Venture Capital Raising: Business Plan Writing
Many entrepreneurs believe that investors will fund their “great” idea because it is a “great” idea. In reality, investors will like an idea and may even think it has great potential, but it’s the explanation in the business plan that describes how you plan to execute that idea that convinces the investor to write a check. That is the difference between successfully raising capital or not.
It is your job to explain both the pros and cons of investing in your project. In fact, you have a legal requirement under federal securities laws, so screw up here and you’re screwed. The best way to start your plan is with a plan outline, also called a business plan template.
The template or outline should list many of the categories of information that should be included in your plan. Start filling out the categories by hand. Answer questions that you feel comfortable answering. Don’t guess. don’t lie Later, in another article, we will talk about investor documents. The plan must eventually be included in your Private Placement Memorandum, also known as a PPM. The PPM is a legal document and you will be responsible for everything in it. At this point, don’t worry about spelling or meaning. You can address the latter. List your answers in the business plan outline briefly.
The important thing is to organize as much information as possible on the subject. In those categories where you cannot provide information, seek help. A common example is putting together a financial report. Do the best you can and then seek help or advice. Don’t get fancy or the reader won’t understand.
Do not use acronyms or abbreviated explanations unless you explain what each one means. An example is in this article when I used the term PPM. The most difficult of all tasks in raising capital is preparing the plan. Take your time, and when you really think you’ve successfully mapped out all the information, start writing your plan. You may also find it helpful to get a sample plan written by a professional.
On our website we provide a free 15-page plan outline and a free 35-page business plan sample. This will help you visualize what level of quality your business plan needs to achieve in order to successfully attract investors to invest in your idea. Keep in mind that the quality of the business plan you write is the potential investor’s first perspective on your competition. If you present the investor with a quality plan, will it have passed the first critical test in the process of requesting their money?