Demystifying investment docs: What investors expect to see
Last updated: 3 June 2024. Unless you've got a Scrooge McDuck money pit you can dive into and draw out a couple of million at will, your business...
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7 min read
Sam Jeans : 19 November 2024
Ah, the humble business plan. Far from being an outdated formality, it remains one of the most powerful tools in a founder's arsenal – when used right.
A smart business plan isn't a static document you write and forget. It's a dynamic tool that adapts as your business grows, helping you progress through each stage of your journey.
From securing funding to aligning your team, a well-crafted plan can be the difference between growth and chaos.
Let's jump in and explore exactly when you'll need a business plan, what to include, and how to create one that delivers real results.
There are certain moments in business when a solid plan is mandatory, such as when you're seeking investment or applying for a business loan.
Whether you pitch to investors, apply for a bank loan, or seek SEIS/EIS approval, you'll need a solid plan to open those doors.
While the core elements of your plan stay the same – your business model, financials, market analysis, team – the emphasis will shift depending on your audience.
A bank wants reassurance about repayment, while investors care more about growth potential.
Here's exactly when you'll need a business plan and what each audience is looking for:
Banks often request business plans to provide unsecured business loans. They care about one thing above all else: getting their money back. Your plan needs to show them exactly how that's going to happen.
When approaching banks, your financial projections and risk assessment are among the most important elements. They'll want crystal-clear monthly cash flows, comprehensive revenue modelling, and solid evidence you can make repayments even in challenging scenarios.
Banks want to see clear routes to sustainable revenue, preferably supported by existing contracts or strong letters of intent. Try to include comprehensive competitor analysis backed by real data, not just assumptions.
Remember: banks aren’t interested in unicorn potential - they want to know they'll get their money back.
Whether you're pitching to angels or VCs, investors want to see something quite different from what banks need. Investors will examine these elements:
The narrative needs to show how their investment will fuel growth. Unlike banks, investors are generally less interested in your ability to repay and more focused on how you'll scale.
They'll dig deep into your customer acquisition costs, lifetime value calculations, and growth projections. Be prepared to defend every assumption in your model.
Your competitive positioning also warrants serious attention. Investors want to understand what makes your solution unique and – crucially – defensible.
Founders famously often struggle to balance ambition with realism!
Plans need to show massive potential, but investors want returns that justify their risk. Every claim needs to be backed by solid evidence and clear thinking.
The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are government initiatives designed to help early-stage companies raise funds by offering tax relief to investors.
SEIS focuses on very early-stage companies, offering 50% income tax relief to investors, while EIS offers 30% relief and is aimed at slightly larger businesses.
Before your investors can claim these valuable tax breaks, you'll need HMRC's advance assurance – confirmation that your investment would qualify. And that means submitting a comprehensive business plan alongside your application.
Your advance assurance application must include:
What often trips founders up is the 'risk to capital' requirement. HMRC needs clear evidence that investors' capital is genuinely at risk – these schemes are designed for growing businesses, not tax avoidance!
Your plan must show substantial growth potential and clear evidence that investors could lose their money.
Applying for advance assurance with Vestd is easy. Our guided workflow takes you through the process step by step, from checking your eligibility to submitting your application to HMRC.
Simply upload your business plan, financial forecasts, your supporting documents, and other information. We'll review it to make sure nothing's missed, then submit it on your behalf. No hassle, no fuss.
The Start Up Loan scheme (up to £25,000) also requires a business plan. As it's government-backed and designed for new businesses, they need to see clear evidence of:
Unlike bank loans, they don't typically require collateral – but your plan needs to be particularly thorough as they're taking a bigger risk on early-stage businesses.
You can explore the information they’ll need you to provide on the Startup Loans website, where you’ll also find a downloadable template.
Your business plan isn't just for external stakeholders – it should work as hard inside your company as it does outside.
While you might place different elements in the limelight for different audiences, at its core, it needs to serve both purposes. It maps out clear goals and how you'll achieve them while remaining flexible enough to adapt when circumstances change.
Every audience will want to see different aspects of your plan, but that doesn't mean creating multiple versions from scratch.
Build one solid plan with all the essential elements, then adapt how you present it based on who's reading it. Those elements are:
Here's how to create each section so it works across every scenario - from pitching investors to guiding your team.
Your executive summary heads up your plan, but it’s often best practice to write it last of all. It needs to capture your entire business story in a page (sometimes two), highlighting what matters most.
A strong executive summary covers:
Write the executive summary so it functions as a standalone document.
Many readers will base their initial decision solely on this section.
Too many business plans include vague statements about market size without showing real understanding. Your market analysis needs to demonstrate deep insight into your industry, customers, and competition.
Start with your target market:
Break down exactly how you'll capture your share. Use real data from:
Most importantly, show projections and trends for the above based on real-world data. Markets aren't static – explain how yours is evolving and why that creates opportunity for your business.
This section needs to balance technical detail with clear value proposition. Start with the customer problem, making it vivid and relatable. Then show how your solution solves it better than anything else out there.
Cover your development stage:
Remember to link everything back to customer value. It's not about features but how those features solve real problems.
Your financial section needs to tell a compelling growth story while remaining credible. Founders typically go wrong in two ways: being too conservative (for investors) or too optimistic (for banks).
Include these key elements:
Every assumption in your financials needs to be justified. Don't just show the numbers - explain the thinking behind them. Include a sensitivity analysis showing what happens if things go better or worse than planned.
Show how you'll actually deliver what you're promising. This means detailed information about:
The team section is particularly critical. Investors back teams as much as ideas, while banks want to see capable management. If you or others have built successful businesses or even exited before, for example, this information should be front and centre.
Your growth plan needs to be both ambitious and achievable. Break it down into clear phases with specific milestones. Show how you'll:
Include metrics for each phase and explain how you'll know when to move from one to the next.
Every business faces risks. The key is showing you understand yours and have plans to address them. Consider:
For each risk, explain your mitigation strategy. This shows readers you're realistic and prepared.
Your appendices matter as they’re used to validate and cross-check claims. Keep your main plan focused but provide supporting detail for those who want to dig deeper.
A solid plan serves as a living document that drives your business forward. Review and update it regularly. Track your progress against projections. Use it to guide decisions and keep your team aligned.
Most importantly, keep your plan honest but optimistic. The best business plans aren't just selling documents - they're practical tools for building successful companies.
And remember, as your company grows, your equity structure becomes increasingly important. Whether you're raising investment or incentivising key hires, having a clear grip on your cap table and share structure is fundamental.
InVestd Raise has everything you need in one place to plan and execute your funding round.
One is far more comprehensive than the other.
Think of your pitch deck as the movie trailer and your business plan as the full film. Most investors will want to see both - the deck to grab their interest, and the plan to validate their interest.
Ready to wow investors with your pitch deck? We've analysed countless successful presentations to create the ultimate template.
Download it for free and take your pitch to the next level.
While you can't copyright business ideas or concepts, the specific way you express them in your plan is automatically protected by copyright.
However, anyone you share your plan with could still act on your ideas. That's why it's wise to use NDAs (Non-Disclosure Agreements) when sharing sensitive information, especially with potential competitors.
Your plan should evolve as your business does. Review it quarterly at a minimum, updating projections based on real performance and adjusting strategy as market conditions change.
Major events like new funding rounds, company valuations, product launches, or market expansion always warrant a refresh. Remember - a business plan that's gathering dust isn't doing its job!
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