Writing a web-based business plan and pitching investors

I should be able to understand your entire business by reading one page: Your executive summary. If I, as an investor, am compelled to read further, then I might read the rest of your plan. Make sure you include a solid monetization plan. Have several methods lined up and get quotes from all the ad networks. For instance, how many users before they will place ads on your site. CPM rates, etc. Explain how you plan to optimize your site and show that in your projections. Make sure you also account for all your possible expenses. Explain how you differentiate and how you plan to gain traction.

Last but not least, investors will want to know their return on investment and how quickly they can expect it. Writing the plan forces you to gain so much more knowledge about your company. Market research is also one the key components. There are no companies that don’t have competition. Hunt down your competitors and explain why you are better. My best advice is to take your time, and never think you are done. Business plans are “ever-evolving” documents. Also, as one of my previous posts implied—Focus is key! The #1 thing that most investors look down on is multiple ideas. Are you all over the map? Figure out which of your revenue streams is strongest, and focus on that. You can throw all of your other ideas into a “Future Products and Services” section. Spending hours explaining each one however, is useless. Lastly, longer is not always better. If you start repeating yourself, whoever is reading it is going to be bored to death. Short, concise, and to the point. Investors look at hundreds of plans a week. They don’t have time to read 100 pages.

My first plan was organized something like this:

1. Executive Summary.

1.1. Objectives

1.2. Mission

1.3. Keys to Success

2. Company Summary

2.1. Company Ownership

2.2. Start-up Summary

3. Services

3.1. Future Products and Services

4. Market Analysis Summary

4.1. Market Segmentation

4.2. Target Market Segment Strategy

4.3. Service Business Analysis

4.3.1. Competition and Buying Patterns

5. Strategy and Implementation Summary

5.1. Competitive Edge

5.2. Marketing Strategy

5.3. Sales Strategy

5.4. Milestones

5.4.1. Expenses

5.4.1.1. Hosting

5.4.1.2. Bandwidth

5.4.1.3. Information Technology

5.4.1.4. General Business

5.4.1.5. Legal

5.4.2. Capital Expenditures

5.4.2.1. Intellectual Property

5.4.2.6. Legal

5.4.2.7. User Interface

5.4.2.8. Server Hardware

5.5. Technical Information

6. Management Summary

6.1. Management Team

7. Financial Plan

7.1. Philosophy

Key things NOT to say:

“I don’t have competition”

“All I need is 1% of the market share and I can be successful.”

“I plan to get acquired, therefore all I need is eyeballs and don’t need to worry about monetization.”

Furthermore, when pitching investors, you need to come prepared. Investors will not sit in the meeting with you and thumb through your plan page for page. Come with a 10-15 page power point presentation. If you can convince the investor that it’s promising, then they will go home and read your plan. They will do their due-diligence and you won’t hear back from them immediately. It’s a long, drawn out process. Pitch multiple investors! The community is tight nit. A VC, if he likes your plan, will share it with all his VC friends to get advice. You need to convince every VC that you are the best. Sometimes VCs will talk trash on you to other VCs to gain leverage. You need to prove yourself to everyone. Get in there and don’t expect term sheets. It’s common to expect one term sheet for every 10 investors that you pitch. The final thing you need to come with is a deal sheet. Personally I presented the deal sheet as a separate presentation after pitching and gauging the prospective investor's interest. This is something that is usually involved in the plan too. Whether it’s a bridge loan investment later, straight cash for equity, promissory note, investments in chunks per milestone met, crawl-back options, etc. There are several scenarios and they should all be carefully considered. Also, connect this to the CAP table, which I have listed under ''company ownership'', and show how everything is effected/diluted. Don’t sit there and ask the VC to propose something, because they will screw you. Come in strong, and know your bounds. You need to be in control.