The document outlines the importance of a business plan for securing VC funding, emphasizing its role in clarifying business objectives, introducing the team, and persuading investors. Key elements include an executive summary, company description, product/service details, market analysis, marketing and operations plans, financial projections, and an exit strategy. It stresses the need for credible information and thorough market knowledge while highlighting the significance of risk management and addressing potential challenges.

1. Business Plan for VC Funding

2. Purpose of a Business Plan Provides clarity of thought and purpose Introduces Business Model Introduces the company and the team Attempts to persuade investors Highlights risks and challenges Serves as an entry point for further discussions

3. Target Group - VC VC firms see many plans Usually smart and knowledgeable Referrals – very critical VC’s objective to assess quantum, type, and manageability of risks Hence, business plan is an important document though not the “be-all, end-all”

4. Key elements of a plan Explain business model in simple terms Fit the plan to the company Be credible and informative Do your homework; Know your market and competitors Highlight Risks and steps to overcome the risks Execution Risk as critical as market or technology risk

5. Business Plan Contents Executive Summary Company Description Product/Service Market Analysis Marketing Plan Operations Plan Financial Plan Management Team Exit Strategy Risks

6. Executive Summary The most important section of the plan, often the only read section! Compact version of the big plan Stick to hard facts; no room for exaggerated optimism Limit to a concise summary; no more than a couple of pages Summary is the prelude to further meetings

7. Executive Summary (2) Summary should answer questions: What sort of company is it? What’s the product/service and what’s special? Who are the managers? How much money do you need? In what stages? What will it be used for?

8. The Company Description A brief history of the company How you started? What was the original idea? Share your mistakes and what you learnt; adds credibility Share financials; actual vs. planned; if applicable Should lead up to the discussion as to where you intend to go from here

9. Product/Service What is your value proposition? How are you going to solve their problem better than your competitor? Than what they are doing now? Any patent protection possible? Technology details: defensible? Unique? Sustainable competitiveness? Time to market? Ability to execute? What prevents someone else from doing it more cheaply?

10. Market Analysis Who is your target market? Profile of the people? What is their behavior pattern? Any complementary products or services? How large is your market? Growth rates? What are the trends in the market? How do you see the market evolving?

11. Marketing Plan Detailed note on how you will convert large market into revenue Provide different marketing tactics – cheapest to most expensive Costs and strategy of acquiring customers Sales and Marketing strategies Respect your competitors Risks and Unknowns Strategies for reducing risks

12. Operations Plan The nuts and bolts – how will you make it? How will it be available to your customers? What’s involved in running the company? Location, equipment needs Labor requirements Risks at different levels and how best to mitigate risks

13. Management Team Provide CVs of the key members Relevance of past experience Start-up experience Market creation experience Team dynamics – very critical when more than one founder Clarity of roles GREAT TEAM + MEDIOCRE PLAN > MEDIOCRE TEAM + GREAT IDEA

14. Financial Plan Detailed numbers not the key Assumptions very critical Key drivers of revenue Realistic projections Exercise prudence Benchmark your model Revenue estimate: bottoms-up Expenses – past and/or industry average

15. Funding Capital – internet time delivery Brand building Scaling the business Funding based on 18 – 24 months projections? Till customer traction? Choose funding partner with care – it’s a marriage!

16. Exit Strategy Exit strategy for the investor; not necessarily the entrepreneur Exit could be merger, acquisition, or IPO Each strategy should be plausible and defensible

17. Venture Funds Today Early stage investing: Only in Technology Product companies with strong background of entrepreneurs Mid-Late stage investing: More the norm, also more common for service companies Many Indo-US companies getting funded; even by Indian VCs