When you enter a boardroom full of venture capitalists bent on drilling whether your business idea is a good prospect, be prepared to become the business.  You cannot rely on your business plan alone when venture capitalists are considering whether they should invest money in YOU.  Remember, your business plan is just that: a small black and white booklet that gives readers some idea of what your business is and how your business is going to make money. 

 

Don’t Make the Cardinal Mistake

 

One of the worst mistakes an entrepreneur can do is sit back and depend on the business plan to win the hearts of venture capitalists.  If they ask a question, the last thing they want to hear is, “oh, it’s there in the plan on page 5.”  What a VC firm really wants to know about is you and your management team.  How did you come up with the business idea?  How much experience does your chosen leadership have to forge a successful business?  How do you back up the numbers on your financial data?  Why should they give money to you and not Entrepreneur Joe waiting in the lobby? 

 

Use your business plan only for reference.  You must become the face of the business – a face in which venture capitalists want to invest.   

 

With that said, what do VCs want to know about before writing big checks in your company name?

 

Venture Capitalists Are Investing in You

 

Of course, venture capitalists want to know about you and where you come from.  What is your expertise and experience?  Do you have a background of leadership?  How about previous innovation and entrepreneurship?  VCs will need to trust that you and your co-entrepreneurs are fully qualified before they back your business.

 

You don’t need to lie or exaggerate about your background.  But paint your expertise, desire, and enthusiasm in the best possible light.  When you are excited about your business, others will be too.

 

What About Your Management Team?

 

Venture capitalists know that you can’t run a business alone.  They want to know that you have put together a great management team and that you have the highest confidence in them.  Therefore, choose your partners and leadership team carefully.

 

Your Employees

 

Your employees will likely be what your customers see as your company.  How will you hire them?  Train them?  Will your company invest and support the career growth of its employees to help retain the best?  Be sure you highlight the roles your employees will play to VCs.

 

Your Product or Service

 

What does your enterprise sell?  Expertise in a consulting role?  Manufacturing a new widget?  Show VCs how your product or service fills a niche and why it will be in demand for your customers.

 

Your Strategy for Success

 

Finally, venture capitalists want to know how your business strategy will be put into action.  If your business plan has a sound strategy with attainable goals, as well as viable steps you and your team will take to achieve those goals, you will have a step up with potential VC funding. 

 

Make your business stand out to venture capitalists with the Who, What, and How.  Remember, venture capitalists are not investing in your business plan.  They are investing in you.  Bring life to your plan, and you will have better success with obtaining VC funding.

Tags: angel investor, angel investors, business plan, Find funding, startup business funding, vc marketing plan, venture capital, Venture Capitalist

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