| What are the most important things that investors | | | | have successfully executed plans in the past. |
| look for before investing in a start-up? What | | | | A Well Thought Out Plan |
| separates rejects from stars? Here are seven | | | | Speaking of business plans, a highly focused plan |
| characteristics most venture capital investors look for | | | | usually precedes a smashing success. Since most |
| in a promising venture. | | | | investors have limited time to meet with |
| A Proprietary Product, System, Method or Approach | | | | entrepreneurs seeking financing, it is imperative that |
| Investors look for surefire indications that the firms | | | | savvy entrepreneurs put together compelling |
| they are investing in have a leg up on competitors. | | | | business plans. In a short well-written plan, they must |
| While patents, trademarks, copyrights and other | | | | communicate their vision and business concept in a |
| trade secrets do not guarantee success, many | | | | convincing manner, anticipating and answering the |
| successful ventures enjoy one or more of these | | | | most critical investor questions. |
| advantages. | | | | Exit Strategy |
| A Large Potential Market | | | | Venture investors usually have limited investment |
| What good is a great product or service if the | | | | horizons. In many cases, they have raised their |
| potential market is too limited? In a relatively small | | | | money using an investment fund vehicle. The vehicle |
| market, a venture might have to capture the entire | | | | usually requires them to return their investors' capital |
| market to be profitable. Most investors look for | | | | within a certain time frame. Most venture investors |
| ventures that operate in markets large enough to | | | | have a three to seven year investment horizon. High |
| result in significant revenues and profits. Large | | | | net worth 'angel' investors may have more flexibility |
| sustainable profits usually lead to greater enterprise | | | | if they are convinced that greater rewards will come |
| value. | | | | from a longer investment horizon. |
| Customer Acceptance | | | | The Potential for Excellent Returns |
| Nothing is more convincing than a rapidly growing | | | | Investors look for ventures capable of generating |
| base of satisfied customers. Well-written business | | | | the kinds of profits that create significant company |
| plans, multiple patents and spectacular Power Point | | | | value. Financial projections must be realistic yet |
| presentations are great, but early rapid product | | | | convincing. Large profits produce high company |
| acceptance is where the metal meets the road. | | | | valuations. Upon an investor's exit from the |
| A Highly Talented and Experienced Management | | | | investment, a large enterprise value usually results in |
| Team | | | | large investment returns. |
| Investors look for management teams that are | | | | If you are making plans to tap the venture capital |
| talented and that can deliver on their plans. Many | | | | market, keep these points in mind. Focus on |
| ventures fail, not because the business plan is not | | | | presenting a compelling, well-written business plan. |
| compelling or well designed. They fail because the | | | | Once you get your meeting with investors, be |
| management team is unable to execute their plan. | | | | prepared to concisely communicate how your |
| Investors are partial to management teams that | | | | business will become successful. |