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How do you build a bridge
between your project and the
financing you need? Simple: Write a killer
business plan.
Entrepreneurs would receive more serious
consideration from VCs, angel investors, and other potential funding sources if
they realized that they are selling a financial package to the financial
marketplace, rather than their product or service to a consumer. Your business
plan is your financial package.
What Every Investor Wants to Know
The goal of every business plan
should be to address upside potential, downside risk, management, potential
dilution, and liquidity issues. Investors are constantly comparing one
investment against another and ranking them in numerous categories. At a recent
Venture Capital Conference we attended 150 business plans were reviewed. Of
these, only 25 asked for specific funding; only 12 had specific uses of funds;
and only 5 had exit strategies for investors!
To
Evaluate Your Own Project,
put yourself in the place of the investor who wants to know the answers to these
seven questions:
-
How Much Can I Make? (ROI
expected.)
-
How Much Can I Lose? (Loan
guarantees or other contingent liabilities.)
-
Who Says This Thing Will Work?
(Third party verification of assumptions and markets.)
-
Who Else Is In The Deal? (The
management/investment team and their qualifications.)
-
How Big is the Market? (Is it
growing? Is it hot?)
-
How Will the Company Reach Its
Clients? (Verification of marketability.)
-
How Do I Get My Money Out and
When? (Exit strategy for IPO,
Acquisition or Merger.)
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