Brent and Howard, you both make excellent points. Having read hundreds of business plans, the weakness I see most often is the inability to translate the elements of the business plan into financial projections that are consistent with the plan's various elements. I've seen brilliant, cohesive strategies literally fall apart in the financial section, for a variety of reasons. Borrowing a quote from a PE investor, "Until I see the financials, it's all chatter."

Another issue that scares off would-be investors is the inability to simplify complex concepts. Based on the sheer volume of information they digest on a daily basis, most of the investment community prefers to speak in "sound bites." In the eyes of an investor, complexity is risk, and risk is scary. Too often, the tendency for entrepreneurs is to demonstrate their expertise through complexity. As counter-intuitive as it may seem, one indication of intelligence is the ability to simplify complexity. If an entrepreneur is unable to simplify the complexity involved in executing a strategy, one may wonder just how well he or she really understands the business.

Brent van der Walt Replied on July 27, 2011

Thanks Jeff. Very good point. If the entrepreneur can't explain the idea in one sentence, it's probably too complex.

Delsie Young Replied on July 27, 2011

Great point Jeff I personally needed that. We use to call this the "KISS" Phase.

Howard Gunn

CIO,CTO,VP,Director, BST Technoloiges

Posted on July 26, 2011

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Jeff Moskovitz

Great question.

I have seen three mostly fatal flaws in pitching proposals to investors. Answering how and when the investor gets their money back plus earnings in the 60 to 70% ROI range is often left off the pitch. A second gap is whether the raise covers the ‘here to there’ burn rate and organizational development needed for success. A third important issue to a successful raise is the experience and quality of the founders and the use of sign posts or identifiable milestones that will indicate progress on the ROI.

I would also suggest most entrepreneurs avoid pitching any investor associated with Venture Capital firms. Their poor performance over a long period (last 15 years) generally implies they have no venture money. At best, they have access to broker business expansion funds and M/A funds. Find out the last time they raised money and you can quickly determine whether they are a viable source of funds.

Howard Gunn