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Q: When approaching investors, do you still believe it is necessary to have a traditional business plan. Also, because I am not in a major tech hub city, what is the best way to reach investors in New York City and San Francisco? By phone? Email?
A: Like most venture capitalists, we, at ff Venture Capital, admit we have the attention span of a 4-year-old. We review thousands of businesses each year and end up investing in a dozen or so. Thus, you need something that summarizes your business succinctly and a traditional business plan does not do that. However, a pitch deck (a slideshow presentation outline) does.
If you find that a traditional business plan helps you with your thinking about the startup, then you should craft one. But when showcasing your idea to potential investors, you are unlikely to need one.
As for how to reach investors in major tech hubs, you should first consider if you even want to take someone else's money. If the answer is yes, realize you will have to pay it back at some point, and you must believe you will be able to do so.
When looking for investors that are not located near your startup, here are a few tips:
1. Turn to social media. To reach strangers, look to your social network on sites like LinkedIn and Facebook. See if you are one or two degrees of separation from the investors you are trying to reach.
2. Seek the right investors. Not all investors are created equally and many individuals and firms specialize in certain areas like education, consumer and mobile, among others. If you do not know which investors you are targeting, figure it out with research. Make sure your business is a likely fit for their portfolio and the check size you are looking for matches the check size they write.
3. Have a mutual acquaintance introduce you. One of the best ways to meet investors is through connections (warm introductions), as it will reduce the amount of time you end up wasting.
If you do get an introduction, many firms, including mine, always prefer first meetings by phone. So, being far away (at least in the beginning) isn't necessarily a disadvantage. We have invested in companies away from main hubs in cities like Chicago, Cleveland and Pittsburg. Some firms are willing to do this, and others are not.
4. Take advantage of your city's resources. Local accelerators are good for mentorship and exposure, and many of the startups that go through them tell us they gained a ton from the process. Techstars and Entrepreneurs Roundtable Accelerator are just a couple of the many out there.
5. Turn to online platforms. Fundraising sites like AngelList are a great way to get exposure to a ton of accredited investors.
6. Take advantage of current policies. Given that the ban on general solicitation has been raised, you can advertise and market that you are raising capital to a much wider audience than ever before. But before you start telling everyone you are in need of capital, understand the potential pitfalls are huge. Make sure you read the regulations, understand what you can and cannot say, file early and consult your attorney.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.