The business plan for a startup raising funds must be composed of two parts : a market analysis and company presentation part and a financial part.
The market analysis/company presentation part must contain information about
- The market issue
- The market study: the size of the market, the competitive analysis
- The business model study
- The composition of the team
The section on financial forecasts should contain information on
- The projected income statement and balance sheet
- The financing plan
- The cash-flow statement
Finally, in terms of form, the business plan must be attractive and easy to read. Thus, the business plans are presented in PowerPoint format with the details of the financial part in an Excel file.
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The business plan for a startup raising funds must respect precise codes. Indeed, it will be read by professional investors such as business angels, corporate venture or private equity funds. Therefore, in order to be effective, the business plan for investors must include two distinct parts : a part on the analysis of the project and the market and finally, a part on the financial analysis.
Project and market analysis in the business plan
- Define the market problem : from the first pages of the business plan, the investor must understand the problem that the start-up is solving. This is why it is essential to spend time describing the problem and then showing the solution you are providing. The market problem can be broken down into different, very pragmatic sub-problems. It can be interesting to use market figures to illustrate the market problem.
- Carry out the market study : the market study allows to estimate the size of the market on which the start-up is positioned. The calculation of the market size is important because often, investors are looking to position themselves on global markets of more than 1 billion euros. It is therefore important to give your reader the image of a company evolving on a vast and growing market. This section should also include a competitive analysis. Indeed, even if some entrepreneurs think they have no competitors, in reality, there is often at least one other start-up or company doing the same thing. Having competitors is reassuring for investors because it shows that there is already a market and that you are not the first entrant. So, make a list of your competitors and show how your start-up is different.
- Do the business model study : how does the start-up make money ? What are the different sources of revenue ? The investor needs to understand everything about the business model. Your business model and your prices must be presented in a clear way. Your pricing should be in line with the competitive study done earlier and adding comments to your business model can be interesting. You can for example indicate if there is a recurrence of sales or a recurring turnover. The coherence of the business model is an important step for the business plan of a startup.
- Talk about the team and its complementarity : the members of a team are very important. Investors often expect to see complementary teams but they may also position themselves on solo-entrepreneurs. Dans le cadre d’une équipe, les principaux investisseurs ou d’autres personnes accompagnant le gestionnaire sont à présenter et sont un élément particulièrement rassurant pour les investisseurs. The latter tend to invest in a person rather than a project in order to establish a relationship of shared experience and knowledge. They will therefore be sensitive to the qualities and skills that are specific to each member of the team.
The financial forecast
In this part, it is important to show how many years the start-up will be profitable. Here, it is interesting to incorporate graphs and synthetic tables. The details of the calculations and reasoning can appear in an Excel file. These documents can be accompanied by comments in a PowerPoint file, which will facilitate the reading and analysis of the data. Comments not directly on the documents can also be added to highlight the strengths of the project.
The form is equally important in a business plan
Professional investors receive dozens of business plans per week, so focusing on an easy-to-read presentation is a good way to keep the investor’s attention.
Also, today, financial documents must respect certain codes. First of all, the pitch deck must be made in PowerPoint format while the financial forecast which contains the different financial tables must be in Excel format. The business plan for a startup raising funds must therefore be complete and pleasant to read.
Making this effort will show the investor that you speak his language and in the race to raise funds, it is essential to show that you understand and share the same codes as the investors.
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