What is takes for a DRHP to attract investors!

  Ateet Sanghavi   Jan 19, 2014   Uncategorized   0 Comment


We build our dream projects by first dreaming about the success and the produce that shall be eventually delivered. But however, there is a lot that goes into first placing the very primary brick to stand strong the very foundation of the venture you aspire to construct. The very first topic that can raise the lines on your forehead would definitely be that of capital interrogation. Where is the money going to come in from? Will it be effectively utilized? Will the returns be good enough? Would the payback be easy? Is the burden of the bank loans going to be too heavy?

These are the usual and the most encountered questions that can trouble even a very ambitious and head strong person. The life juice and the blood of any organization-in-the-making are the finances that shall support its existence as well as encourage its stability and future growth.

The highway to investment!

A red herring prospectus or a DRHP is nothing but the document that is essential for every company to produce and deliver when it comes to marketing the business of one’s firm to the potential and interested investors! Thus preparing the prospectus may be one of the most vital elements as it can be considered as a ticket to enter higher capital investment process for one’s own dream venture. A document compiling aesthetically the goals and the ultimate motives of the organization could serve as the most sort out option for any firm – especially start ups!!

So how can we make a DRHP that would attract investors to shed in their moneyed pockets in your business?

Grab these quick dos in order to make your financial life and upcoming venture more of an upward coaster and less of a roller coaster!!

  • Your first page:  The introductory module for your prospectus requires being extremely efficient in terms of introducing your company and the background specifically. What is the most important step? Mission and vision of your organization. Make sure that this is described well and accurately. Aesthetic defining of the mission and vision of the organization can be half the battle won. Thus, you have to be appropriately unique and goal oriented in framing the vision and the mission of the organization. The page should also contain the details of the organization including location, founding date, website online, annual budget, people served or geography, the summary of the social problem targeted, social impacts, key accomplishments, and goals for a certain period, required financial investment and like.
  • You are sure not there yet, till you haven’t mentioned of how important the financial support that the investors may provide you with, is going to play a great role in the overall development and growth of the organization.
  • Every page that shall continue thereon will serve as an effective and efficient supplement for the all of the important matters laid down in the introductory page of the prospectus. A supplement for providing copious amount of information, true to the knowledge of each and every person concerned, true statistics and all of the information in a neat arrangement of numbers and words shall serve you well if suited with the investor demands.
  • It is a continuous effort by each and every person to chalk out why the investor should invest in your company, but however, make sure that it is not you who is loud, but rather it is the purpose and the future realistic potential that is talking, loud and clear!
  • The chalked out business plan that encompasses the opportunities that shall be grabbed on for immense heights to the business, the problem solving machinery for all the odds, a model of social and economic modification, health indicators of the organization, strategy development and execution for nurturing better growth, financial sustainability and accountability as well as the socio – economic impacts; should be clearly defined and highlighted in the “brief business plan” – The DRHP.
  • Being upright about all of the problems in terms of social or organizational genre that can erupt as a hurdle in the company is important and also, how these problems shall be addressed and settled should also be put across in the red herring prospectus in order to highlight the honesty, capability and the caliber of the organization in terms of sustainability. In the formats of graphic or text, there will have to be clear underlining of all the principles, the protocols and the problem solving mechanisms that shall be resorted to in order to help the organization steer through the competitive business environment of today – nationally and globally.
  • The finances if and when reciprocated by the investors should also be accounted to the investors giving them a fair idea about what’s going where and why it’s going there. The financial structure and the strategies connected to the revenue that you shall administer are very important to be addressed to the investors. A projection of the percentage of the revenue for the succeeding 3 years should also be provided along with that of the current year.
  • The board members, the key personnel as well as the other key staff should also be provided to the investors. Success stories of the firm and its clear potential shall be able to it all for your venture.

On a general note and aspect, it is certain for any investor to invest in a profitable looking project. Thus, the one thing that needs to be made sure of is the ideas to be induced into making the venture and its goals realistic as well as unique. It is very important to set apart one’s own products and services from the rest of the slot striving to make it stand out and appealing to the overall audiences. To be different yet safe on the front of potential sales is extremely important and as important it is to be able to portray this point in the DRHP to the prospective and potential investors. It may be the potential to bring about the bright and clear aspects of one’s business goals which can certainly help to make a difference when it comes to convincing the investors and taking them into confidence about the business’ potential and future positive prosperity.

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