As an analyst for a venture capital firm, I read hundreds of business plans a year and assist our portfolio companies in keeping their business plans updated for further rounds of financing. I often am asked advice on how to compile a business plan and though there are numerous formats that can be used, below are the items I generally want to see included.

1. Executive Summary - this should be succinct summary, telling the reader everything she needs to know within a three - five page span. Mainly this subject should address why the company has been created and what problem it will be solving. If there isn’t a problem needing an answer, consider going back to the drawing boards to think of another idea.
2. Overview - In this section the reader should discover the origins of the idea and a further explanation of the purpose of the innovation.
3. Technology - The entrepreneur will describe how the problem will be solved by explaining the implemented technology.
   1. Thoroughly describe the technology including diagrams.
   2. Answer why this technology is superior to the offerings on the market.
   3. Include patents (provisional and issued) and explain with brevity the coverage of the scope. Referencing filing numbers is useful.
4. Product / Business Model
   1. Explain the initial product, price points and how it will be rolled out to the market
   2. Explain the pipeline of products and the timeframe of when each one will be commercialized.
   3. Discuss the business model that will be used and the target audience, explaining why the model and audience chosen are the best solution.
   4. If the company already has customers, these should be included.
5. Market
   1. Explain the size of the market, backing up your numbers with research reports from top tier research firms (Aberdeen, IDC, Gartner, etc.). With early-stage innovative companies there is the possibility that your market is yet to be tapped and therefore not covered by the analyst firms. The entrepreneur might have to back into numbers by combining markets or creating their own calculations of the market size.
   2. Discuss the annual growth of the market and the drivers that will continue to propel it forward.
   3. Explain the market validation for the product(s).
6. Competition
   1. Thoroughly discuss the direct and indirect competitors. The most useful comparisons are usually in the form of the Gartner Quadrant and / or a table that breaks down the characteristics in comparison to all other companies. It is useful to note which companies are venture backed and by which firms.
   2. Address the company’s competitive advantages with current competition
   3. Describe the barriers for new competitors trying to enter the market
7. Management Team - list all management team members including thorough biographies. Include any position that will be filled upon financing.
8. Financials
   1. Financials can be a quick deal killer. Entrepreneurs are enthusiastic about their companies, but this enthusiasm can often translate into aggressive financial projections. Remember that the market might not think your product is as great as you do and that there are a handful of risks that can occur. It is far better to bring very conservative numbers to a VC firm rather than a graph of the hockey stick growth. VC’s can imagine wild growth, but don’t fare well with extremely hopeful thinking.
9. Round of Financing Details
   1. Describe how much the company needs and the use of the proceeds.
   2. Some entrepreneurs like to “suggest” a pre-money valuation. This is acceptable, but if doing so make sure to base the value on recent industry pre-money comparables. It is usually best just to leave this information out of the business plan because it is the VC who will be setting the initial terms if they are interested.
   3. If previous investors have been involved, include a capitalization table.
10. Exit Strategy
    1. A VC operates through the returns produced by their portfolio companies. The company should list out when they plan to exit and through which medium.

One of the best ways to propel your business plan through the rankings of the venture capital firm is through an introduction, especially from an entrepreneur or other professional who has worked with the firm. A simple introduction will highly increase the probability that your plan will get off the analyst desk and into a partner’s hand.