I am currently in the process of writing up a business plan for a start-up game development studio looking to get VC funding. I am in the phase of writing up the Executive summary. - How long should it be ? - What all should go in there ( For ex. Mission,Market,Management,Exit Stratergy,The offer etc) Thanks

> looking to get VC funding

VCs are not investing in game development studios. Too much risks for lower-than-average returns (VCs expect ~35% compound annual growth on average). Exceptions might be found in the cellphone gaming business because it's booming at the moment. But with the looming recession on the horizon, fund managers will tend to weather their puppies through the storm rather than spread whatever cash they have left on brand new projects.

If you are looking at how to deal with VCs in general, then here are some very broad pointers.

VCs are looking for measurable large markets, saavy and experienced management, and a killer value proposition. In that order. You need to show them how large the market is; it's better to grab 0.1% of a US$1B market than 100% of a US$1M market. You need to show why you have the best and the smartest management team for the job; each member must have industry experience and have worked together in the past. Then you need to explain why your business model is so much better than the competition; this is by far the hardest part to demonstrate.

As for numbers, they are interested in knowing when products will be commercialized, what is going to be your monthly cash burn rate to get there, and how much the management team has invested in personal funds.

Typically, VCs are looking for large investments; some boutique shops will aim for lower investments but you get less experienced VCs. Fund managers will have around 10 companies they track at any given time. So if a particular VC fund manager is responsible for - say - a US$100M slice of a fund then each investment will be in the US$10M range. It's important to know when you are shopping around for VCs; if you are looking to "start small", then you are not the kind of investment they are seeking. That portfolio of 10 companies will comprise (on average) of one superstar, 3 runner-ups, and 6 lame ducks; VCs will spend their time catering to the superstar's every needs and turning the runner-ups into superstars. The lame ducks are former runner-ups that got into trouble and thus get little attention; try not to be in that slot...

Hope this helps.

-cb

Spif, you wrote:

>I am currently in the process of writing up a business plan for a start-up game development studio looking to get VC funding. I am in the phase of writing up the Executive summary.
>- How long should it be ?
>- What all should go in there ( For ex. Mission,Market,Management,Exit Stratergy,The offer etc)

We don't even know what's in your business plan. So we can't tell you what needs to be in the first page. (Ideally the exec summary should present the most important points, on one page.) You know, how many years game industry experience do you and your people have between you. How many hit games you and your people have made in the past. ... Unless either number is zero, then that shouldn't be highlighted on the first page. But then if the number of years experience, and the number of hit games, are zero, VC is unlikely to want to invest in your business (as cb said).

All the above points +
You need to state the industry your targeting, the role your company will fill, the value of that industry, your target market share in that industry and some indication of why you will be able to capture the market share you predict (note: "we have a great idea" isn't enough of a justification).

Spiffy,

everyone has provided really good info, but I thought I'd chime in on some bullet points that should help you out that should go into every Executive Summary:

Define the Industry
Specify Deal terms
Investment Stage: angel, VC, series A and so on... (Angel would be easier than VC)
Fully diluted pre-investment valuation
Company details
Technology defined
Market of target audience
Economics
Management definitions
Competitive Analysis
Business Models
Milestone Objectives
Revenue projections

Worded correctly and professionally, this can easily fit onto one page. During the presentation, be strong and confident in each statement or question asked.

Take care and good luck.

Manofgod

Thanks everyone for their great comments.

I do understand the saturation in the industry but I would like to atleast try to pitch the idea to the VCs and other investors. Afterall 1-2 weeks of business plan preparation wont affect me much anyways.

Regarding the presentation, I would like to recieve some more pointers on how it can be effectively run and told.

spif wrote:
>Regarding the presentation, I would like to recieve some more pointers on how it can be effectively run and told.

These articles on how to pitch to game publishers should be of help in pitching to investors:
http://www.sloperama.com/advice/lesson21.htm (the pitch process)
http://www.sloperama.com/advice/lesson35.htm (more about pitching)