The Investment Package
Venture proposals take the form of a business plan which, like a loan proposal, may be your only chance to convince investors of the value of your concept. It should be thorough, concise, and presented with the reader’s interests in mind—namely, how will they make money by investing in your deal. According to one venture capitalist, “most proposals fail to convince me that the owner has a clear idea about why this venture is going to be a big hit. All too often, they focus on the neat technology or gadget that they’ve invented rather than on how they’re going to bring it to market and manage its growth so we can make money.”
At the simplest level, your business plan needs to communicate enough about you, your venture, and the investment opportunity to make investors want to meet you to learn more. If it leaves too many unanswered questions, it won’t adequately convince anyone of anything except that you don’t know how to write a business plan. If it’s too long and boring, you won’t hold the attention of your reader. As in the Goldilocks story, it has to be just right.
The format for a business plan will differ depending on the nature of the business and the purpose for the plan. For that reason, canned business plan formats rarely work because they have an uncanny knack for giving the reader the distinct impression that they’re looking at an amateur effort. The fact is, and this should be no secret, the thought process involved in creating the plan is as important as the plan itself. Shortcuts don’t help.
One little secret: Don’t insist that investors sign a non-disclosure agreement before you’ll send them the plan. Especially don’t tell someone you won’t talk about your concept until they sign…there’s no quicker way to turn off an investor. Aside from the implied mistrust, if your hot-shot idea is so easy to copy that just telling someone about it will compromise your chances, they won’t be interested in it as venture deal. If they’re professionals, their confidentiality is implied.
If you rummage around the web you’ll find lots of sites that offer you a table of contents for a typical investrment package, but you won’t find a better description of what should go in each section than you’ll find in the Finding Money ebook.
The Executive Summary is the first most important part of your business plan, and you should write it last. If it doesn’t grab and hold their attention, tell them what they want to know, intrigue them, and give them reason to think that investing in this deal could make them lots of money, they won’t read the rest of the plan. You can’t imagine how many poorly prepared business plans for dumb ideas an investor has to wade through to find one that looks like it might have a chance of making some money. If yours looks like another hair-brained idea for a better mouse trap written by a techno-nerd with no concept for market or marketing you can safely assume it will be sent back with a polite form letter saying, “thanks but no thanks.”
The you need a company description, and a marketing section. It’s not an exaggeration to say that a well defined market need with a fuzzy product concept is far more likely to be funded than a well defined product with a fuzzy market concept. An operations section, the all important financial section, and attachments complete the package.
Particularly in fast-growing ventures, a month-old plan can be stale, misleading. So develop an efficient process for sending updates to plan recipients once it’s been distributed
