Step-by-Step Guide to Startup Financing

 

  

 
Vadim Kotelnikov

How VC Investors
Evaluate a Business Plan

Vadim Kotelnikov, founder of 1000ventures - personal logo VadiK

Inventor Business e-Coach

Author Innoball

Founder Innompic Games icon

 
Startup Business Plan - Chapters, Review by Investors Business Plan Evaluation by VC Investors Business Plan DOs and DON'Ts VadiK VadiK Dennis Reality Check Management Executive Summary IPR Milestone Chart  

Business founders must assume that everything written in their business plan will be checked by prospective investors, particularly details of marketing assumptions.

Most venture capitalists, when reading a business plan, look for reasons they don't want to read further.

 

 
 

Business founders must assume that everything written in their business plan will be checked by prospective investors, particularly details of marketing assumptions. Most venture capitalists, when reading a business plan, look for reasons they don't want to read further.

  Startup Business Plan - 6 Chapters

 

 
Venture Investing How To Get More Promising Investees Venture Financing VadiK Venture Investment Criteria - 3Ws: Team, Business Model, Sustainable Competitive Advantage  

Prospective investors, both business angels and corporate venture capitalists, would look for hidden traps, oversights, oversimplifications, hidden competitors, and upside.

 

 
 

VC investors' business plan evaluation criteria, in order of importance, include:

▪ Key personnel: people / management that can get the job done

▪ A large, rapidly expanding market and the company's marketing strategy

▪ A brilliant idea, invention or technology that can be protected, built upon and commercialized

▪ Effective business design and scalable business model

▪ A business strategy that has a strong sustainable competitive advantage

▪ The financial statements and the price per share.

Business Angels look for:

▪ An opportunity to add their own skills and creativity to the venture

▪ A trustworthy entrepreneur with a compatible personality

▪ A firm in a niche market

▪ An early stage venture whose development they can still shape

▪ Healthy financial projections

▪ A venture that is within driving distance for the investor

  

 
 

Venture Capital Firms look for:

▪ An experienced and well-balanced management team with a sound track record

▪ A firm with a unique concept or idea that meets an unmet consumer need

▪ A target market and proven niche product with almost unlimited growth potential

▪ Strong competitive position

▪ Very healthy but realistic, financial projections

▪ A firm that is usually developed and looking for expansion funds (not a just-launched start-up)

▪ Preferably a high-tech firm, but also firms in other sectors

▪ Detailed financial statements (preferably with milestone charts)

▪ A potential equity stake of around 30% of the company in exchange for funds (though there is much variation)

▪ Potential exit routes identifiable at the time of investment

Startup Business Plan DOs and DON'Ts

Busiess Plan: 3 DOs and 5 DON'Ts

 How To Pitch VC Investors: 6Ws Structure

  

 
   

Rocky's Dilemma of Innovation Prevention:

Unless the results are known in advance,
funding agencies will reject the proposal.