Friday, July 23, 2004
How To Write A Successful Business Plan Key Learnings:
There were 14.9 million small businesses in 1983. Only 1,400 received funding from venture capitalist. Unless you exist in an industry that is currently experiencing a bubble like tech companies in the late nineties, small businesses historically have about a 0.01% chance of receiving funding from venture capitalists.
Many venture capital firms receive so many proposals that even sound plans are not given a thorough review.
Many good ideas require years of industry experience to identify as good, just as many opportunities require in-field experience to be recognized. Many venture capital companies hire MBAs straight out of college (with no experience in your industry or any other for that matter) who will have no ability to judge your idea or company based on anything except what is delivered in your business plan.
A sense of status and power rubs off on the people who administer the investment funding process, and this can cause them to overestimate their ability to judge the potential success of your proposal.
When a business plan or business plan author does not clearly and concisely communicate the idea for the product or service being proposed, the audience begins to wonder if there really is an idea.
Each venture needs an idea champion, a true believer, whose belief in the product or service is so deeply unshakeable it becomes infectious to co-workers, investors, and customers.
“If, in order to succeed in an enterprise, I were obliged to choose between fifty deer commanded by a lion and fifty lions commanded by a deer, I should consider myself more certain of success with the first group than the second.”
Saint Vincent De Paul
“A banker is someone who won’t lend you money until you can prove, without any doubt whatsoever, that you don’t need it.”
Unknown
30 venture capital firms will receive 14,604 firms a year collectively with an average of 486.8 per firm.
Those same 30 firms funded a total of 275 ventures that year. Only 5.5 of those 275 funded venture proposals were received unsolicited. Hence…
If you send your business plan to a venture capital firm unsolicited, your chances of receiving funding are roughly 1 in 2,500.
If your business proposal arrives at a professional investment firm through a trusted referral source, the odds of the proposal receiving funding increase to about 1 in 50.
Many venture capital firms receive so many proposals that even sound plans are not given a thorough review.
Many good ideas require years of industry experience to identify as good, just as many opportunities require in-field experience to be recognized. Many venture capital companies hire MBAs straight out of college (with no experience in your industry or any other for that matter) who will have no ability to judge your idea or company based on anything except what is delivered in your business plan.
A sense of status and power rubs off on the people who administer the investment funding process, and this can cause them to overestimate their ability to judge the potential success of your proposal.
When a business plan or business plan author does not clearly and concisely communicate the idea for the product or service being proposed, the audience begins to wonder if there really is an idea.
Each venture needs an idea champion, a true believer, whose belief in the product or service is so deeply unshakeable it becomes infectious to co-workers, investors, and customers.
“If, in order to succeed in an enterprise, I were obliged to choose between fifty deer commanded by a lion and fifty lions commanded by a deer, I should consider myself more certain of success with the first group than the second.”
Saint Vincent De Paul
“A banker is someone who won’t lend you money until you can prove, without any doubt whatsoever, that you don’t need it.”
Unknown
30 venture capital firms will receive 14,604 firms a year collectively with an average of 486.8 per firm.
Those same 30 firms funded a total of 275 ventures that year. Only 5.5 of those 275 funded venture proposals were received unsolicited. Hence…
If you send your business plan to a venture capital firm unsolicited, your chances of receiving funding are roughly 1 in 2,500.
If your business proposal arrives at a professional investment firm through a trusted referral source, the odds of the proposal receiving funding increase to about 1 in 50.
