Know-How Exchange : Copywriting

I am an Australian business consultant helping SME companies to become 'investment ready' and raise equity capital to implement their projects. My profile has more detail. I have a client who has developed and patented a unique method of processing/refining edible oils such as soybean, canola, peanut, palm and the like.

I am finding difficulty attracting venture capital investors to this project, despite the fact that the potential market is large and the patented process has great benefits to users. Details of the project are set out below.

I initially approached about 80 venture capital firms across Australia, Singapore and Malaysia. This approach was through a formal, 'public service' type letter. The response was very disappointing. So I changed tack and with an approach I sourced from MarketingProfs I created the new promotional letter below which I used as a follow-up to the earlier targets and some new targets. The response to this letter was also disappointing.

As I would like to now approach some American venture capital firms, I would be greatful for some assistance in analysing why my two approaches have met with such resistance. Here's my second letter in text (originally it was in HTML so had some formatting to make it look more attractive):

INVESTMENT PROPOSAL: THE INTERNATIONAL EDIBLE OILS PROCESSING INDUSTRY

My Client, Dry Process Edible Oil Refining (Australia), has developed, patented (including a US patent) and is now commercialising a unique, Australian-designed method of refining edible oils (canola, peanut, sunflower, palm etc) for cooking, culinary and industrial use. The method reduces production costs significantly, completely eliminates pollution and concurrently increases refinery output by a factor around 25%. This unique method is called the ‘Dry Refining Process’ to differentiate it from the commercially inefficient and polluting wet process that is in general use throughout this industry.

Dry Process Edible Oil Refining (Australia) Ltd is seeking investment funds to market this innovative process to edible oil refiners worldwide. Discerning Equity Partners are therefore invited to join with Dry Process Edible Oil Refining (Australia) Ltd in this unique venture by contributing investment funds of $AUD 500,000 ($USD375,000) in return for 10% equity in the company.

The project is further innovative in that investors’ will be given the opportunity to accept financial returns not by way of annual dividends on shares, but through participation in regular automatic royalty payments received from the commercial users of the technology.

这项投资能站最严厉的审查from the most fastidious venture capital investor; there are ten reasons why this is so:

Identifiable International Market

1. The end products – edible oils for cooking, culinary, industrial and related uses – are basic living products used worldwide across all socio-economic groups in every society: SO … there is no question as to the size of the market.

Production Costs are Reduced by between $AUD10 ($USD7.50) and $AUD17 ($USD12.75) per Tonne of Oil Produced

2. The users of the Dry Refining Process (DRP) technology – edible oil refiners and processors –
will (depending on the type of oil being processed) benefit from cost reductions of between $AUD10 ($USD7.50) and $AUD17.00 ($USD12.75) per tonne of oil produced - (based on international exchange rates as at 6 May 2004): SO … oil refiners/processors using the DRP technology will have a clear competitive advantage over refiners/processors who will not be using the DRP technology.

Reality Check!: From a practical point of view, if a large palm oil refiner processes 2,000 tonnes of palm oil with an FFA of 2.5% per day and uses the DRP, then that palm oil refiner can expect a cost saving of $AUD 15.58 ($USD11.690) per tonne of refined oil produced!

This is an aggregate cost saving to that refiner of $31,160 ($USD23,370) per day!

But that’s Not All (1):

3. The DRP increases the productive capacity of physical refining plants by about 25%:
SO … this additional side benefit from the DRP means that there will be a further major boost to profitability over and above that contributed directly by the DRP.

But that’s Not All (2):

DRP Eliminates Pollution

4. The DRP has no water or effluent disposal costs and no risk of pollution: SO … the environment, government authorities and anti-pollution community groups will love the DRP!

But that’s Not All (3):

5. New refining/processing plants based on the DRP production system can be constructed for a great deal less capital expenditure than refining/processing plants based on the old-fashioned, polluting, commercially-inefficient ‘wet refining process’: SO … Refiners/processors intending to construct new refining/processing facilities will be able to do so at considerably less cost than is presently possible!

Target Clients Identified

6. Over 500 oil refiners/processors, who substantially contributed to the 91 million tonnes of oil produced worldwide in 2002, have been identified as potential users of the DRP technology: SO … the DRP marketing strategy is based on the targeting of actual operating businesses.

Technical DRP Team Highly Skilled

7. The development team behind the DRP technology is exceptionally well qualified: SO … DRP technology users can have confidence that the team knows what it is talking about.

Benefits of Investing (two perspectives)

8. The DRP technology has been patented in a number of countries: SO … edible oil refiners/processors will know that their investment in the technology will continue to provide commercial benefits for many years to come.

9. The DRP technology has been patented in a number of countries: SO … investors in Dry Process Edible Oil Refining (Australia) Ltd (the DRP technology marketing company) will know that their investment will provide substantial financial returns on their investment for many years to come.

ROI: is expected to be 13 times the investment by the end of the 3rd year.

Dry Process Edible Oil Refining (Australia) Ltd, the Company marketing the DRP technology, will permit Shareholders to participate in a direct distribution of royalty payments received, thus providing a much more regular source of shareholder income.

A copy of the Dry Process Edible Oil Refining (Australia) Ltd ‘Class Order Compliant Document’ (COCOD) containing details of the Equity Offer can be obtained from Graham Segal at chironbizdocs@ozihost.com. This COCOD is an official Offer Document issued pursuant to Section 708 of the Australian Corporations Act 2001 and Class Order 02/273 issued by the Australian Securities and Investments Commission (ASIC). ASIC is the Australian Government’s securities industry regulatory authority, and is the direct equivalent of the US Securities and Exchange Commission.

Please contact Graham Segal on cell phone number 61 0431 607 684 for a confidential, no obligation discussion.

Royalty revenues are proposed to be paid to Dry Refining (Australia) at the rate of 25% of the refiners’ cost saving arising from the use of the patented DRP technology: in practical terms, that should result in royalty payments to Dry Refining (Australia) of between $AUD2.50 ($USD1.90) and $AUD4.25 ($USD3.20) for every tonne of oil produced.

I look forward to talking with you.

Yours sincerely,


GJS

Over to you, professionals! Your analysis, comments and suggestions will be helpful and appreciated.