I recently heard of pre-seed funding. Does anyone know if when seeking idea-stage funding, you should prepare a business plan? Also, what would be the investor expectation when considering investing in a concept?
A couple of quick thoughts. Keeping in mind that the plan is a tool to help you accomplish steps in your process, not a step in the process itself. So a business plan is not an all or nothing concept. Create it to the extent it's needed, and no further.
1) If you are asking for money, then I would at least expect you to be able to answer a few key conceptual questions, 1) what consumer/customer need am I trying to meet, 2) what is my idea and how does it serve to meet that need, 3) what are my top strategic objectives, and 4) how will is use the money to meet one or more of these objectives.
2) Investor expectations are obviously lower at this stage. That's why this stage is more frequently called the "friends and family" stage. They are "investing" in a relationship as much as in a business idea. To the extent you shift away from friends and family, the more I would expect to answer tougher questions. The frequently answered questions should go in your business plan.
Business plans are nice, but they're outdated as soon as you write/type the first word on that document. Also most investors invest in something that's proven already and is of their expertise/interest. Anyone can be investors...you just need to sell the vision and prototype something relatively quick and cost-effective.
Chi Chi, why not put together a video intro outlining your business idea with the minimum of detail as well as some demonstration that you have done your research. This is like a mini-pitch and I think it would serve you much better. You should 1) Outline briefly what your concept is 2) Show what need it fills, or why it's better than a competitor 3) Show you know there are competitors and what they do and what you do differently 4) Show that you have thought out the risks but that you are ready to counter them 5) Show that your idea fits the profile of what that investor has history in and would add value to them and moderate risk by knowing who the investors actually are, or at least their mindset.
Good luck !
Hi - unfortunately the whole investment landscape has shifted a little to the right; what used to be easy and the idea was often enough to get early investors. Is now more where most investors would class as round A. it's not to say it can't be done, but de-risk the investment as much as you can before looking for funding. it will help you get the funding but also help you keep a bigger piece of your company.
Good luck with it!
I generally put together a business plan, not initially for investors ... but for ME. As I transform an IDEA into a potential BUSINESS, I put together a plan to start planning out the puzzle pieces and how they fit together. Going through the exercise of writing a business plan in the early stages helps me to plan the stages of company, the requirements of a MVP, etc.
A quick and easy business plan would never hurt.
No use. But you still have to write. You may be an idea or DEMO because of the seed. This time investors value you or your team, as well as the direction of your project. The business plan is just sort out your logic, and a ticket.