Transcript What makes a business venture successful?

What makes a
business plan
successful to raise
venture capital
funding?
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
1
What makes a business
venture successful?
 the people
 the opportunity
 the market
 the deal
 The degree to which they fit together.
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
2
The people
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Who are the founders?
What have they accomplished?
What is their reputation?
Do they have relevant experience?
Can they adapt to changes?
How will they respond to adversity?
How committed are they to this venture?
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
3
The opportunity:
The bottom line
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What is the idea?
Why is it better than other solutions on the market?
How do you generate revenues?
What are the costs involved?
When do you have to buy resources?
When do you have to pay for them?
How long does it take to acquire a customer?
How much capital equipment is required to support a
dollar of sales?
 What is the probability distribution of payoffs?
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
4
The Market: Who Are the
Customers?
 Who is the customer?
 How does the customer make decisions?
 To what degree is the product or service
a compelling purchase for the customer?
 How will the product be priced?
 How much does it cost to acquire a
customer?
 How much does it cost to retain him?
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
5
Who are the competitors?
 The value of the growth opportunities
depends on the competitors
 Who are the competitors?
 What resources do they control?
 What are their strengths & weaknesses?
 How will they respond to entry?
 Who else might be able to exploit the
same opportunity?
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
6
The deal
 What is the pre-money valuation?
 How much investment are you seeking?
 What stake of the business are you
selling?
 What is the financing history and who are
the current owners, claimholders?
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
7
The concept of integration
 To what degree do the people have the
right experience, skills and attitudes
given the nature of the opportunity?
 To what degree does the opportunity
makes sense, given the people involved,
the opportunity and the deal struck?
 To what degree is the concept favorable
given the people, the context, etc.?
 Why should the VC invest in the deal?
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
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How does the VC evaluate
a business plan?
 What can go wrong?
 What can go right?
 What decisions can management make
today to ensure that what can go right does
go right and what can go wrong is avoided?
 How can the reward to risk ratio tilted in
favor of the venture?
 Why should the VC invest in this company?
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
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What are VCs Looking for?
 Business Plan in line with the VC’s focus
 Discontinuity in technology/ High IRR
 Team that have the ability and vision to
execute and that they can work with
 Promising business model
 Advantage to competition
 Protection for intellectual property
 Potential for exit with attractive multiples in the
timeframe of the fund
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
10
Business Plan/Presentation
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10 pages
Summary of concept (1 paragraph)
Team
Idea, Product Line, Company, Intellectual Property
Market, Costumers, Competitors, Price
Business model: How are you going to make money?
Timing of Cash Flows, Cash Flows, Profits, Assets, IRR
Valuation, Existing Investors, Existing Contracts
How much funds are you looking for?
What fraction of the company are you selling?
Why should the VC invest in the company?
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
11
Business Plan/Presentation
 CLEARLY and QUICKLY articulate what product does for
customers and how revenue is generated.
 Use balance sheet and income statement as the table of contents
(revenue, gross margin, operating expenses, earnings timing)
 Be critical in advance
 Provide what each reader target will need…
 Clear review of product, market, competing alternatives,
differentiation, execution plan and exit
 Evidence of every statement you’re making or credible support
 Overview financials with very detailed assumptions and sensitivity
 In presentation show passion, confidence and flexibility
 Prepare elevator pitch and 10-minute presentation.
 Be ready to give crisp answers to questions
Zsuzsanna Fluck
Broad MBA Business Plan Competition Preparatory Workshop 2012
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