www.baeworkshop.com how to write an executive summary (one that gets read) how to write an executive...
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How to Write an Executive How to Write an Executive Summary Summary
(one that gets read)(one that gets read)
June 15, 2011
© BAE Workshop 2010
Executive Summaries
• Last week we talked about a VC firm in SF that gets 6,000 executive summaries per year
They fund six companies a year They interview about 100 firms for every one they fund Therefore they toss 5,400 summaries a year
• Larger firms have similar ratios, toss more summaries
• Firms can’t read all of every summary they receive 1,000 pages a month for a small firm, more for larger ones
• So what do they do?
© BAE Workshop 2010
Let’s Find Out
• We will do some role playing
• You have just joined a VC firm
• But you are not a VC – you are an associate
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What to Look For
• Do they describe their customers? Is it a large, or a growing market?
• Do they describe the customers pain, or opportunity?
• Do they describe how they solve the pain, or exploit the opportunity?
• Are their number projections credible?
• If ‘No’ to any of the above – Toss
© BAE Workshop 2010
Executive Summary Exercise
• You have 30 minutes to evaluate today’s batch of executive summaries Find two or three that you would recommend to senior partners
to be brought in to pitch If there are none, that’s OK If there are more than three, be prepared to justify your
selections – you’re probably too lenient
• Do not start until told to
© BAE Workshop 2010
Did You Do What They Do?
• Scan the first paragraph? Does it make the company look interesting? Does it make a credible business case?
Does it explain who its customers are? How they are benefited? How the company makes money ?
Does it tell you something you didn’t know? Does it tell you something that excites you?
• IF real VCs were interested at that point, they may scan a couple of other paragraphs If they continue to be interested, the company gets invited in Otherwise they toss the executive summary
© BAE Workshop 2010
How Do You Fight The Odds?
• How do you get your executive summary read, let alone to be one of the six that gets funded, or at least the 5% that get invited back?
• How do you do this in two pages or less?
• What is your objective?
© BAE Workshop 2010
Executive Summary Overview
• First Paragraph The most important one The one that determines if the rest will be read
• Other Paragraphs Explain the business Market, pain (opportunity), solution (benefit), technology,
team, IP, business model, etc.
• Financial Projections
• Remember, you are pitching your company, not your technology Why is your company a good thing to invest in? How will the investor (and you) get very, very rich?
© BAE Workshop 2010
Side Bar
• Value Statement Most important preparation for finding funding Many, many uses
• Used in Elevator Statement
Add how much money you are looking for now
Executive Summaries Forms the core of the first paragraph
Investor Pitches First slide
Social Settings Omit the crass parts about money
© BAE Workshop 2010
First Paragraph
• Summary of the Executive Summary
• Recapitulation of your value statement What you do/are (what do you make or do)? Who are your customers? How do they benefit from buying your thing or service?
How much do they save? What pain do you alleviate?
How do you make money (if not obvious)? How big is the opportunity (if not obvious)? How much money are you looking for?
• Anything else that truly sets you apart, or is exciting
• Anything that will get the investor to read on
© BAE Workshop 2010
Other Paragraphs
• Paragraph 2: Market & Customers Describe simply (Gen Yers, consumers with a home
network, small business owners, etc.) Explain their pain (or the opportunity they represent) Market definition (if not covered above) Market size (if not obvious)
• Paragraph 3: Your Solution How you solve the problem, alleviate the pain, cure the
illness
© BAE Workshop 2010
Other Paragraphs
• Paragraph 4: Technology Stay at 10,000 feet Don’t reveal your “secret sauce” Don’t kiss on the first date Explain briefly what you have and how it works
• Paragraph 4½: IP Can be part of Technology paragraph Describe licenses, patents, know-how
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Other Paragraphs
• Paragraph 5: Competition Who else does something similar? What are customers doing now? Why won’t they keep doing it? Why is your sauce better? Remember, everybody has competition
• Paragraph 6: Business Model How you make money (may not need if you are building
and selling a gadget) Include your selling and distribution channels and
partners, if any and if necessary
© BAE Workshop 2010
Other Paragraphs
• Paragraph 7: Market Entry How do you get your first N customers?
• Paragraph 8: Marketing -- growth How do you grow to your first N2 customers? What partners do you need (if not covered in previous paragraph)
• Paragraph 9: Team Short bios of actual team members Describe relevant experience of each Don’t include board or advisory board members unless so
impressive
© BAE Workshop 2010
Final Paragraph: Financial
• Generally a table and text
• Table Starting from funding, show annual revenue for 5 years plus costs,
money from unusual sources, and year-end cash Show assumed financings Show headcount (you want to show headcount & revenue don’t
have to grow at the same rate)
• Text Summarize the data in the graph Point out when cash flow turns positive, subsequent financings and
anything else noteworthy Mention how much money you are looking for now, and in next
round(s)
© BAE Workshop 2010
Final Stuff
• Add your contact information
• Make sure the whole thing is about 2 pages long for a VC (if it spills over onto a third page, it’s OK)
• For an angel a different layout and a single page are used (and it has to fit onto just one page) You can find detailed instructions at
www.angelsoft.com Or talk to me
© BAE Workshop 2010
Contact
• Ralph Patterson CEO, Bay Area Entrepreneurs Workshop [email protected] 925-200-1895