FREE online courses on Venture Capital Funding - Major Sections of a Business Proposal - Management

 

In this section you should describe the management, the directors and all others who are key to the operation of this business. Usually, there are no more than three key people in a very small firm and fewer than six in a larger one. Remember the Venture Capitalist is looking for key people. You should refrain from using superlatives to describe the key people, but do not be shy about mentioning achievements.

 

Directors and officers

List all the officers, directors and key employees. You should include the full name of each individual; his or her position and age.

 

Key employees

Identify the three or four individuals who are key employees and give a summary, in resume style, of their background and where they have worked. It is important to demonstrate that these key people are achievers.

 

You must present yourself as an achiever to the Venture Capitalist, or you probably will not be financed. The more you have achieved in your industry, the more the Venture Capitalist will be motivated to finance your company.

 

Consultants

Mention the names of your consultants, if any, your accountants, lawyers and bankers along with their telephone numbers. If a special fee is being paid to any of them, or if any of them are on a monthly retainer fee by the company, mention it in this section.

 

Management fidelity

It is difficult to demonstrate your honesty on paper. But a positive statement like the one that follows will be a big plus: “No member of the management team, no director, or any major investor in the company, has ever been arrested, convicted or charged in a material crime. No one has been bankrupt personally or has been associated with a bankrupt business of any kind.'' Personal credit reports will verify that all individuals have excellent credit ratings and have no overdue debt outstanding.

 

Conflicts of interest

This item is listed once again to make sure that any conflict of interest transactions that have transpired are revealed fully. In this section you should reveal transactions that management has had with the company. For example, a director may have contributed services to the company, and in return the director may have received stock or stock options in the company.

 

Stock options

You should tabulate all stock options that are now outstanding. Besides each person's name you should indicate the number of shares that have been granted, the average exercise price, the number of shares that have been exercised since the options were granted and the number of options still outstanding. Where options are outstanding to a corporation, you may wish to note why they are outstanding at this point.

 

Stock option plan

In this section describe the general stock option plan that exists at the company and how many options the plan has in it or will have in it at some date in the future.

 

Principal shareholders

In this section list in tabular form the name of the individual, the amount of shares owned beneficially or directly, all shares under option, the percentage this ownership represents with regard to all the shares outstanding and the percentage of ownership that will exist after the shares have been exercised. Also indicate the price paid for the ownership.

 

Employment agreements

List in detail any employment agreements that the company has with any of the employees and state specifically what the arrangement is with each employee. Employment agreements are not appreciated by Venture Capitalists. Most often they are used to ensure that top management will not be fired and will continue to obtain a high salary. If you have a legitimate reason for employment contracts, state it in this section.

 

Remuneration

List all key employees, directors or officers who will receive any payment whatsoever. You should list in tabular form the names of the individuals, the capacity in which they will be serving and the salary or remuneration that they have received or propose to receive. Under the heading of remuneration, you should include all fees, director's fees, consulting fees, commissions, bonuses, salary and so on -- in other words, total remuneration by your company.