Business plan · Pitch Decks

Are traditional scripted business plans still a good idea?

Richard Pridham Investor, President & CEO at Retina Labs

October 30th, 2016

We've all heard the story of start-ups getting millions in funding with a dozen PowerPoint slides as their business plan. I'm just curious, do VCs still bother reading traditional scripted business plans anymore? Perhaps a well written ~25 or so page doc that they get ahead of time and then you present them a higher-level deck when you pitch in person. Is that a good idea? Does it make a difference for the stage you're at (angel, seed, series A, B...)? When, if at all, would a traditional scripted business plan be of any value? Sometimes it takes more than a few bullet points to communicate important details about your business model and assumptions. I find PowerPoint to be bullet point hell when you start adding more granular information. 
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Steve Everhard All Things Startup

October 30th, 2016

Lets be clear; it was never the Powerpoint that got the funding. A presentation is a mechanic supporting your story, your pitch. I wouldn't bother sending a 25page business plan as I don't know anyone that would read it ahead of a first meeting. I might read your exec summary but that would be the exception.

 Your initial contact is to buy the right to have a broader conversation. Just like any first date you have some key objectives but you have to feel your way through. Be prepared. If you have a business plan then take it. If you have any kind of financial model then take it but don't present either unless you have buying signals. Your financial model isn't going to save a bad pitch because early stage funding is about buying you, your team, then your plan. Find the best mechanic for doing that. It won't be spreadsheet based unless that is your business. You might get into a tire kicking exercise over your business plan but they will be all in or all out long before that discussion.

Keep it short enough to tell your story in the most engaging way, long enough to intrigue and show your chops. It varies from one business pitch to another. Take out as much detail as you dare and then take out some more. Keep your slide ware in reserve but only pitch the essence, deal with the potential objections positively in the slide ware and your pitch. 

A good technique is to print your slides and spread them on the desk to check the flow - it allows you to see the story more effectively than you can on a screen.

Todor Velev Managing Partner, EEI Network

October 30th, 2016

It seems that you have problems with two aspects: content and format (PowerPoint).

On the content - you could not present a business plan to potential investors simply because as it was already noted, it is too long to read. In any medium sized or big company, the higher the level in the herarchy, the shorter the document (that's why you have Executive Summary). If you want to capture the attention, follow the advice on Internet with regard to the content for a pitch deck. And invest only in a good deck; you may never come to preparing a full business plan.

On the format: Power Point is the used format for one reason - in introduces discipline and order. More or less, you have to deliver one message on each slide, and support this message with some data / considerations. And if you want to rpesent everything on, let's say 15 slides, it may become really challenging. Understanding what is important for your business, and what are the levels below it that support it, is the main benefit from using Power point. It requires you to think and to decide. There are Annexes for details, and almost never people get to them if the rest is will prepared. Nothing compared with the unlimited length of a Word document. I have been in consulting more than 20 years with some of the top strategy consulting companies, and I do not think we have prepared one plan / strategy / document for the board of directors in Word (or for any type of client). If somebody wants to prepare a Word business plan for you, most probably he/she has no idea what it is about. 

Rupert Meghnot MBA CXO, Burnout Game Ventures, LLC

October 30th, 2016

As someone who's helped 300+ startups, I can say this: things have changed! I used to write 50pg BPs (w/ 3pg Exec Sum) in the 90s. Didn't even KNOW what a Pitch Deck was... Now, it's essential (in order to raise Seed $$) to do the following: 1) develop a BMC (and don't use those crappy templates, which lack DETAIL); 2) develop a Pitch Deck from your BMC (I suggest this link as a guideline - https://docsend.com/view/p8jxsqr); and, 3) it IS best to have a 15-20pg business plan - just in case an interested party asks! But, more importantly, if you fail to plan...?

Irwin Stein Very experienced (40 years) corporate,securities and real estate attorney.

October 30th, 2016

People who suggest that VC's don't read business plans have limited experience with VCs.  If a VC puts down your business plan it is because your business plan does not tell the VC what the VC wants to know or worse, that the VC does not think your company is worth funding.  A VC is looking to invest in a business that has a chance of succeeding. You need explain that you will sell a lot of your product, that you can source it reliably and at the right price and that you have a team that can succeed because it has succeeded.  Please don't tell me that you got different advice in a book.  I have represented VC funds and professional investors for 40 years and helped them fund quite a few businesses. If you think a power point will get you a few million dollars you are kidding yourself. They want spreadsheets and projections with good numbers. The same is true for a business plan that is based on a template.  If you want funding from professionals, you can't act like an amateur.  If you do get funded, they are likely to spend more for the money than you should have. 

Rob Kornblum

October 31st, 2016

It really depends on what your goal is. If your goal is a document to collect and test all of your assumptions, and to keep you on target to run the business, then it can be helpful to have a document that is an extension of a business model canvas. I prefer the Lean Canvas a bit more.

If your goal is to raise money, VCs just don't read business plans anymore. Times have changed. They will want a 2 pager before the meeting and a good pitch deck. For diligence, they will want a model with assumptions (not with hundreds of levers like some have suggested). They want to test a few things, notably what assumptions could drive this business to huge success and what could kill it. In that realm, what have you tested already or have some data around, vs what still needs to be learned.

I'm a former VC, a venture-backed entrepreneur, and I advise lots of startups.

Gregory Giagnocavo Serial Entrepreneur

November 1st, 2016

I've found success obtaining early stage funding (up to $1M) using a) very clear succinct 12-slide pp presentation, b) then a blank slide followed by 10 more "hidden" slides with more detail, gritty info; that way, in case the conversation and questions warrant more info, I'm ready in two more clicks.
  A 15-minute presentation will usually be enough to either catch their attention and they'll want to hear more; or, to decide they're not interested.
   I have always found valuable to prepare a 25 page business plan for internal purposes as a discipline to think things through. 
   The BP is also ready in case investors like my presentation, are interested and ask for the BP.
   They may ask if I have a full business plan and I want to say yes.
    Even if they don't really want to read BP line by line, they either want to have it in the file and/or they want to know that I have thought things through carefully. 
  Early-stage investors are not interested in five-year financial projections (because they will be wrong) as much as they are knowing that the founder took time to think things through. 
    Investors will focus on the size of the market, the growth of the market and your product fit for the market.
     And you have to sell them on your team. Your enthusiasm and passion is a big part of it and that will not show up on any business plan.

   

Martin Omansky Independent Venture Capital & Private Equity Professional

October 30th, 2016

We think "decks" are truncated and ineffective instruments. Moreover, a good business plan is an internal document, as well as a fund-raising tool. "Decks" are a curse! Sent from my iPhone

Jen Fuerte Founder at TeachrTec

October 30th, 2016

You should have a good and short PowerPoint presentation because sometimes you can present to investors who would not take the time to read your in-depth business plan.

Investors are not investing lots of money just from the presentation, you need a solid plan with numbers, if they are initially interested in your startup, they will want to see more details.

Best of luck!

Richard Pridham Investor, President & CEO at Retina Labs

October 30th, 2016

I'm very familiar with the Business Model Canvas. We have built an exhaustive 5-year financial plan with over 200 assumptions and parameters for our revenue and cost structure. My question pertained more to the means of "communicating" the plan to VCs. Do we write a traditional scripted business plan, do it all in PowerPoint or a mix of the two the latte of which is a high-level synopsis "pitch deck"? The scripted plan would have all the nitty gritty details. But if VCs pay no attention to the scripted plan, then what's the point?

Rupert Meghnot MBA CXO, Burnout Game Ventures, LLC

October 31st, 2016

There's no "only one right way" of doing this. It depends upon your funding stage, your chosen market(s), and your audience. If your audience is an established seed capital angel network, they'll want a Pitch Deck & "Financials" (usually your history & 3yr PFs). Not all will look at BPs. Individual investors (especially accredited within those groups) will want a BP (to sleep better at night). Just do some due diligence on your target(s), so you know what they're looking for. If you follow what I suggest above, you'll be prepared for any eventuality. IMHO.