Acquisition to capital when you are 3rd or 4th to market requires unique and out of the box thinking if you are going to out-innovate the innovators. Should traditional funding routes be on the top of your list? Absolutely not! That includes VCs, banks, and angel investors.
When seeking funding, your business plan is your calling card. So what are investors looking for in a business plan?
Credibility. Extensive due diligence is required.
Competition. Know every competitors strengths and weaknesses
A well thought out plan. Does it make sense?
Realistic not optimistic. Don't make it pie in the sky
A thorough WOTS analysis
Anticipate every question, every objection and have the answer to it in your plan
When you are 3rd or 4th to market-what are the barriers to entry? Who would also want to be in the business, but would have a difficult time getting into the business?
When 3rd or 4th to market, a KEY source of funding can be an organization that would love to be in the business, BUT, has significant barriers to entry. Such as knowledge, technology, expertise, incubation, culture, etc. Who fits that bill? How about a MAJOR corporation? Think about it. Who would want to be in a business more than GE, or Microsoft, or Intel? Think I'm crazy??? I think not. Here's the story.
After doing three start-ups for two Fortune 500 companies, I wrote a business plan and shopped it around to some VCs, then showed it to two Fortune 2000 companies. Think about it......overnight they could expand their product line. There are three ways to grow a business. Organically, threw lift-outs, or acquisitions.
Guess what happened? Inside of 3 months, we struck a deal and six months later, I was up and running. I did not go to a competitor. I went to a public company that did not have my product or service. They ended up selling to another company two years later. By then I took my company private.
The point is there are twenty five ways to skin a cat............so VCs, private equity, angel investors are not the ONLY answer to a start-up. In the case of Google for example. If I had been the guys at Google, where would I have gone for funding? I would have started with Microsoft because who needs new technology more than Bill Gates? After that, Steve Jobs, Paul Allen. Then? McCaw, Then? GE, Then? IBM. Then? Andy Grove. Then? OK? Got my drift. Then list goes on and on. And when I have my mind made up about something. There is no stopping me. Trust me, I would have gotten through.
So what do you need? A KILLER business plan. One that blows them away. One that every time someone asks a question, you look at them as say,
"Its in here, we just haven't reached that part yet."
Will you get the funding? You bet you will. Now go get them and good luck!
Copyright Ev Nucci 2007