Angel Funding Myth No. 2 – “You don’t need a business plan to raise angel funding.”

Angel Funding Myth No. 2 – “You don’t need a business plan to raise angel funding.”

This myth, which is really more of what I would call an “over-generalization,” has been repeated often in the last several years. The notion originated from angel investors who would prefer to see a startup team spend their resources to build and test their minimum viable product, rather than writing a 25-page business plan that will inevitably change. In these cases, it’s perfectly reasonable for an angel to invest up to six figures in a good team based solely on a pitch deck (and perhaps a demo).

In other cases, for a startup that has a version one product and is seeking to raise larger amounts, most investors expect to see a more traditional business plan. This document serves as the basis for performing the due diligence on the company, a critical step that strongly influences investment decisions.

One entrepreneur recently asked me, “When do I need a business plan?” My answer: “When a prospective investor asks you for it.” Be prepared.

In my Funding Quest One-Day Workshop – How to Get Angel Investors to Finance Your Business – one of the many things I cover is how to use various documents, including business plans, executive summaries, investor pitches, financial projections, terms sheets, et al, to effectively navigate the process of raising money.

The next Funding Quest One-Day Workshop will be held Tuesday April 8, 2014 in Seattle. REGISTER NOW and save $50 before early bird registration closes March 31st.

Best wishes in your quest for funding!

Bryan