A B-Plan depicts the founding/management team’s vision about the business. A well written B-plan goes a long way to excite investors/ funds about the space and the company. It could result in better response rates to emails written to investors/ funds and better outcomes to investor presentations. This post assumes that you have thought through your own business (the complex part). This post focuses on structuring your thoughts together to make a B-Plan (the easy part). This post maybe especially useful for the first time and non-MBA founders.
Investors are pretty busy people – attending a 4 hour long board meeting one moment, building their next investment thesis, meeting potential investors for their next fund, sharing their thoughts on how to manage/ run startups in conferences, giving media interviews and many more. Sometimes multiple of them at the same time. Their calendars are choker blocked for weeks if not months. And on top they get thousands of B-Plans from entrepreneurs like you and me. They may have little attention span and at best only few minutes to make sense of your B-Plan. In such a scenario, the possible outcomes of sending a B-Plan to an investor are
- <.0001% probability: Investors understand everything about your business and are ready to just wire you the money/ send term sheet
- 20% probability: Investors really like your business but there are some unanswered questions/ concerns. They would like to meet you to know more and get their concerns alleviated
- 60% probability: They are confused and unclear about your business. Since they don’t want any credible opportunity to slip away, they have put one of their junior resources to meet you to know more. They may also get unresponsive because of heavy inflow of business plans where they already get enough that are understandably and interesting (falling in the first two categories)
- 20% probability: They understand your business but for whatever reasons (don’t like the space, don’t have money, have invested in competition etc.) don’t want to invest in your business. Nicer ones will tell you so upfront, others may become unresponsive
Odds of outcome 1 are lesser than buying a lottery ticket and winning it. Outcome 2 is the only reasonable play for a sensible founder. Fund raising is a super time consuming process, therefore between outcome 3 and 4, I believe 4 is a better state to be in than 3. It will save you a lot of time and emotional trauma of misplaced expectations in the chaos. The primary driver of option 2 is generating interest among investors so that they want to meet you and so that they keep you in an active evaluation set. Given the time investors would have, the B-Plan has to be simple, clear and succinct. These attributes cannot be compromised for completeness, disclaimers and other unwanted details at this stage. The following are important points to ponder upon
- A B-Plan should cover broad business aspects about your startup. It should make investors understand the business of your company and the broad environment around it. It may not answer all their questions but only the important ones
- A B-Plan is not an encyclopedia/ technical manual that will answer questions about each and every aspect about the business but should get them interested in it. Getting them interested in it is of paramount important
- Even before you may get to meet an investor, the B-Plan deck may get emailed and shared. People would skim through it quickly and already start making their opinions. They may start discussing their opinions with their colleagues. And even before you would have a chance to present and defend your business, they may already start making their judgements
- Keep it simple and as less verbose as possible. Try to restrict one message in one slide. The material on each slide should only augment/ bolster the intended message. Use figures to aid your messages (don’t overdo it). Aesthetics help but don’t try to make a Mona-Lisa. If a B-Plan is easy to understand – doesn’t mean it is not an investable business (in-fact quite the contrary)
- Keep the deck short; not more than 10-15 slides. Anything more, non critical can move to appendix only if you feel strongly about it
A possible structure of a B-Plan can be
- What problem are you planning to solve: I have found this framework useful to structure your slide on the problem statement – What is the problem, what are the symptoms that testify that the problem exists, who is the impacted party and what is the impact. At Mettl, for example our problem statement was – Hiring evaluation criteria for most job roles is haphazard causing a lot of inefficiencies in companies. Even when evaluation criteria is well defined, it is time consuming to measure it manually and that too led to a lot of biases. This led to suboptimal company performance and undesired extra work for HRs and hiring/ line managers. At Milkbasket’s, it could be – A bulk of household grocery needs are items like dairy, breads, vegetables and fruits etc. that needs to be delivered daily and by early AM. Traditional e-commerce companies are not specialised to do that. Traditional mom and pop stores don’t have the scale and logistics to do that. This causes households to fend for themselves – causing unnecessary/extra work. We can do better in the above by making the message more pictorial (and less verbose)
- What is your solution: This slide can start like – XYZ is building a system/product/ software/app etc. to do ABC that will solve the problem defined in the previous slide. Drawing parallels can also work here. It helps to convey the message faster and clearer. For example at Mettl, we used to pitch to investors – Mettl is SurveyMonkey(SaaS) for candidate skill assessments. We help companies hire the right talent by providing scientific evaluation criteria across job roles and automated assessments to measure the candidates. Through visual depiction on the above and inserting the right keywords (like psychometrics, data science, technology etc.) helped us depict to our audience the kind of solution we were talking about.
- What is the competitive landscape & what is the positioning of the proposed solution: Here you may like use your view of the market meaningfully to dissect it. For example use one or more attributes like premium Vs economical, enterprise Vs SMB, US Vs Other geos, millenials Vs Gen X etc. At Mettl we said that while our competition addressed top 5% of the market by catering to senior level and above job roles, we want to make the power of psychometrics available for junior to mid-senior level job roles at an affordable price by automating the assessments.
- What is your market size: In this slide it is important to give a sense of the market size using right business drivers. If we use wrong or naive business drivers we can get market size to be all over the place. For example at Mettl we said that our primary customers were mid and large sized companies in India. There are 10K companies in India with a topline of 100MUS$ +. Mettl should be able to bill them 50K US$ on an average to use unlimited assessments across any job role. That made the market size to be 10,000 x 50,000 = 500MUS$ in India. If we start by with Indian population in working age etc. then the market size would come in tens of billions.
- What is the current state of the company:
- Profiles of founders & key employees
- # Full Time Employees/ Temp staff/ interns
- Key advisors/ investors
- Product/ solution: State of the product/ solution. Demo/ video at an appropriate stage of discussion is very handy
- # Customers/ engagement/ revenue: Now depending on the space of the company, you may like to show the business traction appropriately. For example in B2B SaaS companies it could be # customers, ARR, MoM growth etc. In consumer companies it could be DAU/ MAU, growth etc.
- Why do you need funding: You can keep this high level (without disclosing the numbers) saying that you are looking for funds to help the company achieve – X business goal in Y time. You can also indicate the numbers. You need not indicate the valuation because that is always up for negotiations with Seed/ VC funds. The goal is to get them to give a term sheet. Valuation is to be negotiated later.
- Who all have already committed to invest? What % of the round is already closed?
- Future avenues
- Assumptions and citations
- Any other important information that you deem important
Depending on the funding round (seed to series A) the deck structure would be the same but detailing in each slide could be different. The more advanced the round, the material on each slide is more real and experiential instead of projective.
Please take the above suggested approach with a pinch of salt. This is just my own assimilation of how a B-Plan should be like. There could be many other successful ways used by others. Best luck with building your deck :-).