Feasibility Studies for Investors: What VCs, Angels, and Private Equity Look For

Investors receive hundreds of pitches. Most get rejected within minutes — not because the idea is bad, but because the financial analysis is weak. An entrepreneur who presents revenue projections without NPV, market estimates without sources, and financial models without sensitivity analysis signals that they don't understand the investment decision they're asking someone to make.

A well-prepared feasibility study speaks the investor's language. It demonstrates that you've tested your assumptions, modelled the returns, and understand the risks. Here's what different types of investors look for — and how to give it to them.

What Different Investors Prioritise

Venture Capitalists

VCs invest in growth. They're looking for businesses that can scale rapidly and generate outsized returns to compensate for the high failure rate across their portfolio.

• TAM exceeding $1 billion. VCs need a market large enough that even a modest market share generates significant revenue.
• IRR of 30–50%+. The high failure rate in VC portfolios (60–70% of investments underperform) means the winners must return 10–30x to make the portfolio work.
• Unit economics that improve with scale. Decreasing CAC, increasing LTV, or improving margins as the business grows.
• Path to $100M+ revenue. VCs model exit scenarios — IPO or acquisition — and need to believe the business can reach a scale that supports a meaningful exit.

Angel Investors

Angels invest earlier and with smaller cheques than VCs. They're often former entrepreneurs who invest based on a combination of financial analysis and personal conviction.

• IRR of 20–35%. Lower threshold than VCs because angels typically diversify across fewer investments.
• Clear path to revenue. Angels want to see that the product can generate revenue quickly — ideally within 6–12 months.
• Capital efficiency. How much progress can you make per dollar invested? Angels are sensitive to burn rate.
• Break-even timeline. When does the business become self-sustaining? Angels want to know their capital isn't funding infinite losses.

Private Equity

PE investors typically invest in established businesses or larger development projects. They're more conservative and focused on predictable returns.

• IRR of 15–25%. PE targets lower but more reliable returns than VC.
• Strong DSCR for leveraged deals (1.5x+ preferred).
• NPV positive at conservative discount rates (12–15%).
• Detailed sensitivity analysis showing resilience to downside scenarios.
• Clear exit strategy — sale, IPO, or management buyout within 3–7 years.

Real Estate and Development Investors

Property investors evaluate feasibility with specific metrics:

• Development margin (15–25% minimum)
• Cash-on-cash return (8–15% at stabilisation)
• Capitalisation rate (varies by market and property type)
• NPV and IRR over the hold period
• Peak equity requirement (maximum capital needed at any point)

The Non-Negotiable Elements

Regardless of investor type, every investor-grade feasibility study must include:

Verifiable Market Data

Investors have seen too many pitches with fabricated or cherry-picked market data. Every market claim in your feasibility study should be traceable to a credible source — government statistics, industry reports, or verifiable competitive data. Unsourced numbers are assumed to be made up.

Conservative Base Case

Experienced investors automatically discount optimistic projections. Present a conservative base case as your primary scenario, with an optimistic case as upside potential. This demonstrates commercial maturity and gives investors confidence that the base case is achievable.

Sensitivity Analysis That Tests Breaking Points

Investors don't just want to see the optimistic, base, and pessimistic scenarios. They want to know the exact conditions under which the investment fails: what occupancy level turns NPV negative? What cost overrun eliminates the return? This information allows them to assess whether those failure conditions are likely.

Honest Risk Assessment

Every business has risks. Investors expect you to identify them, quantify them where possible, and present mitigation strategies. A feasibility study that claims no significant risks isn't credible — it signals that the founder is either dishonest or hasn't thought deeply enough about the business.

NPV and IRR at Appropriate Discount Rates

The discount rate matters. Using a 5% discount rate for a startup makes the NPV look artificially attractive. Use rates that reflect the actual risk profile: 12–15% for established business types, 20–30% for early-stage ventures, higher for unproven concepts. If the NPV is positive at an appropriate discount rate, the investment genuinely creates value.

How Feasibility Studies Fit in the Investment Process

Pre-Pitch: Self-Validation

Before approaching investors, use a feasibility study to validate that your concept generates returns that match investor expectations for your stage and type. If the IRR is 12% and you're pitching VCs who need 30%+, you have a mismatch that needs addressing before the meeting.

During the Pitch: Credibility Signal

Presenting a data-backed feasibility study immediately differentiates you from founders who pitch with gut feeling and spreadsheet guesses. The presence of NPV, IRR, sensitivity analysis, and cited market data signals analytical rigour.

Due Diligence: Foundation Document

During formal due diligence, investors will scrutinise your financial assumptions. A feasibility study with verifiable sources, documented assumptions, and stress-tested projections provides the foundation that their analysts need to evaluate the opportunity.

Post-Investment: Performance Benchmark

The feasibility study's projections become the benchmark against which actual performance is measured. Having a well-documented set of assumptions and scenarios allows meaningful comparison as the business operates.

The Bottom Line

Investors are evaluating risk and return — and they use specific metrics to do so. A feasibility study that calculates NPV, IRR, and payback period, sources market data from verifiable references, tests assumptions through sensitivity analysis, and presents realistic ramp-up projections gives investors the information they need to make a decision.

The founders who secure funding are the ones who speak the investor's language. A professional feasibility study is that language.

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