Modern investors love to first read a two-page summary of your business plan, formatted like a glossy marketing collateral sheet, with text well laid out in columns and sidebars, and a couple of relevant graphics. This one had better grab their attention, or they won't look further.
You may have already found several articles, web pages, or books about writing the perfect executive summary. They all offer a list of requirements that might take 50 pages to address, but of course they ask you to write concisely. Take a look at my website for the Sample Executive Summary, which shows what can be done in one page (both sides).
Before you start, remember that the goal of the executive summary is to provide a printed version of your best elevator pitch, to provide a positive first impression to the reader. Think of it as a selling effort, not an attempt to fully describe your startup. Here are the key components:
1. The problem and your solution. These are your hooks, and they better be covered in the first paragraph. State your value proposition, and what specifically you are offering to whom. Skip the acronyms, history of the company, and the disruptive technology behind your solution.
2. Market size and growth opportunity. Investors are looking for a large and growing market. Spend a few sentences providing the basic market segmentation, size, growth and dynamics — how many people or companies, how many dollars, how fast the growth, and what is driving the segment. Skip the comment that you are conservatively estimating your penetration at 1%.
3. Your competitive advantage. Identify your sustainable competitive advantage, like unique benefits, cost savings, or industry ties. Don't kill your credibility by saying you have no competition. At minimum, you compete with the way things get done currently. Most likely, the investor has already seen multiple plans with similar solutions.
4. Business model. Who is your customer, what is the price, and how much does it cost you to build one? Do you now have real customers, are just starting development. Outline your sales and marketing strategy (direct marketing, sales channel, viral marketing, and lead generation). Identify key quantities, such as customers, licenses, units, and margin.
5. Executive team. Remember that investors fund people, more than ideas. Why is your team uniquely qualified to win, and what have they done before? Explain why the background of each team member fits, by naming roles and names of relevant companies. Include outside advisors if they have relevant experience.
6. Financial projections and funding. You need to show your summary revenue and expense projections for three to five years. Investors need to know the amount of funding you are asking for now, and what they get. The request should generally be the minimum amount of cash you need to reach the next major milestone in your plan.
The above outline need not be applied rigidly or religiously. There is no magic that fits all startups, but make sure you touch in each key issue. You need to think through what points are most important in your particular case, and capitalize on your strengths. Key points skipped are red flags, and investor first impressions will go negative.
A final important element is not even in the executive summary, it is the paragraph you use in the email that introduces your company and has the executive summary attached. Less is more here, so include the grabber, show your passion and commitment, and be sure and ask for something (like a follow-on meeting or specific feedback). That's your metric to see if you have their attention.
Martin Zwilling is the founder and chief executive officer of Startup Professionals, a company that provides products and services to start-up founders and small business owners. Check out his daily blog at http://blog.startupprofessionals.com. Read more about Marty here.