Quick thought on Executive Summaries

Many Exec Summs I read are either too long or too wordy. Here’s some bullets/thoughts to keep in mind when writing yours:

  • Its purpose is to give the investor enough to see if they are interested.
  • It’s not to give in-depth info, that’s what the pitch/slides/businessPlan is for.
  • In many ways, you want to give enough to get them interested, enough for them to say “hey, lets look more into this”.
  • Investors are pretty smart and they can go through something really quickly and know whether they are interested or not.
  • The ES’ purpose is to state the plan in a quick and easy-to-digest way so they don’t have to think or move around it to get what they need to know.
  • LESS is ALWAYS better. Why? Because it forces you to only keep what’s absolutely necessary, allowing the reader/investor to cut through the fat and get to the meat in the quickest way.

How much of your own money have you invested?

I remember one presentation made by a CEO who had claimed to take several companies public beforehand, yet here he was pitching to raise a relatively small amount of money that someone with his alleged previous success would have easily been able to self-fund. When the investors asked him why he didn’t just fund his own venture, his answer was, “My wife won’t let me”. I’m sure he was telling the truth (my wife won’t let me invest in all the deals I want to either), but he definitely lost a lot of points with some of the investors in the audience.

This simple question (How much of your own money have you put in the venture) is an obvious one that you should be prepared to answer. In addition to looking for the direct answer, investors are also trying to subliminally find out:

How successful have you been on your previous ventures?
If you have presented a history of previous successes, you must have money in the bank, right? If you don’t have money in the bank, then you either didn’t make as much money as your success claimed, or you spent it all on something else.

How confident are you in your current venture?
An obvious point, but extremely important nonetheless. If you’re raising $X and asking investors to pony up their money, surely you have already stepped up to the plate. If you don’t have money in the bank, did you mortgage the house to raise capital? Hock the car?

If you haven’t invested any of your own money, don’t skirt the question and exceed expectations by proactively addressing the subliminal questions. Some investors will disqualify you right away regardless, but if you have an honest and compelling story that answers both the direct and subliminal questions, you may be able to come out of it alive.