One of the more stubborn problems in building a business is the paradox of consistency vs. the pivot.
Consider this: It’s better to have a mediocre strategy consistently applied over three or more years than a series of brilliant strategies, each applied for six months or so. But too often people get bored with consistency and drop a working strategy long before the market understands it. Read more
Somebody asked me in email what investors look for in the marketing portion of a business plan and/or business pitch. What works? What’s credible? What are investors looking for?
Caveat: generalizations are dangerous. And I’m generalizing here from what I’ve seen in the three dozen or so pitches and plans I’m exposed to in a year, plus my discussions with other angel investors in my group, and investors I meet as fellow judges in business plan competitions.
I see three essentials: Read more
I really like Martin Zwilling’s post here yesterday, 10 things that make a business plan fundable. That made me think about this list, the opposite, things that make a plan not fundable. Before I start, though, I second Martin’s motion on the use of business plans:
People ask me if they really need ANY business plan, unless they are looking for an outside investor. In fact, a business plan is needed more by you than investors, as the blueprint for your company, team communication, and progress metrics. Things that make it investment-grade for outside investors will also benefit you, since you are the ultimate investor.
I liked all of Martin’s points in that post, but, since sometimes the other side of the coin is just as interesting, here’s my list of reasons why not. These are my 10 things that make business plans notfundable, in my assumed order of importance. Read more
Fred Wilson of Union Ventures writes Entrepreneurs Have Control When Things Work, VCs Have Control When They Don’t on his AVC blog.
This is one of those ideas that seem completely obvious but only after I’ve heard them. Whether we’re founders or investors, we focus on terms and percentages as determining control. But in the real world, as Fred points out, strength and power are about who holds what cards, and who needs whom. He says:
An entrepreneur or hired CEO can own as little as 5-10% of a Company but they can control it like a dictator if they are doing a great job running the business and the company is making a lot of cash flow and has no need for additional capital.
An entrepreneur can control 95% of a company and all the seats on the board but they can easily lose control of the business if they company is floundering and they need more money and the only investors who would consider putting up money are the existing investors. Read more
Take a step back and be objective, and U.S. angel investors are hardly a diverse group. Not demographically diverse (sadly, we’re mostly older white men) but in opinions, preferences, and what we want in a deal, for sure.
I strongly recommend a quick tour of the ‘what investors want‘ collection of videos on this site. You’ll find 22 very short videos taken from interviews of some very thoughtful, successful, and influential investors. It’s a bit like an angel investor role call.
What reminded me of diversity was how I was struck yesterday by one of these in which one of the angel investors values certainty very highly. It’s s very short snippet, but the active quote is … Read more
It’s one of the most frequent questions: What if I can’t get funded for my deal? What next? Do I keep trying forever, drowning in the myth of persistence? Who can I complain to? Where do I get my appeals hearing?
Here are my seven favorite cures for post-pitch depression.
- Scale down and focus: So don’t be the next Facebook, at least not immediately. Go back into your plan and find the core components that drive the rest. Narrow the market, narrow the business offering, and shorten the time from zero to revenue. Reduce the risk on the big questions of viability and market. Lower your valuation. Create smaller milestones for the short term. Read more
Most of us know not to complain about the previous employer during a job interview. Fair or not, it just doesn’t work, right? The new job never want to hire somebody with that kind of chip on a shoulder.
More so with investor pitches.
I was at one once, as an investor member of a local angel investment group, when this happened. The pitch had been intriguing, the product/market fit looked attractive, and the guy in charge seemed to know his stuff. The pitch went well. The general feeling in the room was positive. We wanted to hear more. Read more