Investors View

Pain

Venture capitalists often look at a business plan as to how it alleviates the customer’s “pain”. You may feel that “pain” is a harsh word to use but the point is well taken. Products or services that make a customer’s life easier, safer, enjoyable, or saves money, time and energy are often more readily accepted by the public. They alleviate the “pain” of doing something we prefer not to do, or they somehow make our lives more bearable.

For every issue in our lives we may choose to find a solution, or we may determine that it just isn’t as important as some other issue. Whether or not we act usually depends on how serious is the discomfort and if this discomfort is a higher priority than other issues.

Business Model

How does the business make money providing this product or service? This is the business model. Its one thing to recognize that potential customers have a problem and that you have a solution, but it’s an entirely different set of issues to get them to purchase the solution you offer. The business model directly addresses how the customer purchases the solution and how the revenue stream continues to grow.