by Kimberly Weisul
The invitation got my attention right away. "Suit and tie required," it read. How cute, I thought. How retro. Sort of like being asked to wear bell-bottoms again.
The crowd at The IndUS Entrepreneurs-NY's business plan critique, held on March 22, all complied with the dress code, so the room at the Yale Club looked like it was full of accountants, not gung-ho entrepreneurs. But these people were serious.
They had to be.
Three business plans had been selected by TiE's executive committee for critique by a four-member panel: two consultants, a lawyer and a private equity investor. The plans weren't necessarily the strongest entrants received by TiE, a professional association for businesspeople from the Indus region of South Asia. The plans were chosen instead for their ability to be instructive to others.
No Sugar Coating
It's one thing to read a book, or even talk to an investor, about how to prepare a decent business plan. It's quite another to see your plan critiqued in front of hundreds of people. And it soon became clear that the ability to express criticism gently was not a prerequisite for joining the panel.
"The basic problem [with this plan] is there are too many buzzwords and not enough focus," panel member Seema Chetal, a vice president at Citigroup Investments, said of one business plan. "You add everything to the mix and there is not one original idea."
The entrepreneur whose plan was thus critiqued, Arun Bannerjee, protested that his business did have unique elements and that his goal was to become the next QVC, but online. Apparently that did not come through in the plan. Bannerjee's dilemma became a theme throughout the evening: Written business plans don't necessarily reflect the most interesting facets of the business seeking funding.
Despite the harsh criticism, the panelists made some suggestions to beef up the business models of all of the new ventures. ZRep, one of the companies presenting, is marketing a proprietary scoring system to help users of sites such as Monster.com come up with better matches for job openings. So panel member Sanjiv Nathwani, senior principal at Diamond Technology Partners, suggested zRep consider setting up a branded site for job seekers, and Chetal suggested that zRep expand to other markets.
Another start-up, HerMarket.com, plans to build a virtual community tied to an international marketplace of woman artisans. Nathwani said HerMarket should consider targeting those in charge of corporate giving and think about developing its own line of arts and crafts. Those goods would be produced by the site's network of artisans, but would carry the HerMarket brand.
While Bannerjee had trouble getting the panel to buy into his plan for a directory service linking consumers and e-tailers, the panel did its best to be constructive. Chetal suggested Bannerjee try to aggregate "reviews" from people who buy in bulk, such as purchasing managers.
Some other advice from the panel:
- State your business clearly. This advice sounds too simple to require the services of a top-flight panel of start-up experts. But even zRep, whose business plan was well-received, failed on this point.
- You can't say too much about the
competition. While most of the panel thought zRep
had done a good job detailing the competition it could
face, Lou Budzyn, a patent attorney at Strook &
Strook & Lavan, was looking for more factors that
differentiated zRep from its competitors.
HerMarket had buried its competitive analysis in an appendix, such as iVillage and Women.com . The company also didn't see women's sites Networks as competitive threatsHerMarket needed to do a better job of . The panel, however, did - so differentiating itself from those well-known sites.
- Passion counts. "You
could show a little more passion, some frothing at the
mouth," Nathwani said to zRep Chief Executive Steve
"The wild-eyed look - I advocate that."
Investors, the panel said, want someone who is absolutely zealous. "It's about your confidence," Nathwani said. "If you're confident, if you're passionate, it doesn't matter how you deliver it. There is no room for fear here."