Every start up needs investor for taking it to next levels, there is nothing wrong in going for investor, remember it is always advisable to have investor as it helps you in performing with a fear of losing your own company. Fear is a great stimulator to keep you always on the track and you keep pushing your performance to next levels.
Investor helps in providing the much required thought process, helping with their contacts, giving proper direction to your company, as your baby is always the best for you. Every start up should live on the threshold of losing revenues, then is where the performance gets peaked only with pressure on mind. It helps in keeping your mind with goals you need to reach.
Investment sheet comprises of 3 aspects, the first one being the amount required for setting up your company with the required infrastructure which will aide revenues, this sheet is also called as investment sheet which has all the details of costing, which gives investor clarity as to where the funds will be used and how it will help in returns.
The second aspect is the First year Recurring Expenditures which can be in the form of salary, office charges. Remember just getting investment to set up infrastructure doesn’t serve the purpose its like you have bought a car but know you need fuel, that is what recurring expenditure take care off. So be clear as to how many people you want on board, at what salaries and what will be office expenses for 1st year of your existence
The third aspect is if your revenues show negative in first year as you want to tread very cautiously with regard to sales or your product or services, the first year losses that you expect to happen should also be included in the venture capital investment sheet.
So it comprises of Setting up cost + recurring expenditure cost for 1st year + losses in case they are happening. The final amount that you arrive is what you call it as the total investment required. So when you are pitching to investors you need to show this as the amount required by your company.