
- Your projected customer growth: XX% per quarter
- Your investment requirements: We are looking for XXX
- We have negotiated a partnership with ABC Coworking spaces, the leading coworking space provider in Western Europe. Our services are offered to all their members and we give them a $XXX dollar fee for any of their members who sign up for six months or more.
- Our investors include Start Up Accelerator (5%) and Top VC (10%).
- Valuations: based on [method for calculating valuation], our current valuation (January 202X) is $XX m.
- Customer metrics: We have 1000 paying customers and are growing at a rate of 10% per quarter.
- Business metrics: Our average cost per customer acquisition is $XX and the average lifetime value of a customer is currently $XXXX. We expect to drive this up, however, as the company is young enough that we need more time to create a large enough sample to determine this metric.
- Integration with SaaS services: We are in negotiations with SaaS Events Company to integrate with their services. They provide XYZ but don’t have an insurance solution for customers, so this can be to our mutual benefit.
Sign-up to a free Founderpath account to get useful metrics for your SaaS company including a valuation.
We are a team of four.
- Angela Arnold, CEO
- Barbara Buckingham, CTO
- Christopher Crone, CFO
- Derrick Dunford, designer
- The XXX niche in the insurance market is worth $XX bn in Western Europe. The biggest players are XYZ Insurance and Non-SaaS Insurance.
- We believe our SaaS solution offers our niche flexibility that our more traditional competitors cannot match.
- Our subscription+ model of a $100 standing subscription charge plus the revenues from any insurance sold can save our customers money.
- Our revenue this quarter was $X m and we aim to grow that by XX% over the next quarter.
- We have a 95% satisfaction rate on 200 customers surveyed.
- We are looking for another engineer ASAP and foresee an increase in expenditure based on regulatory requirements.
- Our current yearly expenditure is $750 k
Percentage increase in forecast expenditure