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How to make a perfect business plan that appeals to Venture Capitalists (VCs)?

27 Nov

RaiseCapitalForYourBusinessAlthough every small business (or startup) should always have a live business plan, which they can show it to their future investors at any time; most of the businesses don’t have a targeted business plan, which can work for them while acquiring some funding. All of the investors will be looking for a slightly different information about your business. While you can’t make all of them happy with a single business plan, there are some common things that all the VCs firms are looking for. Thus, in this blog I will share with you some basic information that can help you acquire some funding from a VC firm.

Advertise your executive team: In addition to your understanding of the market, your customers, and the problem you solve, most of the VC firms are looking for the leadership team and their capabilities to do the business. They are mostly looking for your leadership team and why are they qualified to execute your idea? Thus, it would be a good idea to provide some visibility into the work history, networks, skills, and any previous successes of your executive team members on the first/second page of your business plan.

Explain your finances: Most of the venture capitalists (VCs) are from some financial background. They are more interested in making their money grow. And hence, your business plan should focus on basic financial questions. If possible, your business summary should answer few questions, such as – How does your business make money? Who pays for the expenses? How much do they pay? And, when do they pay? What are your expected revenues and expenses? How long do you anticipate this round of funding to last? Etc.

Explain your future plans: Most of the VCs would like to know where their investments are going. Thus, you should be ready with the answers to the questions, such as – How much capital are you trying to raise, what are you going to do with it? Are you looking for money to develop your team, for overhead, or to expand? What is your vision for the future? Have you established milestones for the next two or three years? Etc. If possible, outlay your milestones in your business plan itself, most VC firms would like to keep track of those milestones and hold you accountable for meeting them, if they choose to invest in your company.

Have something to demo: Most of the VCs are visual people. And they are most likely looking for a demonstration that can display how your product works. They want to make sure that they understand how your product works as compared to similar products in the market (if any). At the very least they’ll want to see a mockup. Thus, have some kind of a write-up ready, where you can clearly differentiate how your product differs from your competitors. Having some competitor’s products handy can be a good idea as well. In this way, you can clearly differentiate your product features from your competition. It makes it easier for them to visualize the clear picture.

Having a good idea isn’t enough to make your startup up-and-running. I hope, my tips will help you to create the best business plan for your venture, so that you can make your dreams come true. Please share your comments here, if you agree/disagree with my blog.

Thanks – Bhavin Gandhi

 
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Posted by on November 27, 2014 in 21st Century, Leadership, Management

 

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