investors being an entrepreneur is hard
having supportive and caring investors
helps fred wilson how do you write a
business plan for investors it doesn’t
matter if you have a business degree it
doesn’t matter if you graduated from
university college high school or the
school of hard knocks it doesn’t matter
what your last name is what your skin
color is how old you are or whether you
wear pants or a skirt I used to be a
venture capitalist a VC people came to
me to raise big money for their
businesses I’m talking 500,000 to 15
million dollars kind of money and today
I’m going to share with you the three
most important things I look for before
inviting someone in to see me
ninety-nine point nine percent of
business plans got rejected only the
point one percent of entrepreneurs who
followed these three simple rules got
invited to a meeting with us so if
you’re thinking about raising capital or
just one an education as to how the
process works you’ll want to pay
attention to this one number one
executive summary the executive summary
is the first thing an investor venture
capitalist angel banker and so on looks
at it’s 13 pages at the beginning of
your business plan that summarizes the
whole opportunity right at last make it
important keep it simple there was an
expression in the VC world that an
executive summary had to pass the
grandmother test meaning that it had to
be written in plain English so that your
grandmother could understand it most
business plans are filled with so much
jargon and technical terms that
investors get lost remember investors
are generalists not specialists they
don’t know your business like you do
it’s your job to make it easy for them
to understand the opportunity if they
can’t understand how they’re going to
make money from your executive summary
then your entire business plan goes to
the trash can and that’s your fault keep
it simple number two management team
assuming they like your executive
summary the next thing to look at is
your management team they want to see
what kind of experience you have have
you done this before you
any startup experience are you the right
person to actually execute this idea of
yours one of the biggest problems with
most startup companies is an incomplete
management team for example you’ve got a
founder who can’t sell and doesn’t have
a sales person we’ve got a tech company
without a CTO or everybody involved is
young and this is the first thing
they’re trying all of those things
scream risk for an investor to give
yourself the best chance at a yes find
people to complement your team it could
be someone who’s a partner a full-time
or part-time employee or even a member
on your board of advisers pro tip create
a board of advisors get respected people
to lend their name to your company so it
doesn’t look like it’s just you for
example if nobody who really understands
finances is on your team that’s going to
worry an investor get your account to
join your board of advisers to add
credibility and make investors feel more
comfortable number three financials
investors want to know that they’re
going to get a return on their
investment banks for example want to
know that you can pay them back and
they’ll likely want your house is
collateral angel or VC investors will
want to see that your business can give
them an average annual return of thirty
percent on their investment they want to
see that you can grow quickly and that
someone is likely to buy you out they
want to be in and out of your business
in six to eight years can they get that
kind of return through your financials
if they can’t they’re out also make sure
that you understand every number on your
financial projections they’re going to
test your assumptions and if you stumble
you’re going to lose them the next step
you’ll need to send an entire business
planning but those are the three main
sections investors will look at if you
pass a test on those three then the
investor will likely read the rest of
the plan but will be thinking in the
back of his or her head I’d like to meet
this entrepreneur and that’s what you
want that first meeting where you can
show your passion and get them excited
about the opportunity with you it’s not
about having a business degree you don’t
need it to write a business plan
your plan just has to make sense make it
easy for investors to understand your
business and you’re that much closer to
getting a yes from them
belief
having supportive and caring investors
helps fred wilson how do you write a
business plan for investors it doesn’t
matter if you have a business degree it
doesn’t matter if you graduated from
university college high school or the
school of hard knocks it doesn’t matter
what your last name is what your skin
color is how old you are or whether you
wear pants or a skirt I used to be a
venture capitalist a VC people came to
me to raise big money for their
businesses I’m talking 500,000 to 15
million dollars kind of money and today
I’m going to share with you the three
most important things I look for before
inviting someone in to see me
ninety-nine point nine percent of
business plans got rejected only the
point one percent of entrepreneurs who
followed these three simple rules got
invited to a meeting with us so if
you’re thinking about raising capital or
just one an education as to how the
process works you’ll want to pay
attention to this one number one
executive summary the executive summary
is the first thing an investor venture
capitalist angel banker and so on looks
at it’s 13 pages at the beginning of
your business plan that summarizes the
whole opportunity right at last make it
important keep it simple there was an
expression in the VC world that an
executive summary had to pass the
grandmother test meaning that it had to
be written in plain English so that your
grandmother could understand it most
business plans are filled with so much
jargon and technical terms that
investors get lost remember investors
are generalists not specialists they
don’t know your business like you do
it’s your job to make it easy for them
to understand the opportunity if they
can’t understand how they’re going to
make money from your executive summary
then your entire business plan goes to
the trash can and that’s your fault keep
it simple number two management team
assuming they like your executive
summary the next thing to look at is
your management team they want to see
what kind of experience you have have
you done this before you
any startup experience are you the right
person to actually execute this idea of
yours one of the biggest problems with
most startup companies is an incomplete
management team for example you’ve got a
founder who can’t sell and doesn’t have
a sales person we’ve got a tech company
without a CTO or everybody involved is
young and this is the first thing
they’re trying all of those things
scream risk for an investor to give
yourself the best chance at a yes find
people to complement your team it could
be someone who’s a partner a full-time
or part-time employee or even a member
on your board of advisers pro tip create
a board of advisors get respected people
to lend their name to your company so it
doesn’t look like it’s just you for
example if nobody who really understands
finances is on your team that’s going to
worry an investor get your account to
join your board of advisers to add
credibility and make investors feel more
comfortable number three financials
investors want to know that they’re
going to get a return on their
investment banks for example want to
know that you can pay them back and
they’ll likely want your house is
collateral angel or VC investors will
want to see that your business can give
them an average annual return of thirty
percent on their investment they want to
see that you can grow quickly and that
someone is likely to buy you out they
want to be in and out of your business
in six to eight years can they get that
kind of return through your financials
if they can’t they’re out also make sure
that you understand every number on your
financial projections they’re going to
test your assumptions and if you stumble
you’re going to lose them the next step
you’ll need to send an entire business
planning but those are the three main
sections investors will look at if you
pass a test on those three then the
investor will likely read the rest of
the plan but will be thinking in the
back of his or her head I’d like to meet
this entrepreneur and that’s what you
want that first meeting where you can
show your passion and get them excited
about the opportunity with you it’s not
about having a business degree you don’t
need it to write a business plan
your plan just has to make sense make it
easy for investors to understand your
business and you’re that much closer to
getting a yes from them
belief
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