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Research from the Robert H. Smith School of Business, University of Maryland shows that entrepreneurs need not worry about writing an in-depth business plan to get funding from VCs. The research shows that business plans play an insignificant role in the decision making process of Venture Capitalists.

The paper titled “Form or Substance? The Role of Business Plans in Venture Capital Decision Making.” which was co authored by David Kirsch, Brent Goldfarb and Azi Gera, contains research on 718 funding requests from the period April 1999 – February 2002.

This gives solid academic backing to entrepreneurs who have always believed that there was no need to present a 60 page thesis to potential investors. Entrepreneurs’ time should be focused on making their business better and not on formatting a business plan. I have always recommended that fellow entrepreneurs follow a “straight to the point” model of business planning. Investors should be able to understand a business plan in under 5 minutes.

Remember, investors don’t invest in ideas they invest in businesses. More than ever, businesses need substantial traction to attract investment. The underlying business fundamentals are critical and a well presented business plan has absolutely no effect on these.

You can read more about this research on the Wall Street Journal’s Independent Street Blog.