What do investors want? I’ve read more than 100 business plans in the last two months. Entrepreneurs are overwhelmingly predictable on this point. Investors want disruptive. Investors want game changing.
But not just saying it. Being able to believe it. Two of every three plans says it. Only a very few make it actually believable.
And believable, in this context, is still a matter of huge uncertainty. Nothing in startups is fully believable. The closest you get is an interesting market story about solving a real problem and doing something important differently, and a team that seems to have experience and background that indicates it can execute the idea.
The best thing I’ve seen in a while on what investors want — at the high end of venture capital — is this one on The Anatomy of a Successful Entrepreneur, that appeared on TechCrunch about a week ago. Post author Rip Empson digs into the recent Kaufmann data on venture capital, adds some analysis by Fred Wilson, Chris Dixon, and others, and comes out with the short list shown here.
[…] Angel investment is for a select few businesses that offer a reasonable chance of future returns on a few hundred thousand dollars. Occasionally that dips down into the tens of thousands. Real investors usually want scalable, defensible, high-growth businesses that can be sold in 3-5 years, with experienced management teams. The background includes three essential truths on getting investment and here’s what investors want. […]
[…] that it’s worth spending money on your business for their chance of return? Ask yourself: do you have what investors want? If you don’t, then don’t waste time on […]
[…] my post here yesterday I questioned the value of the phrases “game changing” and “disruptive” for […]
The business plans I’ve seen and read are almost always written by the owner – sometimes delegated to the accountant or sales manager – in response to the need for funds or a bank loan. They often make valiant attempts to follow a template, and end up littering the content with vague, ambiguous and flowery statements such as “XYZ LLC will aggressively seek out local vendors to form strategic alliances in order to reduce the cost of business and offer more services to our clients”, or “Our vision will manifest itself in building strong relationships with our business clients and customers”. The plan is written only to obtain funds to cover cash flow problems or a desire to expand.
Very few write plans that lay out their vision and mission in clear language and then follow up with an actionable strategy and design to implement it. Very often the plan is cluttered with assumptions that don’t have any data or facts that validate them. This is most obvious in revenue projections where basic questions such as Who will buy, What will they buy, Why will they buy, and what is your Value Prop that will keep them coming back to you.
[…] In my post here yesterday I questioned the value of the phrases game changing and disruptive for […]