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Business founders must assume that everything written in their business plan will be checked by prospective investors, particularly details of marketing assumptions. Most venture capitalists, when reading a business plan, look for reasons they don't want to read further.

Prospective investors, both business angels and corporate venture capitalists, would look for hidden traps, oversights, oversimplifications, hidden competitors, and upside opportunities. Their business plan evaluation criteria, in order of importance, include:

• Key personnel: people/management that can get the job done

• A large, rapidly expanding market and the company's marketing strategy

• A unique brilliant idea or technology that can be commercialized and protected

• A business strategy that has a strong sustainable competitive advantage

• The financial statements and the price per share.

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28 Ways to Finance Your Venture

What Different Types of Venture Capital Investors Look for In A Business Plan

Business angels

Venture Capitalists

• An opportunity to add their own skills and creativity to the venture

• A trustworthy entrepreneur with a compatible personality

• A firm in a niche market

• An early stage venture whose development they can still shape

• Healthy financial projections

• A venture that is within driving distance for the investor

• An experienced and well-balanced management team with a sound track record

• A firm with a unique concept or idea that meets an unmet consumer need

• A target market and proven niche product with almost unlimited growth potential

• Strong competitive position

• Very healthy but realistic, financial projections

• A firm that is usually developed and looking for expansion funds (not a start-up)

• Preferably a high-tech firm, but also firms in other sectors

• Detailed financial statements (preferably with milestone charts)

• A potential equity stake of around 30% of the company in exchange for funds (though there is much variation)

• Potential exit routes identifiable at the time of investment