What makes a business plan successful to raise venture capital funding?

1. What makes a business plan successful to raise venture capital funding?

2. What makes a business venture successful? • the people • the opportunity • the market • the deal • The degree to which they fit together.

3. The people • Who are the founders? • What have they accomplished? • What is their reputation? • Do they have relevant experience? • Can they adapt to changes? • How will they respond to adversity? • How committed are they to this venture?

4. The opportunity: The bottom line • What is the idea? • Why is it better than other solutions on the market? • How do you generate revenues? • What are the costs involved? • When do you have to buy resources? • When do you have to pay for them? • How long does it take to acquire a customer? • How much capital equipment is required to support a dollar of sales? • What is the probability distribution of payoffs?

5. The Market: Who Are the Customers? • Who is the customer? • How does the customer make decisions? • To what degree is the product or service a compelling purchase for the customer? • How will the product be priced? • How much does it cost to acquire a customer? • How much does it cost to retain him?

6. Who are the competitors? • The value of the growth opportunities depends on the competitors • Who are the competitors? • What resources do they control? • What are their strengths & weaknesses? • How will they respond to entry? • Who else might be able to exploit the same opportunity?

7. The deal • What is the pre-money valuation? • How much investment are you seeking? • What stake of the business are you selling? • What is the financing history and who are the current owners, claimholders?

8. The concept of integration • To what degree do the people have the right experience, skills and attitudes given the nature of the opportunity? • To what degree does the opportunity makes sense, given the people involved, the opportunity and the deal struck? • To what degree is the concept favorable given the people, the context, etc.? • Why should the VC invest in the deal?

9. How does the VC evaluate a business plan? • What can go wrong? • What can go right? • What decisions can management make today to ensure that what can go right does go right and what can go wrong is avoided? • How can the reward to risk ratio tilted in favor of the venture? • Why should the VC invest in this company?

10. What are VCs Looking for? • Business Plan in line with the VC’s focus • Discontinuity in technology/ High IRR • Team that have the ability and vision to execute and that they can work with • Promising business model • Advantage to competition • Protection for intellectual property • Potential for exit with attractive multiples in the timeframe of the fund

11. Business Plan/Presentation • 10 pages • Summary of concept (1 paragraph) • Team • Idea, Product Line, Company, Intellectual Property • Market, Costumers, Competitors, Price • Business model: How are you going to make money? • Timing of Cash Flows, Cash Flows, Profits, Assets, IRR • Valuation, Existing Investors, Existing Contracts • How much funds are you looking for? • What fraction of the company are you selling? • Why should the VC invest in the company?

12. Business Plan/Presentation • CLEARLY and QUICKLY articulate what product does for customers and how revenue is generated. • Use balance sheet and income statement as the table of contents (revenue, gross margin, operating expenses, earnings timing) • Be critical in advance • Provide what each reader target will need… • Clear review of product, market, competing alternatives, differentiation, execution plan and exit • Evidence of every statement you’re making or credible support • Overview financials with very detailed assumptions and sensitivity • In presentation show passion, confidence and flexibility • Prepare elevator pitch and 10-minute presentation. • Be ready to give crisp answers to questions