. . .I mean if a personal friend of mine thought the business plan was half baked and didn`t open it . . .
Perhaps, there are members of this forum who are the ones that review business plans for a living. I truly hope that they note the irony of your case and resolve to more carefully scrutinize the business plans that come across their desk.
Perhaps, they will resolve to schedule an interview with the owner of the business plan in an effort to ensure that they fully understand the whole picture that is trying to be painted in the business plan.
Hey Bytenram - sounds like a frustrating process you`ve encountered. Ummm, maybe I can kick in a few cents. You dealing with, I gather, several different audiences. One is your colleague, who despite his business experience and his personal skillset, may be not be attuned to dealing with a business plan approach. That is a skill in itself. Some are more experienced at that than others. The second audience appears to be on-line mating services - and you have no visibility into what happens behind the scenes (although I am not that familiar with these services). You have also mentioned an accountant, and the S.B.A, I believe - their approach is different again. And lastly, someone has mentioned Family, Friends and so on - yet another perspective.
Gotta say, each audience needs their own approach. When you have an avenue to a face-to-face (your colleague) take it - do not send them a business plan.
I come from a venture capital context - started in management, owned my own businesses, ended up at the VC, went back to my own business. not sure that many grasp the inside workings of a VC. First, as has been pointed out, a VC is rarely if ever interested in start-ups. There needs to be some market penetration for a VC to pay attention. Secondly. a proposal has to enough legs (size of market, geographic reach) to get a VC interested, because if there is no pathway to a market in the equity, there is no exit strategy. (With the sole exception of a plan that explicitly envisions a sell-out to an aligned competitor).
Third, some VCs are passive, and some are active. Passive is only relatively so, because there are reporting requirements, and inevitably, a pathway to asserting control. Sometimes the structure is board representation, conditionally voting equity series, convertible debt, convertible prefs, and the real favourite - demand debt. VCs will, it deemed necessary, force the vehicle into restructuring to salvage something for their investment.
The active VCs will insert someone on the management team to represent their interests - often the CFO.
Fourth, a lot of VCs are sector or industry preferential investors. Meaning, they are interested in say, bio-med - they have contacts in that field, they have research, and they are looking for synergies.You are extremely unlikely to get a VC interested in bio-med to invest in comm technologies. They use their asset base to enhance their investment vehicles upside, and shorten the timeline.
Fifth is that it costs VCs a lot of money to appraise a proposal. If the proposal gets past the rough cut screening, you can expect that they will take your idea and re-model it based on their market factors, economic forecasts, productivity factors. From there they will asess the viability of the proposal, and finally, ask what you bring to the table.
Sixth - just to look at the proposal for rough cut means about ten minutes, and that will cost the VC about $50 in burdened time. Ten minutes gets you three paragraphs scanned, and 5 numbers assessed - ROI, investment size, CAGR, capital budget, and time-to-payback. That`s it. the full proposal analysis will cost about $1,000 to $4,000 depending on the scope of the potential investment.
Lastly, depending on the VC - they do not recruit the bulk of their reviewed investments this way - unsolicited business plans. They will assign a student to wade through these piles. The most common sources are two. The most common is through market intelligence, by following people in the field, and keeping their ears to the ground on who might be in a position to start a new venture. I have actually recruited executives to start ventures based on my portfolio, and my knowledge of their personal strengths. The second source is through industry analysts, bankers, corporate lawyers (they find out first)and industry sources like equipment suppliers.
Now as I say, this has been my experience, and I don`t know much about these online services. Are you sure that you actually want a VC, and not an angel? If the latter, give serious consideration in analyzing your local economy - who has money, whose toes would you be treading on, talk to your lawyer, your banker about who has the money and the inclination. Be prepared to offer them a stake.
Finally, you mentioned $100k. I can`t remember offhand why (what the capital budget was), but you might seriously consider looking to an equipment supplier as a potential source of start-up financing. If you can scrape together enough funds for the expense outlays to first sale, and get the vendor to extend terms on the equipment, you may find that you need less investment capital than you think.
robertj at 12:30 is absolutely correct - sending in a business plan, even a good one is not enough . . .just a start. And you had better know your audience to have any impact.
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