Forums: Discussions for entrepreneurs and small business.

Folks

Have read through alot of the Business Plan postings and thought the following would be useful.  If you are interested in chatting with the person who wrote it...please let me know and I can reach out to him or ask him to respond to any questions via this forum.

21 Fundraising Pitfalls to Avoid: Why Business Plans Don’t Get Funded!

Andrew
http://www.AdvisorGarage.com

Great information! I think the most important one is No Competition. No matter how different your concept is, you are always going to have competition. Your business concept may be an enhancement of the same type of business, but delivers a different service or product.

Business plans do not sell equity in a company.   Business plans communicate a story, a strategy for the company to become a high growth well run company.   An investor ready business plan will communicate to an investor how they could see a return on their investment.   For some reason, early stage companies seem to think that all they need is a business plan.  They spend time and money creating investor interest, but can`t get the investors across the goal line because they don`t have the necessary documents to actually facilitate the transaction.  They need some sort of an offering memorandum to communicate the structure of the deal and the risks associated with the deal.  Then they need member operating agreements for LLC and subscription agreements for C corps.  Without these, they can`t actually sell the shares. 

Just like an interview, you only get one shot to make a good impression.   Don’t risk blowing it with your potential investor because you have a poorly written plan that doesn’t grab the attention of the investor.   Launch Funding Network offers a full business plan review to determine a company’s investor readiness and includes an initial consultation to discuss funding strategies.   Go to the Get Started Tab on the LAUNCH Funding Network ( www.launchfn.com ) to learn more.   Also get massive free information about raising capital by clicking on the links found on the Info & Links tab, includes links to 2 Blogs  and a podcast site.  Tune in also on Fridays at noon est www.blogtalkradio.com/karen-rands

For entries talking about attracting capital from angel investors:

A recent national survey of angel investor groups actively investing in private companies revealed that 66% of their members do not actively invest because of their lack of knowledge of the process and uncomfortable with gathering enough info about the company to feel OK about cutting the check, not because the opportunity was considered too risky.   When I heard this statistic and called the firm conducting the survey to confirm, I couldn’t believe that was the primary reason aggressive sophisticated investors didn’t invest in private companies.   So many exciting emerging growth companies struggle to find growth capital from angel investors.   On average, only 23% of the companies that qualify to be considered by angel investor groups actually receive investment.   Although, there are many factors that drive this low percentage such as valuation of the company, structure of the investment offering, and validity of the business model, this study revealed that the biggest reason an investor doesn’t invest is completely outside of the control of the entrepreneur.   The potential investors simply are uncomfortable with the process of private equity investment and their desire to participate does not supersede their fear of uncertainty.   That is why LAUNCHfn’s partner the Network of Business Angels & Investors (NBAI) provides a safe haven for new investors to join the experienced members a country club type atmosphere to review.   Go to www.launchfn.com and click on the For Investors tab. NBAI Is an active investor group who meets about every month to consider alternative investment and private company opportunities to invest in along with others from the group.  

Nice compilation. I would really recommend going to your close friends and family before approaching VCs. You will be skinned alive even if the idea takes off.