Summary: Don’t send long business plans to investors. Don’t ask for NDAs. Don’t share information that must remain confidential. Understand that investors care about traction over everything else.

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In Parts 1 and 2 of ‘What should I send investors?’, we covered the elevator pitch and deck. In this article, we present a few dos and don’ts of sending collateral to investors.

Don’t send a business plan.

“Nothing slows down a VC as much as a comprehensive business plan.”

David Cowan, Bessemer Venture Partners

Don’t send a 50-page business plan to investors. Nobody reads them and nobody executes them. Investors who want a long plan look bad—so do companies that generate them.

The milestones slide of your deck summarizes the company’s plan for the next 1-3 quarters. Document your detailed plans on a napkin, wiki, spreadsheet, deck, to-do list, or whatever. Share it with investors sometime around your second meeting and make sure they generally agree with your plan.

But don’t send investors a 50-page sales pitch that you call a business plan—an elevator pitch and deck are sufficient. You don’t need an executive summary either—an elevator pitch and deck are sufficient.

Don’t ask for an NDA.

“Because of the large number of business plans… that we review, and the similarity of many such plans… we cannot accept responsibility for protecting against misuse or disclosure of any confidential or proprietary information…”

Sequoia Capital

Getting an NDA from professional investors is almost impossible. It can happen (like a rainbow!), but you shouldn’t bother.

Investors don’t sign NDAs because they don’t want to get sued over them. Competing companies tend to get started at the same time because the market timing is right. Investors don’t want you to sue them if they fund your competitor—so they don’t sign NDAs. Read Why Most VC’s Don’t Sign NDAs by Brad Feld to learn more.

Asking for an NDA creates a barrier to getting funded—aren’t there enough barriers already? And this barrier is insurmountable: your request will be declined or, worse, ignored because you haven’t done your homework.

Accept the fact that your elevator pitch and deck will contain information that you don’t want printed on the front page of the Wall Street Journal. Fortunately, they won’t get that far.

Write “Proprietary and Confidential. Please do not distribute. Prepared for Blue Shirt Capital,” on the cover of your deck (some folks write it on every page). They’re less likely to forward it if their name is on it. And ask any recipients, in writing, via email, to kindly not distribute the deck outside their firm.

And if you must keep something absolutely confidential, don’t email it to investors and don’t mention it in person. Investors often look at several similar companies at once. Your plans probably won’t get to your competitors, but you should assume they will.

Traction rules. #

“Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital—whatever is required.”

Marc Andreessen

Whether they’re reading an elevator pitch or listening to a presentation, investors care most about actual traction in a seemingly large market.

If you have incredible traction in what seems to be a large market, you can raise money no matter what the product and team look like—although a good product and team will improve your terms.

If you don’t have incredible traction but the market seems large, your product and team are both critical to raising money.

If the market doesn’t seem large to them, investors won’t care about your product or your team.

Traction is demonstrated profit, revenue, customers, pilot customers, or users (in order of importance), and their rates of change, and the rates of change of the rates of change, and the rates of change of…

Read The only thing that matters by Marc Andreessen to learn more. Also see Brendan Baker’s post on traction.

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Topics Business Plans · Decks · NDA · Pitching · Traction

14 comments · Show

  • Abir Bhattacharyya


    Great post. Can you be more specific for the consumer market and define traction vs. stage of funding, something like typical seed $250-500K, traction=finished product.

    $500K-1Million, traction = 50,000 monthly users and weekly growth rate of x% etc…

    The more specific guidance you can provide the cooler it would be.

    Thanks much,

    Abir Bhattacharyya

    • Nivi


      The way we defined traction, it is real honest-to-goodness profit, and its immediate precursors such as revenue. We included users but that is a stretch.

      The point is that investors (and everybody else) have all kinds of opinions about your product, your team, and your market.

      But real traction blows those arguments away. After traction, there are still questions such as “Is this defensible,” or “What’s the limit to their growth?” But these arguments require more investigation and thought than “I don’t think this team can do it.” Because traction means the team has already done it to an interesting degree.

      Smart investors know that they’re often wrong and look for traction over everything else.

      Roughly, traction is what Marc Andreessen calls product/market fit.

      • Joshua McKenty

        As always, an awesome post. But I have to disagree about traction being equal to product/market fit. BountyUp closed a $6000 bounty this week, so I’d say we’re definitely showing some substantial traction. But we’re missing product/market fit by many other metrics, the most important one being that it just doesn’t FEEL quite right yet.

        Maybe a more accurate equation would be that product/market fit is reached when the rate of increase in traction is at its maximum – and if that’s still low, then perhaps the market is that small.

    • Naval


      It’s highly dependent on the details. This sort of question is hard to answer in the abstract. If you’re raising an angel / seed round (say $250K) you’ll need any two of great team, good product and good traction. If you’re raising a Series A, especially for a web site, all three are preferred, although you might get away with two if your team is really exceptional or if your traction is phenomenal.

      • Abir Bhattacharyya

        Naval and Nivi:

        Cool thanks for well-thought out replies.

        Look forward to staying in touch, please feel free to send me a Linkedin invite, if you guys want to network, happy to introduce you to people I know.

  • Richie Hecker

    Here’s what I believe in terms of NDA’s: If you are not confident/capable of executing your idea better than your friend (who you just told the idea to), keep your day job. If you can’t execute your idea better than anyone else – then you’re not the person to do the idea. Only build a business you can do better than anyone else – at least if you are looking for funding. If you’re not, you’re welcome to do whatever you want but if you want OPM then you better be better then OP.

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  • Mark

    How does the dynamic change when you are outside the start-up epicenters of the Valley, Boston, Boulder, New York etc? Regardless of product & traction quality, my team will be an unknown by default because we are located in Oklahoma. Any thoughts?

  • abizcoach

    Nowadays, a business plan or okay, a shorter version of it (a pitch or deck) can be easily written and shared right on the Web, on-line.
    Time to get rid of papers, files and sheets.

  • Pavan

    I sent a 50 page business plan to an investor when I was new to this. A good friend of mine told me to knock it down as much as possible, so I got it down to 4. Ideally it should have been 1 page.

    I really wish I could go back in time and tell myself and my team to not waste time making the business plan and just work on the product.

    Oh well. Live and learn right?

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