How to Write an Investment Prospectus

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An investment prospectus informs investors about the details of a business, such as financial history, risks and outlook. It also promotes the business to potential investors. Mutual funds must publish a prospectus for each fund family. Companies looking for venture capital financing or preparing to list on a stock exchange need a prospectus.

Write the executive summary so that a busy investor can get a quick overview. Include the mission statement, brief history, key products and services, financial summary and contact information. Outline your funding requirements. Limit this section to two pages.

Introduce the leadership and key investors. Provide biographical summaries of the senior executive officers, including the president, chief financial officer and key product leaders. Provide an overview of the key investors—for many small businesses, these are often the senior officers.

Describe the business environment. This includes a description of the addressable market, competitive environment and key success factors. Identify the key competitors.

Describe the company’s key products and services. Mention some of your top clients, after getting their permission. Highlight key historical financial data such as sales growth, profit margin, debt levels relative to current (or cash) assets and annual cash flow.

Describe the funding requirements. Provide details on the proposed use of the funds. For example, if you are planning a new product launch, describe how the additional funds may help you achieve your sales objectives.

Describe the risk factors. Provide details on key client relationships that provide 10 percent or more of your revenue. Alert investors to how changes in any of these relationships could have a material impact on sales and profits. Outline issues relating to product development. For example, biotechnology products often have to go through a lengthy approval process before they can be marketed. Outline any pending litigation issues and how their resolution may impact your earnings.

Attach the historical financial statements and no more than one or two product brochures as appendices.


  • Forward-looking information is not necessary in a prospectus. Publicly listed companies often add lengthy disclaimers when they talk about the future. Be realistic in your projections because savvy investors are going to see through overly optimistic or pessimistic forecasts.


About the Author

Based in Ottawa, Canada, Chirantan Basu has been writing since 1995. His work has appeared in various publications and he has performed financial editing at a Wall Street firm. Basu holds a Bachelor of Engineering from Memorial University of Newfoundland, a Master of Business Administration from the University of Ottawa and holds the Canadian Investment Manager designation from the Canadian Securities Institute.

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