In my prior post, Don’t Try To Force Fit Your Model Into A VC’s Thesis, I tried to highlight the importance of not artificially repositioning a business plan in order raise capital from VCs.

I wanted to offer some additional color. There is an important distinction between artificially repositioning a business and genuinely evolving the business plan.

By “artificial repositioning”, I refer to making unrealistic claims about the business. For example, after hearing that an addressable market size is not large enough to meet a VC’s investment criteria, claiming that the addressable market size is actually much larger than previously stated (without a new plan to sell to new customer groups) is disingenuous. In situations like these, the underlying business plan has not changed – just its positioning.

If, however, after management was told that its addressable market was in fact too small for the VC’s needs, the management team then identified a new customer segment to target, it would be reasonable for the team to come back to the VC pointing to a larger addressable market. This is an example of a management team evolving in response to feedback. Not only does the evolution of a plan justify a new discussion with the VC, but constant, thoughtful reimagining of a business is also a good thing early in the life of a company.

It’s worth noting that some models cannot evolve to meet the requirements of a specific investor. For example, some VCs don’t invest in hardware-dependent businesses. If an entrepreneur pitches a business that is dependent on hardware to such a VC, it might be impossible for this company to ever meet fit the investor’s thesis.

At the end of the day, there is an important distinction between artificial repositioning and evolving a strategy. If you can evolve the company (and like the new model), do so. If you can’t, don’t try to artificially reposition the company – it will do more harm than good.