What you state in your business plan says a lot about the future success of your business.  Venture capital firms have witnessed plenty of successful new businesses that started with a sound business plan.  VC firms know what should be included in a business plan – and what should not.  They also know the qualities that a business plan should possess if it is worthy of their time and money.

What are the qualities that VC firms like to see?  Here are 10 that should be in your business plan:

1. A Brilliant Idea

No plan is complete without a nugget of a great idea.  The idea is what sparks the interest of a VC firm.  The rest will solidify their interest, but it all starts with an exciting idea.

2. Brevity

VC firms don’t have time to review every business plan that is put in front of them.  Make sure yours is brief and succinct and contains the main compelling points that are of interest to a VC firm.

3. Clarity

Be absolutely clear about what your idea is and how it will achieve success.

4. Know Your Market

Do you know who will buy your product?  What are the demographics? How will you market to them?  Let your potential VC funding firm know that you completely understand your market.

5. Show a Large Market

VC firms will invest in startup companies with a potential for big earnings – which means having a big target market.  Show VC firms that your product will fit into a large market.

6. Your Competitive Advantage

Why will your target market buy your product rather than the competition?  This needs to be addressed honestly and with crystal clear focus so VC firms know why you set apart.

7. Existing Contacts

Have you already established potential partnerships with other successful businesses?  Do you have a top industry business ready to buy your product?  VC firms like to know that you already have potential help and customers waiting.

8. Management Team

The quality of your management team will be a top priority for VC firms.  Show that you have a team assembled with the best experience and qualifications.

9. Demonstrated Product Success

If your product has already been developed and shown sales potential, prominently display your sales success. 

10. Avoid Anonymity or ‘Hiding’

Don’t try to hide information a VC firm.  Your plan will more likely be rejected.

New and startup businesses may get their proverbial foot in the door of venture capital firms by securing a joint venture with another established and reputable company.  Venture capital funding is difficult enough to obtain as it is, but with the help of a big business name on your side, your business may walk to the head of the class in a VC firm. 

In most joint ventures, an agreement is drawn up between two companies or business owners to share in a business venture strategy and share the profits resulting from it.  A simple joint venture may be cross promoting a business or bundling products for merchandise sales.  A more complex joint venture might be the formation of a new company to pursue a separate business prospective.

In the case of trying to obtain VC financing, it may be just a simple category joint venture that gets you in the door.  Why?

Instant Credibility

Say you started a business manufacturing a new high-tech coffee or hot beverage holder.  If you approached the coffee giant, Starbucks, with a proposal to sell your innovative container exclusively in their stores and they agreed, you would then gain instant credibility with any venture capital firm by having the Starbucks’ name and reputation at your side. 

Or perhaps you have invented a new or innovative bottling process that has been picked up by PepsiCo.  Knowing the brand and market share that PepsiCo has on the soft drink market, your VC proposal could be a gold mine with the right capitalization.

Access to Large Markets

Though VC firms do not invest as much into retail businesses, you may have a green flag with your joint venture with a big name company.  They know that you would have access to a potentially large market with a company like Starbucks as your product distributor.  With a large market comes the need for expanded production and manufacturing, which would be a prime reason for the need of venture capital. 

An example of instant access to a large market is an innovative idea that could be used in conjunction with licensing agreements with the likes of Disney or comic book characters.  A new, innovative product like glow stickers or action figures could land you a joint venture licensing agreement with Disney or DC Comics.  With that green light for product development and access to an already established market, your chances at VC funding grow substantially.

Time to Market

Expanding into national and global markets takes time.  It takes time to get the marketing word out and time for the customer base and demand to increase.  That time span decreases considerably when you have a big name as a joint venture partner.  With the credibility and customer base already established, you can more easily convince a potential venture capital firm your need for capital expansion. 

When you are ready to take your new or existing business to the next level and want to try raising venture capital, don’t forget the potential and favorable possibilities with joining forces with an already established company.