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What Does a Venture Capitalist Look for in a Business Plan?

Venture capitalists are high-risk investors, they expect higher returns. Venture capital firms review hundreds of business plans and focus on a few. Individual venture capitalists or venture capital firms extend capital financing from new companies or existing companies.

You can take minority shares or major shares. Some of the factors that VCs look for in a business are bandwidth management, customer base, corporate governance structure, investment structure and exit plans.

The business plan must convince the venture capitalist and give him confidence in the expertise and experience of the management team to achieve the business goals within a certain timeframe. An effective and highly usable business plan should include the following key points:

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The most important part of any business plan is the executive summary, and it is often best to write the last one. This is the initial interaction between the report writer and the VC. It summarizes a lengthy report or proposal, or a group of related reports, in such a way that a VC can quickly become familiar with a large amount of material without having to read it all. It should be brief and contained with appropriate recommendations, reasons and conclusions.

If the product or service is technology-oriented, it must be clearly explained with adequate product descriptions, competitive comparisons, unique selling points, technologies to be used, and future innovations to help VCs understand the whole concept. The stages and development of the product or service should also be mentioned (early stage, initial stage, expansion stage).