A guide to winning the Seedcorn competition – Part 3

Part 3 of the guide covers: the Operations, the Key Risks, the Financials, the Funding and the very important Exit.

These sections really bring the plan to a close and it’s focused one major thing: Think Jerry Maguire – think “Show me the Money!”.

You need to show the money (twice).

  1. Money that company will make from the product year to year
  2. The amount of money the company will be turning over in 3 / 5 years

Remember you are inside the mind of an investor.. if they are going to but €MONEY into the company they will want to see a return of, say, 10 times €Money. You have to be realistic. You can’t sell an iPhone App to every owner of an iPhone. You’ll get a % (a two digit number if your lucky). Investors are very smart and will therefore spot any flaw.

The last section is “The Exit”. For us (and presumably others) this was a very short section – we clearly stated what we wanted to happen in 3 years. The investor wants to see an exit otherwise no matter how good everything is they won’t invest. Scroll down to see an answer investors like to see.

Tomorrows post will conclude the series and have a word document template with even more comment!

7    Operations

Being a software company we don’t really buy stuff in as part of the production process so there is no real supply-dependencies. This section for us was pretty short.  We do everything in house so there was major outside dependencies except for some 3rd party software.

7.1    Location

Where are the super heroes located? Store house needed?

7.2    Equipment

Shovels? Spades? Clouds?

7.3    Licensed 3rd party software

If you use other software list it here.

8    Key Risks

Spell out the risks
•    Cloning?
•    Speed to Market?
•    Funding & Finance
•    Key personnel ?
•    Scaling

Give clear statements to how these risks can be mitigated. These risks can be fixed, a lot of the time with money – so the next section and this section are closely linked.

9    Financial Plan

So you have outlined a plan showing the product, why it exists, who will buy it, how much they will pay for it. Behind this plan is the team of superheroes and it will cost money to execute the plan. This section does 2 things:
•    Shows how much money the company can make using your outlined business model(investors like to invest in companies that make or show great potential in making money)
•     How tight/mean/lean your company can run on

9.1    Shareholders/Ownership

•    If the superheroes have shares  indicate %
•    Who else has shares?

9.2    Royalties

If applicable.

9.3    Profit and Loss Summary

We put a condensed version of our excel sheets in here. (3 years). Expanded versions were in the schedules below
Year 1                            Year 2                           Year 3
Sales revenue
Less cost of sales
Gross profit
Less expenses
Net Profit(Loss)
Less Tax
Net profit(Loss) after Tax

9.4    Balance Sheet

We put a condensed version of our excel sheets in here. (3 years). Expanded versions were in the schedules below

10    Funding

Now that you’ve shown how much money the company make in 3-5 years but you need a small amount (in comparison to year 3/5 profits) to get there.
How many rounds of funding will be needed?
If there has been previous rounds:
•    How much money have you put in to the company yourselves?
•    How much money has other people put in so far?
If you need money now (and let’s face it you are entering the seedcorn competition to win investment)
•    How much money do you need now? (200k? 500k?)
•    What are you going to do with this money? (Top-tip on what you should NOT spend investment money: your salary, new car etc. )

10.1    Achievements to date

To help the reader/investor believe in your business plan, state you achievements to date.
•    Get on an EPP?
•    Win any awards?
•    Spin out of a knowledge provider?
•    Got customers?

11    Exit Strategy

Right answer: “Trade sale for cash ( with revenue streams of X million euros) in Y years. ”
Wrong answer: “We don’t want to sell the company. It’s our baby”.

Ronan

Sharing my experience on startup, sport, linux, mobile phones, movies and some other random stuff.

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