“Focus On the Business Model, Not the Technology”

I was looking though TheFunded.com’s advice section, and saw a post by an anonymous member. Too bad he/she decided not to provide their name. The post is spot-on. Whether you are talking to a VC or Angel, they want to know what you are going to do with their money, how much you think you can grow it, over what period of time and when they can expect it back. You know, the “Elevator Pitch.” Yet, time and time again, entrepreneurs spend the majority of their presentation, including the critical first 45 to 60 seconds, talking about their technology, how they started and why!

A lot of investors I know use the philosophy of, “If you can get my attention in the first minute, and I don’t mentally arrive at “NO”, then you’ll have my attention for the remainder of the presentation. If you get that far and I still haven’t arrived at “NO”, then I will give you an hour. If after an hour, I still haven’t arrived at “NO”, then I’ll do due diligence and if I still haven’t arrived at “NO”, you’ll get a term sheet”.

Talking about the business opportunity and business model you are planning should take front stage to the product or technology. You have to cover both, but the business should be more equally weighted. If you don’t cover it early, investors get to NO. In most cases, Yes can always become NO over time but not vice versa!

Now I understand that there are exceptions and VC’s/Angels that look at very early stage deals where maybe the technology is the only thing that exists, but these are “Seed” stage deals where the technologist is looking for thousands of dollars to put the business together not millions of dollars that most entrepreneurs are looking for.

If you are going to go through all the pain and expense of trying to make something out of a great idea, technology and associated products, then why put all that at risk by not understanding who you’re talking to, what drives them and cover their needs early in your presentation, business plan and executive summary.


1 Response to ““Focus On the Business Model, Not the Technology””

  1. 1 Does EESTOR Have What It Takes To Be Disruptive? « Open Source Innovation Trackback on August 11, 2007 at 10:33 am

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Subscribe Using Feedburner


Flickr Photos

August 2007
« Jun   Sep »

%d bloggers like this: