8. MOTION OF VENTURE CAPITAL DEFINITION : โ Venture capital is the investment of long term equity finance where the venture capitalist earns his return primarily in the form of capital gainโ -according to Pratt
23. It is placed at the beginningIt is vital to give this summary significant thought and time as it may well determine the amount of consideration the venture capital investor will give to the detailed proposal
24. BACKGROUND ON THE VENTURE The business plan should provide a summary of the fundamental nature of the proposed venture and its activities and should also mention an outline of its objectives THE PRODUCT OR SERVICE -The plan should explain ventureโs product /service in plain language -This is important if the product is technically oriented -A non specialist should also be able to understand the plan -should emphasize the product/serviceโs competitive edge or unique selling point -describe the state of development of the product /service
25. MARKET ANALYSIS -The plan should convince the venture capitalist that there is a real commercial opportunity for the business and its product/service. -It should define the market for the product/service and explain in which industry or sector the venture will operate. It should answer the following questions What is the size of the whole market? What are the prospects for this market? How developed is the market as a whole? How does the company fit within the market? Who are the competitors? What is their strategic positioning? What are their strengths and weaknesses?
26. MARKETING -Once defined who ,how, what & others it is necessary to address how the prospective business will expand these opportunities. -The plan should outline the companies sales and distribution strategy It should answer the following questions What is the companies planned sales force? What are its strategies for different markets? What is the companies pricing strategy? How is it as compared with competitors? What are the companies advertisement, public relations and promotion plans?
27. BUSINESS OPERATIONS The plan should explain -how the business operates -how the company makes the product -what are services provided -and others โฆโฆ It should answer the following questions What are the sources of raw material? Who are the suppliers? What are labor requirements? What is the companies approach to industrial relations? The plan should out line the companies approach towards R&D
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29. Finance & marketing and their roles should be specifiedThe plan should explain Control Performance Measures and remuneration for management Employees and others
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31. What is level of gearing?(debt to shareholders fund ratio)
33. What are budget for each area of companyโs activities?The plan should be feasible and not optimistic. It should highlight challenges and how they will be met.
34. AMOUNT AND USE OF FINANCE REQUIRED & EXIT OPPORTUNITY The business plan should state how much finance is required by the business and from what source i.e. management , venture capital and others and explain the purpose for which it will be applied. It should consider how the venture capital investor will exit the investment and make a return . Possible exit strategies for investors may include Floating the company on stock exchange Selling the company to trade buyers