When owners of established companies prepare to raise capital, they often start with a presentation: slides about the company, its history, its products and its numbers. That is useful, but it is not yet an investment case. An investment case answers a different question: why should someone put money into this company now, on these terms, and what will they own at the end?
Investors see many presentations. What separates the ones that progress is clarity: a simple, evidence-based argument that connects the company's strengths to a specific plan and a credible return.
The six building blocks
1. The core thesis in one paragraph
Before building anything else, write the case in a few sentences. What does the company do, why does it win, what will the capital make possible, and what will the business look like afterwards? If you cannot write this paragraph clearly, the rest of the material will struggle too.
2. Why the company wins today
Investors want to understand the source of your advantage. That might be specialised know-how, long customer relationships, a distinctive service model, a strong position in a niche, cost efficiency or a reputation for reliability. Be specific and support each claim with evidence, such as customer tenure, repeat business, margin consistency or the reasons customers give for choosing you.
3. The market and your place in it
Describe the market in terms that matter to your business: who buys, why they buy, how they choose and how that is changing. Avoid inflated market-size figures that bear little relation to what the company can realistically address. A focused, honest description of the relevant opportunity is more persuasive than a large number.
4. The plan for the capital
This is the heart of the case. Explain:
- What the capital will be used for, in concrete terms
- In what sequence, and over what period
- What has already been tested or proven
- Which milestones will show progress
- What the plan depends on, such as hiring, permits, partners or systems
The best plans show that management has thought about execution, not just ambition.
5. Financials that tell the same story
Historical figures should be clean, consistent and reconciled. Forecasts should be built bottom-up from clear assumptions, such as number of customers, average order value, prices, capacity and staffing, rather than as a percentage increase on last year. Show a base case and a cautious case. Investors will build their own versions; giving them a solid starting point builds trust.
6. Risks and how they are managed
Every investment carries risk. Naming the main ones and explaining how they are mitigated signals maturity. Investors are generally more concerned about the risks owners do not mention than the ones they do.
Supporting materials investors will expect
- A concise information memorandum or investment presentation
- A financial model with transparent assumptions
- Historical accounts and management reports
- Information on the management team and organisation
- Key customer and contract information, shared appropriately
- A summary of the proposed use of funds and capital structure
Common weaknesses in investment cases
- The plan is a wish list. Many initiatives, little prioritisation.
- Forecasts disconnected from history. A sudden acceleration without explanation.
- Over-reliance on the owner. The plan depends on the founder doing more of everything.
- No view on the investor's outcome. Investors need to see how they could eventually realise value, even with a long horizon.
- Defensiveness about weaknesses. Investors respond better to candour.
Test the case before you take it out
Before approaching investors, test the case with people who will challenge it: experienced board members, advisers or trusted peers. Ask them to argue against it. Where the case is weak, either strengthen the evidence or adjust the plan. It is far better to discover the gaps in a friendly room than in an investor meeting.
The case is also for you
A strong investment case is useful even if you never raise capital. It forces clarity about where the company is heading and what it needs to get there. Many owners find that preparing it changes how they run the business.
Presenting the case in person
Investors meet management before they invest, and those meetings often matter as much as the written material. Prepare the team to present their own areas with confidence, to answer difficult questions honestly and to show how they work together. Rehearse the most likely challenges. An owner who can let colleagues speak, and who visibly trusts them, strengthens the case considerably.
How LXN works with owners
We help owners build investment cases from the inside: understanding the business, testing the plan and strengthening the evidence. As investors ourselves, we know how a case is read on the other side of the table, and where we believe in it, we may invest alongside the owner.
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