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Venture Capital Investment Process

Business Plan Evaluation and Investment Criteria

   

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3Ws of Venture Investing

 

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Business founders must assume that everything written in their business plan will be checked by prospective investors, particularly details of marketing assumptions. Most venture capitalists, when reading a business plan, look for reasons they don't want to read further.

Prospective investors, both business angels and corporate venture capitalists, would look for hidden traps, oversights, oversimplifications, hidden competitors, and upside How To discover opportunities. Their business plan evaluation criteria, in order of importance, include:

     

Business Angels vs. VC Firms

Business angels and VC firms use somewhat different criteria for business plan evaluation and  Investment selection.

 

What Different Types of Venture Capital Investors Look for in a Business Plan

Business Angels

Venture Capital Firms

 

  • An experienced and well-balanced management team with a sound track record

  • A firm with a unique concept or idea that meets an unmet consumer need

  • A target market and proven niche product with almost unlimited growth potential

  • Strong competitive position

  • Very healthy but realistic, financial projections

  • A firm that is usually developed and looking for expansion funds (not a start-up)

  • Preferably a high-tech firm, but also firms in other sectors

  • Detailed financial statements (preferably with milestone charts)

  • A potential equity stake of around 30% of the company in exchange for funds (though there is much variation)

  • Potential exit routes identifiable at the time of investment

Venture Financing Funnel Download PowerPoint presentation, pdf e-book

Venture Financing: Key Documents

 

Rocky's Dilemma of Innovation Prevention:
Unless the results are known in advance, funding agencies will reject the proposal
.