

What to do when an investor asks for your "Business Plan" - danshapiro
http://www.danshapiro.com/blog/2011/09/what-to-do-when-an-investor-asks-you-for-your-business-plan/

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mixmax
In Denmark, where I happen to live, I've had two companies funded largely from
a businessplan. The venture and startup ecosystem isn't as developed here, and
frankly I don't think you'd get anyhwere without a businessplan and a
powerpoint deck.

Businessplans are great for getting funding from people who don't really
understand your business, are government employees, banks, or are looking for
the safety of knowing you are an expert in your field. They're also great for
making an appearance and looking "professional". For instance when I hand out
businessplans they're always pesonalised (every page will be annotated with
"private and confidential - this businessplan belongs to Joe Schmuck). People
fall for this.

It's basically a great sales document for people that don't know much about
startups. If you live in an area where nobody knows what the heck you're
talking about when you mention retention rates, A/B split tests, etc. these
are the tricks you'll need to get funding.

I've always included "we will produce (product) to enhance shareholder value"
in all the businessplans I've written just to see if anyone would catch the
Neal Stehpenson reference. Nobody has yet.

~~~
dotcoma
More about the Neal Stephenson reference, please. Sounds like great fun :)

~~~
mixmax
It's from Cryptonomicon - a thousand pages about wargold, allied codes,
enigma, cryptanalysis, startups, datahavens and money perfectly weaved
together as only Neal Stephenson can.

One of the main stories in the book is about Avi and Randy that are trying to
get a datahaven startup off the ground, and Avi, the sly businessman, is
constantly on about enhancing shareholder value. There's an excellent and
humorous description of writing businessplans where it's all about "doing X to
enhance shareholder value."

This is also where the term "fuck you money" comes from. Fuck you money is the
amount that will allow you to economically say fuck you to anyone for the rest
of your life. Basically total financial freedom. Avi, again the businessman,
keeps an updated excel spreadsheet that calculates exactly how much money fuck
you money is at the moment, since it's obviously dependant on exchange rates,
stockprices, real estate prices, etc.

It's a great read.

~~~
dctoedt
> _This [Cryptonomicon, 1999] is also where the term "fuck you money" comes
> from._

It's also in the 1981 novel _Noble House_ by James Clavell.

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true_religion
> One final note: investors who want business plans are probably not your
> target market, if you’re founding a high growth technology startup. We had
> lots of great followup conversations with the angels who wanted them, but
> ultimately none of them turned in to investors.

They never gave a busienss plan to these angels, so the angels never invested
despite "good follow ups". That seems reasonable.

I'm just pointing this out lest people have this take away message the
business plans are obsolete (they're not: if you're not a radical startup,
please have a business plan).

~~~
danshapiro
We had plenty of conversations with many of these folks; I'm pretty sure that
they had their questions answered and understood the business. I don't think
there was a lingering resentment at a probably-forgotten request that was
never mentioned again.

But in the course of those conversations, their reason for passing also became
clear - generalizing across the group, they were used to more traditional
investments like restaurants and real estate. Not coincidentally, investments
for which a business plan is both a sensible and standard document. They
passed because our profile (tech company swinging for the fences) wasn't the
right fit for them.

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tszming
If you really need one, the format recommended by Sequoia is very good.

Writing a Business Plan: <http://www.sequoiacap.com/ideas>

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rdl
I think it's pretty easy to hand someone a "50 page business plan", if that's
what he really wants, by turning a 5-10 page pitch deck and 3 page executive
summary into a ~10-15 page document (with notes), combined with some
additional product documentation, market research, etc. (which can just be
included as appendices).

As long as there's no real original content required, I don't see why it's
that big a deal. You already have the pitch deck, executive summary, maybe
some long-form resume or bios of key people, news articles, and white papers
(if it's a hard tech company; otherwise include screenshots, press coverage,
etc.).

The only thing which is bogus is the 5y pro forma financials; these become
more reasonable post series A I think.

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pbhjpbhj
> _But during Ontela’s seed round, when we pitched probably 100+ angels, it
> came up more than a few times._ //

I'm involved with a small business. When people come asking for a job we
asking for a resume/letter of introduction. The vast majority of the time it
never comes. This is simply our first filter.

Presumably these companies have a business plan they just don't have a
BusinessPlan.pdf. As an investor I'd be pretty keen to know you've looked at
the figures and that you understand the basics of accounting before I gave you
a wad of cash. It's moot as I don't have a wad of cash but there ya go ...

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ojbyrne
The basic components of a business plan are often in people's pitch deck:

\- description of the market

\- description of your product

\- competition

\- your plan for the next 12-18 months

\- burn rate and runway

\- team

You can probably just flesh them out (which might not be much more than having
a word document with paragraphs and sentences instead of a powerpoint document
with bullet points) and satisfy a significant proportion of investors.

~~~
wisty
For all the above:

\- an explanation of _why_ this is relevant, written for someone who has never
heard of network effects, minimal viable products, iterations, ab testing,
google ads, virtual hosts, backups, recovery, testing, user testing, user
tracking, user demographics, early adaptors, or anything else really.

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ig1
Do you need to have a 50 page document ? - no

Do you need to have a document showing you understand your growth and revenue
model and the underlying assumptions ? - yes.

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jjm
Maybe give them your lean canvas and 30 second pitch.

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d0m
tl;dr: Just give them the same slides/documents that you'd give an investor
who doesn't ask for the business plan. (And, a VC asking for a 30 pages
business plan _might_ not be what you're looking for.)

------
Yipster
uh... give it to them?

