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Chapter 12. Business Plans

We’ve covered the slide deck. What about a business plan? In their outstanding book Venture Deals (Wiley, 2011), Brad Feld and Jason Mendelson discuss the “business plan:”

We haven’t read a business plan in over 20 years. Sure, we still get plenty of them, but it is not something we care about as we invest in areas we know well, and as a result we much prefer demos and live interactions... However, realize that some VCs care a lot about seeing a business plan, regardless of the current view by many people that a business plan is an obsolete document.

They go on to caution you:

Regardless, you will occasionally be asked for a business plan. Be prepared for this and know how you plan to respond, along with what you will provide, if and when this comes up.

This is good advice. Let me take it one step further and tell you what to do when investors request that you conjure an obsolete 30-page document from the ether and send it to them that evening.

I’ve been in this situation, and it’s very disconcerting. When Ontela was raising its Series B, none of the 77 VCs we pitched asked for a business plan. We talked to dozens of VCs (I didn’t keep track of how many) during our Series A as well, and got zero business plan requests. But during Ontela’s seed round, when we pitched probably 100+ angels, it came up more than a few times.

Whenever it did, we felt something between guilty and scared. Guilty that we had skipped something that was clearly ...