Think of executive summaries as a marketing slick without the high gloss paper and fancy graphics. It’s usually the first thing an investor sees (the second is your pitch). A good one gets you the meeting. A bad one gets you crickets. The executive summary brings alive the startup trinity via words and narrative. While the pitch is interactive, the executive summary must stand on its own. It competes against thousands of other executive summaries clamoring for investor attention. Yes, thousands. It has to be good.
Ideally, an executive summary is no more than two, single spaced pages, using twelve point font. The layout should use ample white space and sections should be accented with bold or underlined text. Like the pitch, there are critical sections that need to be included. These sections, in order of appearance, are:
- Centered Company Name and Executive Summary: It should be obvious from across the room that this is an executive summary. Centering that fact, in a larger font, primes the reader for what is to come.
- Elevator Pitch (100-150 words): This is the most important paragraph you will ever write. It’s the lede that hooks the reader. A dull or flat first paragraph will ensure your summary gets circularly filed. Make it bold. Make it stand out. Make it grab the reader. Distill the essence of your company in this first paragraph. Doing this shows that you can focus on what is important and that you know your business. Any business, I don’t care how complicated, can be distilled into a paragraph. Revise this first paragraph until it flows like water when read. Say it out loud. Craft the words so they do the maximum amount of work while not over complicating it.
- Customer Pain (150 words): Describe why what you are proposing solves a customers pain or problem. This should also be part of the elevator pitch but here, you need to elaborate to convince the reader to read on. Give statistics like customer savings, performance improvement, etc. Again, make the words crisp but not overly complex. Use market jargon if appropriate but make sure it’s properly defined.
- Market (100-150 words, tables help): Define your target market. How big is it? Who are the major customers? What is the size and scale of the dollars you are going after? Add a table to break out the various sub-markets so that it is clear where you will focus.
- Product Offering (150-200 words, pictures help): Explain your product offering. This should include technical advantages as well as form, fit and function. It’s also good to put in any issued or filed patents.
- Competitors (100 words): Describe any competitive threats that are present or may be present. Along with these threats, explain why your solution will beats them.
- Customers/Partners (100-150 words): Summarize your lead customers and partnerships. This should be your top one or two for each. Elaborate on your relationship so that it is clear where it’s at. Make sure to list any signed agreements.
- Management (150-200 words): Brief bios (a short paragraph each) of your executive team. Keep the content relevant to the present venture. List recent accomplishments as well as successful exits.
- Schedules, Milestones and Capital (150-200 words, maybe a table): Start this section with any capital raised to date as well as how it was raised. Explain how these initial funds were used. Next, state the amount you want to raise and what those funds will be used for. Give some details as to the milestones, along with dates, that this new round of funding achieves. As space permits, describe any additional round that may be required to launch the product or become profitable. In some cases, a table might be the best way to show this.
- Contact Information: Include who to contact about additional questions or to setup a meeting.
In some cases, an angel group may want the above information in their own format. This is common when presenting to an angel forum since they usually produce a deal book for their members. You should have most of what they will need if you collect the above information. Don’t stray from the forums format. They don’t like that.
The thing to keep in mind is that the executive summaries only purpose is to get you the pitch meeting. You don’t have to explain your entire venture nor do you have to answer every question. Make it interesting and enjoyable to read. Give the investor enough to want to talk to you.
Now that you know what goes into an executive summary, the natural next question is where do I get the information? Information sources vary depending on your industry. The majority of your work will revolve around:
- Is there a market?
- What can I offer that solves a customers pain or problem?
- Will customers buy my product?
Answering these questions will require both primary and secondary research. Primary research will be asking customers what problems they need to solve and secondary research will be culling the Internet to find market sizes and competitors. A lot of time will also be spent just thinking about what you want to build and if it can be built. It’s common to go between the financial model, executive summary and pitch to refine your thought process. Remember, this is an iterative process. Don’t get frustrated if your first or tenth revision is not perfect. This stuff takes time and effort.
Another popular method is to take each of these sections and write a detailed plan for each one. This is commonly called a business plan. You don’t have to worry too much about pulling everything together into a formal plan. Chances are, most angels or venture capitalists won’t read a detailed business plan. Rather, they want it communicated to them either verbally or in distinct sections. Most investors will base their decision on how your interactions go rather than a detailed written plan. That does not mean you don’t do one but don’t expect anyone except your team to actually read it.
You Have To Do The Work
Don’t be fooled that just because it’s a summary that you don’t need depth. The best executive summaries are backed up by in depth knowledge. This shines through when the entrepreneur talks about her venture. Do the hard work to figure out the answer to the nagging questions. Think like an investor. Dig in as much as you can. Know what you are talking about. It’s the only way you will get noticed.
Check out this article on executive summaries by Robert Ochtel. He has some good suggestions as well.