An IM or Information Memorandum is one of the important things an investor will request when you start your capital levitation mission. An Information Memorandum serves as the basement for your investment raising. It highlights the future, present and past strategies for your business.
If you have plans to prepare an Information Memorandum or IM for investors, you need to check the following headings for your investment raising.
Investment highlights: It should be self-explanatory. It can be in the form of four to five bullet points regarding the kinds of returns the investors can expect when everything goes as per plan. For instance, if you are one of the few recognized providers of the service or product, then it can specify high barriers to access for competitors.
Letter to investors: It can be a Director’s Letter or Chairman’s Letter. The letter gives an idea of where you have planned to go and where you have been. Ensure to maintain it crispy and short. It should not be more than one page in length.
Executive summary: This part basically consists of all scheduled sections. The executive summary is developed to offer a picture of your business and also a reason to raise capital. The potential investors can focus on Executive Summary instead of spending their precious time by reading an entire document. If you wish you can give sufficient information in this part to the investors. But remember it should not be wide-ranging by any means. Just imagine it as a teaser or brief summary of the remaining contents in the document. You can also use it as a chance to showcase certain milestones your business has accomplished to date.
Growth strategy and business plan: It is a complicated part of the Information Memorandum. You can do copy paste task from the business plan you have already prepared prior to beginning the new venture. Well, your business would have changed significantly until you looked at the business plan last time. It is best to update it appropriately. It is recommended to give particular details on the below aspects of the business.
Risks: Risks comes in various forms and shapes. There are some risks you may have control over and certain risks which you may not have control. It is necessary to discuss risk factors associated with:
These are some of the rough possible risks which you should discuss to remain transparent. As a business owner, you would know what kind of risks your business faces in day to day life.
Executive team: It is a major factor for small and medium enterprises (SMEs). It is one of the best chances to admire the worth of the senior management team. If possible, you can give more information about the advisory board members or the board of directors.
It is necessary to take help when preparing financials both forecast and historical and also while drafting relevant disclaimers. Hope the above outline offers a brief idea of details necessary when raising the capital.
