How much time does an Investor look at your Business Plan?

How much time does an Investor look at your Business Plan?

This is a common question asked by many capital seekers, so we put this question to 100 VC Managers around the world, here are some interesting feedbacks.

I really liked this article because this week I personally have been seeking some VC for USA Green Jobs Now and I have had the exact same feedback the news article dwells on so I figure to pass it on and it may help someone else out along the way!

For more Capital Raising Related Strategies and Reports fromwww.researchwhitepaper.com
VC – are they like recruitment agencies?

VCs are not like recruitment agents!

Which, some of them basically looking for keywords in the resume, and even using systems to scan them. This process can be done within 30 seconds! Which is why you get a rejection letter almost within 24 hours! The shortest record for me was within 5 minutes!

USA Green Jobs now is still looking for some more investment capital to this day!

For VCs, they are different – but do not expect they spend hours on the business plan you have sent them initially, however, if you include essential information in your business plan, this will increase your probability in securing to the next stage.

“What makes your business plan stand out from the crowd?”

Depending on the industry, some VCs receive up to 50 business plans a week, and most of VC have less than 10 team members, less the key people who are tied up with meetings all the time, less the time they spend in reviewing and updating the investee companies, less the people on vacation.

This means, you are typically left with between 2 to 7 investment managers or analysts in a firm to go through the plans, which is why they have stringent review process in place to speed things up.

Addressing their criteria upfront and you will have a much better chance!

During our interview, many VC Managers suggest that, as a first step, it is a good idea to send an Executive Overview as well as the Business Plan. If they find your Executive Overview of interest, they will contact you to arrange for an interview which you can go through the Business Plan with them in details together.

Financials, while they are important, it is likely they play a smaller part for VCs initially, however, you need to know how to justify the assumptions stated in the Business Plan.

If you are an existing business, your financial figures will be more important as they can carry out a good valuation using your actual numbers.
The forecast figures always get discounted by Analysts, but do not put too bullish figures to impress the investors, as they will get questioned, it is better to have 3 scenarios: Optimistic, Neutral and Pessimistic.

State several facts very clearly in your Executive Overview: How much capital are you seeking? How long have you been operating? What industry are you in? Who are your target customers? Do you have competitors? What makes a good pitch?

I used to be a VC Manager as well as Senior Analyst with several firms, we used very simple 5 to 10 steps to decide if we will follow up on the business or not. We always use our “60 seconds rule”, in 60 seconds; please tell me about your business. Recently I received 2 phone calls from capital seekers; let me show you the difference:

One project is in the healthcare sector, he said “my technology is used to cure diabetes, not to control, but to cure, and we have gone through clinical trial for last 5 years, we are seeking $5m to $10m EUR to set up a plant in Europe” simple, concise, and straight to the point.

The second person clearly has no idea what he is looking for “I am a financial company looking to utilize opportunities in environmental sectors, and match the companies and the farmers in the world through a credit system”

Does this make sense to you? I have no idea what he was talking about, and then he went on and on for 45 minutes, went into machines, engineering, credit cards. If you are not sure about what you want to do yourself, then convince yourself first.

“Never invest in industries you do not understand”, this is the golden rule used by many fund managers including Warren Buffett, apply this rule and think from investors’ side when you prepare your Executive Summary and Business Plan, then you will have a much better chance. I hope this may help someone else out there.