Attracting an investor is like attracting a mate—you want to pique the investor’s interest without showing all your cards at the outset. The perfect vehicle for achieving this delicate balance is the Executive Summary.
The goal of an Executive Summary is to whet the appetite of the investor by presenting a compelling premise, an irresistible hook. Your short (5 pages or less) document is meant to give a potential investor every reason to say “yes” and little reason to say “no” to a face-to-face meeting.
While it’s typically included as part of the business plan, the Executive Summary should ideally function as a stand-alone document. Its function is to build enough interest to get you meetings with potential investors. Once you’re at the meeting, then you can dazzle them with your presentation and ready answers. Ideally your Executive Summary should include the following 10 items:
1. Opening Statement. Your initial statement of how much money you are looking to raise and a very brief summary outlining how the funds will be used.
2. Description of Problem/Opportunity. Your answer to the all-important question: What problem am I solving for paying customers?
3. Solution. Your specific solution(s) to solving the problem or exploiting the opportunity. Support your statements.
4. Products & Services Offered. Describe the products and/or services you’re selling, including what makes it/them different and desirable. Explain why customers will buy from you.
5. What is Proprietary? Only include this section if you own intellectual property (e.g., patents, trademarks, copyrights) or proprietary technology that sets you apart from competitors.
6. Target Market(s). Define your target customers. Discuss the size of your target market and its growth potential.
7. Marketing/Sales Plan. Explain how you will reach your customers.
8. Competition. Talk about the competitive landscape relative to your product/service. Highlight your competitive advantage and how you can defend it.
9. Management Team. One of the most important sections. Ultimately, investors are investing in you and your management team. Include the qualifications and experience of each member.
10. Financial Summary. Summarize your financials by showing your total annual revenues, expenses and net income for the first three years (at a minimum). If you will become cash flow positive within your first three years, this is where you state when you expect to reach that milestone.
Keep in mind that a compelling Executive Summary is best written after the business plan. How can you summarize what you haven’t yet written? Writing a great business plan is a process for which there are no shortcuts. It forces you to address all those nagging questions you’d rather avoid but ultimately can’t. Your vision will inevitably evolve and take shape as you think through all the issues, big and small. This evolution is a critical part of the plan writing process, and the results will ultimately show not only in your Executive Summary, but in the business plan and your pitch meetings. You need to write it last and write it well. Once you get in the door, it’s the hook that will entice an investor to look deeper.
ATTRACTING INVESTORS: A Compelling Executive Summary in 10 Items or Less - To learn more about this author, visit Diane Tarshis's Website.
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Diane Tarshis
(Visit Diane's Website)
Diane Tarshis is Principal of Springboard
Business Plans, LLC (www.spr
ingboardplans.com), and has been
writing business plans for more than 10
years. She brings her 20+ years of
business experience to each and every
business plan, whether for a biofuels
producer or a floral shop franchise.
Diane holds a degree in finance from the
Wharton School and spent several years
working on Wall Street. She is also a
published author.
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I had the following exchange with the CEO of one of my investments the other day.
Q (Brad): It’s strange to me that only a few of the investors / board members are using Product X. Any insights?
