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Let's face it - the traditional business plan as we know it (or as we knew it) is slowly slowly going away. Or is it? Startups and small businesses move at such lightning pace these days that a static document quickly becomes outdated, but the principals and lessons involved with its creation could be valuable in a new form. Many young entrepreneurs still think a business plan is a must-have cornerstone of their business, but as many venture capitalists have said recently, the traditional business plan is not the end-all be-all for startup success.
In the world of the investing in and acquiring of companies, strategic investments sit on the fence between these two camps. When an established company sees a smaller one making progress in a field that it is interested in, it may make an investment in the company for one of several reasons. Doing so can give the company a bit of leverage in terms of helping steer the startup while not dropping a big acquisition investment. That said, it is important for startups to understand both sides of the coin before taking on strategic investors.
As an entrepreneur raising funding, it's easy to get into the mentality of pitching to anyone who will listen, but an active discussion amongst the investment community has sparked considerable debate on whether or not entrepreneurs should be more respectful of the chain of command. Should startups be pitching associates directly or should they be waiting for general partners to take notice?
Todd Dagres, founder of Spark Capital and one of the VCs that poured an additional $35 million into Twitter recently, finds it amusing when people talk about Twitter's lack of a business model.
"We think it's kind of funny," Dagres recently told Innovation Economy. "We know how we're going to do it, and we're very confident about how we're going to do it, and it's not necessarily in our interest to tell people how we're going to do it."
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