Or will a 15 slide preso and solid knowledge of my market and business suffice? Some VC websites still have a "submit business plan" link and we're already up and running as a business with a clear strategy in place, but I'd rather not spend a lot of time ginning up a long document that noone will read. That is, unless you tell me I need to :).
Do I need to put together a 30 page business plan for series A or angel funding?
Answers
I work with many VCs and Angels none of which require a traditional business plan. The modern business plan we generally work with is a PPT presentation and detailed pro forma. Personally, I recommend and use three tools: One Page Summary, PPT and pro forma. If a VC site requests a business plan, I would respond with your summary, PPT and pro forma or ask if these will be satisfactory. Also, I feel that the number of slides is irrelevant, though some VCs will recommend such. Rather, I recommend that when you practice your presentation it should take no more than 20 minutes so that you can get through your entire presentation in an hour meeting; allowing for the meeting to start a bit late and introductions, as well as your presentation.
I used to be strong detractor of formal business plans. But, I have come around. A business plan is a good thing to have...but not for the document and not for the VCs. A business plan proves that you have thought out the important aspects of your business.
President Eisenhower said, "Plans are nothing. Planning is everything."
What is important is that you do planning. If a VC gets interested by a 1-2 pp exec summary, PPT, and pro-forma, they will start to do due diligence. They will want details. Mostly they will ask. But...if you have clear plans, it shows that you have thought things through. What are your product plans? Show them a product roadmap? How are you going to sell your product? Show them your sales and promotion plan and/or channel plan. Who are your competitors? Show them your competitive analysis. Every business has unique needs. So every business will have a unique set of planning that is required. If you don't have this planning done, you will look like you haven't thought through the important issues of your business. And you will fail in due diligence.
After you do all the planning...it is easy to write the business plan. Heck...the business plan can be an outline...with brief summaries...referring to the individual planning documents. A business plan is a good checklist. A checklist to show that you have thought about WHAT are the important things for my business. Then...that you have spent time thinking through HOW you are going to handle those important things.
Bill Walsh never took the '49'ers on the field without his first set of scripted plays. Don't take your startup out into the world without doing enough planning to show you know what you are doing. Otherwise, the VCs will eat you alive. A formal business plan might be just the forcing function for doing that planning. Then...if you want...you can leave the formal plan on the shelf. Just don't let the individual planning documents rest. They need to be living documents. Your strategy and tactics will change as you evolve. Codify this in updated versions of your planning documents. Then...if you need to show someone an updated formal business plan, again, it is easy to update it based on your current planning documents.
I agree with the comments above. I would never give a potential investor or bank a 30 page business plan but I would never try to raise money or get a loan without having a plan in place. Having it documented is important but it will be more of an internal use document than something to hand out, however, it will be a very handy reference when you are talking to a bank or investors. Please do share it internally with your team, however, I can't tell you how many companies I talk to and many key team members do not clearly understand the Company's strategy -- now that is a problem. Good luck!
As a Product Manager, I agree strongly with Roy's comment above suggesting the inclusion of a product roadmap. VCs know that a roadmap is the summary statement of the entire life cycle of a product - customer research, competitive landscape, viability studies, production plans, delivery strategy, post-release support and upgrade, etc. If you've got a roadmap, it means you've done all of your homework and can show the VCs the path you will take to get to your success. As an established company, be prepared to demonstrate where you are on the roadmap, how you got there, and how you plan to move forward. If you're a single-product company, you'll also want to discuss your product or innovation pipeline. Good luck!
During my 14 years of working with Satr ups and the investment community there has been a transition from the 30-40 page BP to now where the investment community wants to see an Executive Summary that has specific information in a sequence that allows them to understand the business proposition quickly and to make a decsion on whether they want to inves or not.
To accomplish a proper ES you need to go through the same process as you would a BP, however, what you produce is a document that is more focused and as a result shorter in length.
The content should cover the same ground, so YOU WILL =go through a full planing stage to get to where you need to be.
There are 3 tools you will need to start the funding process from the Business Model standpoint.
A one pager summary, the content and sequence of which follows exactly the same as the ES but summerized to the major salient points.
I use this to get a quick yes or no from the targeted investors for a given business model.
The second is the ES , which we have discussed above, which uses a specific sequence of information to educate the investor.
That sequence has been an evolving over the past 5 years and is now pretty well set, however, some of the sequence is changed depending on what the business model is that your going to execute.
The last item you need is a PPT presentation.
This is NOT A PRODUCT PRESENTAION, NOR A SALES PRESENTATION, it is an INVESTMENT PRESENTATION.
Again, you need to follow the structure and sequence that you have used for the one pager and ES.
This presentation should have no more than 22 slides, and ytake no more than 15 minutes to present, leaving the bulk of the time to Q&A so you can expand on subjects that the investor wants to pursue.
There are a number of rule for the PPT and the content that I will not go into as I have "spoken" enough already.
I hope this helps
Ted Stokes
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