This group supplies the fundraiser with a 100-page book that includes 20 pages of newspaper clippings and a scholarly treatise on the industry complete with 15 pages of charts and graphs, which may be impressive, but is not read. The failure of both of these approaches stems from a misunderstanding of the role of the business plan in the capital venture world. An angel is no different than a capital venture firm in his or her desire to make a prudent investment. I remember sitting at a forum on angel investing, when an audience member indignantly accused the panel of angels of being no better than venture capitalists because they wanted experienced management, collateral, growth industries and significant returns on their investment. The thought was that an angel investor suspended all prudent business practices and just threw money at any project presented by glib entrepreneurs.
Nothing can be further from the truth.
Each venture capital source must present the plan to a committee or advisors to determine if further processing is warranted. The business plan is the door opener, if the plan is favorably received the firm or individual will proceed to the next step, due diligence. The projects that are selected achieve a business comfort level that encourages further pursuit. If a project or business is inherently unsound, a skillfully drafted plan cannot cure the flaws, nor does a poorly written plan automatically condemn an excellent company s chances for financing, however it does make it significantly more difficult. Most proposals received fall in between.