While I’m generally skittish about business plan competitions, they can be an entertaining exercise if the level of competition is high enough. So, with that in mind, here is an excerpt from a note I sent to someone tonight who emailed asking for advice with respect to a prestigious business plan competition to which they had won entrance:
My First Rule with respect to doing venture pitches (whether in business plan competitions or to venture folks) is to put together a presentation that you like, then cut the number of slides in half and reverse the order. That is admittedly glib, but it works surprisingly well. That way you start by telling people what you want and who you are and why they should listen, and you push the boring stuff until later.
The key is to keep it short, never lose the thread, and never forget that investors want to know “why now”, “why you”, and “why this market”. When talking to sophisticated audiences you can drop all pretence of chattering about exits — that’s considered bad form — but you should tell people upfront how much money you want and what you’re planning to do with it.
Helps to also, depending on the business, have a clear idea of channels and cost of sales. How long is the selling cycle? How much will it cost to close a sale? How will that change over time? Why? What is your mix between product and service? How will that change? What is the direct/indirect mix? How will that change? Why?
It is also good to admit you have competitors. No faster way to communicate you’re entering a crappy market than to say you have no competition. There’s competition selling porta-potties, for crying out loud, so there pretty much has to be competition selling everything else at which you can make money, especially technology where venture capitalists are falling out of trees to fund quarter-baked ideas. The only reason why you might have no competition in technology is because you have no market ….
Finally, I generally say go easy on the first-mover stuff, the chasm stuff, and the innovator’s dilemma stuff. It has all become cliche, not to mention often untrue, as is the case with first-mover advantage. Nevertheless, if someone asks a question obviously aimed at getting a first-mover/chasm/dilemma answer, then be prepared to offer a wry smile and an answer — but don’t proffer cliches until asked