The Single-Most Important Section
The marketing section is the most troublesome for many founders to write convincingly and should, in view of the significance venture investors pay to the issue, be the most carefully drafted. It is relatively easy to obtain industry statistics and divide by some number. For example:The overall market for Product X is 1.5 billion per year and we plan to capture, “conservatively,” 10 percent, which means we project 150 million in annual sales.
Our strategy is to pursue the following niches…All the words are appealing and familiar; venture capitalists are expected to applaud a niche strategy, meaning that the approach to the market is focused on an area where competition will be minimal and a substantial market share is ripe for the plucking.
The term “conservative” is also routinely joined to an entrepreneurs forecast. However, a well-done plan does not stop there—a number of questions remain to be answered. For example:What determines the niche?Price?
Few successful venture strategies are driven by the idea of being the lowest-cost producer. Quality? Performance? Geography? Service? Proprietary information? Is the market growing? How will competitors presumably larger and better financed be kept at bay? How will the market be penetrated? Will the issuer train its own sales force, use manufacturers representatives, joint venture with another supplier or vendor? Will it advertise? What are the promotional plans? Direct marketing? Trade shows? What service and warranty policies will be followed?
via VC Experts.