The Role of Stories in Raising Venture Capital

Tim Berry has a great article on the importance of stories as part of a business plan.  From Tim's post:

A good business plan is a collection of stories. Your vision is a story about the future. Even financial projections are stories, told in numbers. If we sell this many units at that price, we have this much in sales; but we also have to spend this much in rent, and so on.

There has been a lot of debate about the role of the business plan in the fund raising process.  Tim's post helped me clarify my view on this topic. 

I've always considered the business plan process as a key way to prepare for VC meetings and the questions they ask.  While the VCs don't read business plans, they do ask probing questions and expect quick and well thought out responses.  Developing a business plan equips an entrepreneur with the knowledge needed to handle these sessions. 

But even more important that plan details, VCs want to hear the founders vision for the company and their enthusiasm for building the company.  In other words, they want a good story delivered with passion. 

I've always been aware of the importance of stories, but it is useful to include story telling in the business planning framework.   

Comments

[Michael Tunstill]

Hmm... I'm not so sure.
I've been down this road a few times and always thought a good story about a great vision and told with passion would do the trick. But in the end it all came down to numbers: How many do you think you can sell, how much do they cost to make, how are you going to market it... and worst of all... "are you SURE people are really going to want this?"

[Steve]

Michael: You're right - numbers are key. But my experience is numbers alone aren't enough. You also need a good story told with passion and conviction.

[WhitfieldSANDY27]

It's understandable that money makes us autonomous. But how to act if one has no cash? The one way is to get the loans and car loan.