The following is from
Ask The VC, where Brad Feld and Jason Mendelson of
Foundry Group answer questions related to venture capital investment and startups:
Q: I just read your column in the January Issue of Entrepreneur
and I had a follow up question. I am at the very beginning point of
putting together my business plan. I have just started writing it and
am fleshing out exactly how I envision the company running and what
customer base I would want to target. I certainly would be looking for
financing but I also feel that would really be important to the success
of this business would be a group of people involved who can help with
the various intricacies of getting a new company up and running. The
long and the short of my question is should I send my business plan to
VC firms when I have completed it or is there a better avenue to take
at this point?
A: (Brad) My immediate reaction is "No!"
For starters, my impression is that you probably aren't ready for VC
money given your description of where you are in the process of
creating your company. It sounds like you haven't started the company
yet, but rather are working on the idea and using the business plan
process to formalize your thinking. This is good, but it's a long way
from being ready to approach VCs.
Given that you "feel that
would really be important to the success of this business would be a
group of people involved who can help with the various intricacies of
getting a new company up and running." I'd find these people first.
These are unlikely to be VCs. Rather, these are going to be
business partners, mentors, advisors, and angel investors that can help
you get things off the ground. Once you've made some progress, then
you'll be ready to contemplate talking to VCs.
But - before
you even do that, you need to decide how much money you actually need
to get your business up and running. If you needs are modest (say -
less than $1m) then it may be the case that VCs are the wrong funding
choice for you and you should focus your energy on angel investors.
Or, depending on the type of business you are trying to create, you
might be able to bootstrap the business without raising any money.
So - bottom line - don't think of VCs as the first step in the process.
Continue reading below
I found a really good website that offers samples of business plans and free MS Word and MS Excel Business Plan tools.
Free Business Plan