Mostly Entrepreneurs has been rejected by investor lack of their business report. he doesn’t know how to approach venture Investors or how to prepare a business plan and how to explain their business idea in front of Investors?
In this article, we try to explain everything about how to approach venture Investors and how to prepare a clear business plan to invest their project. we hope this is benefits for you this article how to approach venture Investors?
How to approach Venture Investors?
The best way to be successful in approaching venture investors is to offer them a well-constructed investment opportunity that meets their goals and objectives.
The first step is to develop an executive summary describing the business opportunity in one to two pages, backed up by a business plan that outlines the business, the need for financing, and the opportunity for investors.
The executive summary is very important because it is often the key to getting an investor to read the business plan.
It is a brief summary of the business plan, drafted in such a way that is communicates the excitement of the investment opportunity to the investor and whets his or her appetite to read the business plan.
The business plan should be clear enough that the investor understands it and believes it.
The plan should be designed to convey to a prospective investor a fairly complete description of the business and the investment opportunity.
It should convince the reader that the author of the business plan has thought the need for the capital, how it will be used, and what the impact on the business will be.
A sloppy, incomplete, or superficial business plan gives a bad impression of the investment opportunity and the entrepreneur.
There are many business plan guides and tools available on the internet and in the business sections of larger bookstores.
How to present Business plan
While there is no required form, the business plan presented to a venture capitalist should cover certain basic points:-
Points 1: The mission of the business and the objectives of the management team.
Points 2: A description of the product or service, its history, and an explanation of what problem it solves or what is unique or exciting about it.
Points 3: Objectives of any ongoing research and development activities.
Points 4: The ownership structure and capitalization.
Points 5: The amount of investment needed and what it will be used for.
Points 6: A description of the product and the competition, and where the company fits into the market.
Points 7: Whether the product or service has any proprietary advantages or other protection from competition.
Points 8: A description of the industry , its growth trends, prospects, and its major challenges.
Points 9: The operations plan with an explanation of challenges, solutions, and strategic relationship.
Points 10: The marketing and sales strategy, with the names and size of principal customers.
Points 11: The organizational chart, with track records, compensation packages, and resumes of key management and board members, and hiring plans for unfilled positions.
Points 12: The historical financial data, along with financial objectives and projections, with assumptions, showing cash flow needs of the business and how they will be met
Points 13: A discussion of exit opportunities and strategies.
The business plan should be clear in conveying the excitement about the opportunity, but should also be frank in assessing the major challenges and risks.
Once the executive summary and business plan are put together, the challenge is getting them in front of investors.
For privacy reasons, most angel investors do not want to be deluged with business plans from entrepreneurs seeking capital.
How to search Venture firm Investor
Venture firms are relatively easy to find. Venture capital firms in other areas can be easily located through internet searches.
It plays to do some research on venture firms before sending them an executive summary business plan.
There is no point in sending information to firms that are looking for something different. Most venture firm web sites also include a list of portfolio companies.
How to contact an Investor
The entrepreneur should make every effort to set up a meeting with prospective venture firm investors to explain the opportunity and the business plan in person.
This is not always easy, since venture firms cannot invest the time to meet with everyone who submits a business plan because of the fact that most venture firms see hundreds of investment opportunities each year.
The best way to get attention and a meeting is to get an introduce to the venture firm from someone that the firm respects, such as a lawyer, an accountant, a scientist, a company in their investment portfolio, an investor in the fund, or an investor in the company.
If the only available approach is to deliver an executive summary and business plan to the venture firm, it should be followed up with a telephone call and a request for a meeting.
If Investor say “no” for invest what should can you do :-
In approaching venture firms, entrepreneurs should remember that these firms typically turn down 99 to 100 applicants.
Because venture firms target so few investments for each portfolio, the fact that they say no is not necessarily an adverse reflection on the entrepreneur.
If the answer is “no” the entrepreneur should try to find out as much as the venture firm will offer about why it was not interested. This information can be valuable in approaching other venture firms.
Entrepreneurs should take care not to burn any bridges, but to learn from each “no” and look for ways to improve the business plan.
If the venture firm or angel expresses further interest, the investor usually determines the next steps.
In this stage, it is critical that the company be responsive to the questions and concern of the investor.
If Investor say “Yes” for invest what should can you do :-
When the investor makes an investment, the relationship is only beginning.
It is important that the company keeps the investor well informed and avoids unhappy surprises.
The investor can be a key to the success of the business by providing wise counsel, contacts to important strategic partners, and more money when needed.
Most businesses, particularly early stage ones, will have to go back to their investors for more money at some point, so it is important to continue to treat investors as well or better after they invest as they were treated before the investment.
And in the long run, an entrepreneur who makes money for an investor has an advocate and supporter for life.
Know Your score (how to approach venture Investors)
After seen you business appraisal if venture firm give you points of your business plan that means which are mentioned as given below:-
Point total 30 to 38 : You have an interesting proposal that should garner the interest of venture investors.
Point total 23 to 29 : Your business has possibilities and might be of interest to angel investors, but probably needs more works before you will be able to raise significant venture capital.
Point total 16 to 22 : You may be on to something here, but you probably have a way to go to attract investors.
Point to total 10 to 15 : A long short, Reread this primer and go back to the drawing board.
Point total below 10 : You should probably not expect to raise venture capital for this venture.
At last words, Every entrepreneurs should have to prepare a clear and frank business plan report So that Investor are know every one about this project and not any points is hidden for investor otherwise the problem can create after.
And if any Investor say that no then entrepreneur should not demotivated rather, he should prepare business plan well and try again.
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