How to Create an Investor Ready Project
By Ayat Amin
Dec. 14, 2020, 10 a.m.
Community Development Playbook - Part 1 Developing a project can often feel like an uphill battle. We feel you and we are here to help. Welcome to The Opportunity Exchange’s Community Development Playbook. This series will walk you through the best practices we’ve seen in developing and supporting community-oriented projects. Our first piece deals with a big roadblock we’ve seen projects face - getting funded. When it comes to getting investors interested, the secret to success is a great project pitch. In this piece, we have broken down the six essential elements of every great project profile, the best practices for each, and a real example from public projects on The Opportunity Exchange. # 1- Project Description To start, we must convey the vision for your project. A great project description is arguably the most important element of any project profile. In this short description, you must provide enough background to capture an investor’s attention. Do this in two parts. Inspire the investor by answering ‘What is the vision for your project.’ then hit them with the hard facts by answering ‘How will we ensure that this project is successful, and what will the project deliver for the community?’ It is also great to provide context about where you are in the project development process. This can be as simple as a sentence on the land/site control status and project status. Land/site control status indicates if the land or building for the project has been identified or purchased. Project status indicates what stage the project is in and some common options include conceptual stage, design stage, or construction stage. Example from Rally project in Richmond, VA. # 2 - Project Sponsor Description Next, tell the investor who you are. Write a paragraph describing your team’s background and experience as developers or business owners. The important thing here is to explain why you, as the developer, are qualified to lead this project. Prior experience isn’t the only qualifier. If you come from the community and understand its needs well, that can make you a great person for executing the project successfully. The goal here is to highlight the important elements of your background so that the investor is confident in your ability to deliver. Example from Zero-Energy North Avenue Workforce Housing project in Baltimore. # 3- Project Market Background Now we need to illustrate how broader market forces align with your project. Build credibility by linking your project to existing studies such as market demand studies, feasibility studies, development plans and/or needs assessments. Another option is to reference successful nearby projects that are comparable to yours. The goal is to provide evidence from the market that your project is likely to succeed. Make this effective by pulling out numbers or quotes from these documents that demonstrate demand for your project. Solidify the link by adding a sentence on how your project meets that demand. Examples of key numbers to pull are the total size of investment the neighborhood has received or numbers showcasing demand for your industry (such as housing demand). Example from the COFLA Enterprises Expansion Project in St. Louis. #4 - Project Viability & Financials This section is the investor’s bread and butter, the information they want to know the most. It’s finally time to highlight what will make your project financially successful. Investors are interested in return, so showcase any numbers you have on why your project will be a financial success. You don’t need to have all these numbers immediately, but the better you know your financials, the greater chance your investor connection will be a success. At a very minimum, before reaching out to investors, you should know the amount of capital you are seeking, the total size of the project, your target capital stack (which we will cover in a later piece), and expected Investor Rate of Return (IRR). If you do not have these numbers yet, do not fret. The Governance Project, with generous support from the Mastercard Center for Inclusive Growth, has built a free tool to provide step by step guidance on creating your first proforma, a standard document for outlining project financials. Go here to get started with the GroundUp tool. Example from the Warner Swasey project in Cleveland. #5 - Project Social Impact An important element of project viability is community buy-in. Projects that meet a community need or have strong community involvement are more likely to experience success. That’s why it’s important to spend a few sentences explaining why your project is a good fit for the community. There are several good options for demonstrating community alignment. First find some documentation of community needs. This could be a community prospectus document, a community profile such as those found on TOE Introduce, a neighborhood plan, and/or community surveys. Once found, look through those documents for language or numbers you can quote to demonstrate your project’s alignment with community needs. Example from the Common Beltline South project in Atlanta. In certain special cases, a community organization will have developed a scorecard that you can fill out to illustrate community alignment. A good example is the Community Impact Assessment Tool developed by The Urban Institute and integrated into The Opportunity Exchange. As an example, Opportunity CLE has filled out this scorecard for the Cleveland Werks Project to showcase their project’s alignment to the community. # 6 - Image This last element may seem small, but adding an image to a profile can make a big difference. Humans are visual beings, so a project image is an easy way to capture investor attention. The rest of the profile, which we have outlined above, is to keep the investor interested. Conclusion A great pitch is nothing with no one to show it to. Once you have created a great project profile, the next step is to share it with investors. Start is by posting your project on The Opportunity Exchange’s Marketplace where over 1,400 investors on the site can connect to you. Get started here. It’s free! A second option is to participate in project pitch competitions such as Invest Michigan’s Summit or Invest Acadiana OZ Pitch Fest. The best way to find these is to connect with a local community development organization, such as our community partners, and let them know you are interested. The last suggestion is to search for investor lists such as NOVOGRADACs QOZ list and email investors directly. This last suggestion can be time-consuming but can be worth it. Developing a project is hard, but doesn’t have to be impossible. These steps should be a great first step to making your project a reality. If you have any questions about any of the advice above, reach out to us! We love supporting community & economic development.