Venture Financing: WHAT EVERY INVESTOR WANTS TO KNOW

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Venture Financing: What Every Investor Wants To Know?

You must write a killer business plan to build a bridge between your project and the financing you need. Entrepreneurs would receive more serious consideration from venture capital firms, angel investors, and other potential funding sources if they realized that they are selling a financial package to the financial marketplace, rather than their product or service to a consumer. Your business plan is your financial package.

What Every Investor Wants to Know

Source: Venture Planning Associates

The goal of every business plan should be to address upside potential, downside risk, management, potential dilution, and liquidity issues. Investors are constantly comparing one investment against another and ranking them in numerous categories. At a recent Venture Capital Conference we attended 150 business plans were reviewed. Of these, only 25 asked for specific funding; only 12 had specific uses of funds; and only 5 had exit strategies for investors!

To Evaluate Your Own Project, put yourself in the place of the investor who wants to know the answers to these seven questions:

1. How Much Can I Make? (ROI expected.)

2. How Much Can I Lose? (Loan guarantees or other contingent liabilities.)

3. Who Says This Thing Will Work? (Third party verification of assumptions and markets.)

4. Who Else Is In The Deal? (The management/investment team and their qualifications.)

5. How Big is the Market? (Is it growing? Is it hot?)

6. How Will the Company Reach Its Clients? (Verification of marketability.)

7. How Do I Get My Money Out and When? (Exit strategy for IPO, Acquisition or Merger.)