When my friend and serial entrepreneur Jim Medalia told me last year that business schools were no longer teaching students to write business plans, I was aghast. I’ve been a professional business plan writer for the past 15 years, and the first business plan I ever wrote was for my Entrepreneurship course at Wharton 38 years ago. My team wrote the plan for Wharton Magazine, which is still in existence today.
To see if the business plan was truly dead, I decided to talk with three professional investors and with Jim as well.
Nikhil Basu Trivedi of Shasta Ventures in Silicon Valley said, “Everything is so product-centered now, we usually see demonstrations of the product along with a brief slide presentation—no more than 10 to 15 slides.”
He added that if he receives a large, printed business plan, he usually doesn’t read it.
Nikhil, who co-founded Artsy when still an undergraduate at Princeton and now invests in early-stage companies, said, “Entrepreneurs, of course, should think through all the elements of a business plan when they start a company. But they don’t need a formal business plan to use when pitching to investors.”
Liddy Karter, managing director of Enhanced Capital Partners, said, “The change in business plans has less to do with content than with format. We used to get bound books on paper. Now, we are more sophisticated about the process.”
Entrepreneurs should send a one-page executive summary that includes a reason to invest—Liddy doesn’t want to read a detailed product description.
“You are selling the investment, not the product. I want to know what the entrepreneur wants (how much funding), why they want it and what the return on the investment will be,” she said. “There is no downside to doing a plan, however, for yourself.”
J. Skyler (Sky) Fernandes, head of the Simon Venture Group, told me, “The business plan is not dead. It is dead for sending to investors.”
Like Nikhil and Liddy, he said that investors want a brief slide deck. “Pitch decks are almost becoming business plans in PowerPoint form,” Sky said.
It’s wise to send the PowerPoint via a service like Dropbox, he advised, since you can update the deck easily as you hone your plan.
Sky added, “Presentations are becoming more photo- and video- intensive with less text.”
He allowed that many entrepreneurs do not know how to put together a good pitch deck. To help them, he’s published a guideline for developing a good pitch and made it available online.
Sky said, “It has become the standard template at a few accelerators.”
Sky’s view echoes those of the investors. Medalia is beta-testing the pitch-deck concept for his latest venture, 225AM.com, an interactive site designed to guide students and recent graduates through the process of landing a career-track job. Medalia typically shows a one-page summary to get in the door with investors, then presents an interactive demonstration of the 225AM service, along with a brief slide show. He has extra slides available to explain things in greater detail in response to questions.
It’s clear to me that the business plan is not dead. It has simply evolved to fit the new digital ecosystem. The essentials of business planning I learned at Wharton still need to be explored and understood by any entrepreneur who hopes to launch a successful venture.