Angel and venture capital investors may receive hundreds or even thousands of executive summaries each year. With their time being limited and the competition for their attention intense, it is extremely important that the entrepreneur provide executive summaries that “Wow!”
As suggested by Guy Kawasaki and Bill Reichert in their Garage Technology Ventures article on “Writing a Compelling Executive Summary”. Should it not “Wow!” it is likely to end up in the circular file at the foot of the investor’s desk.
The Entrepreneur Dictionary of Launchopedia defines an executive summary as follows:
An Executive Summary is a one to two page document which provides an overview of a startup entrepreneur’s business opportunity. It summarizes the key points of the startup’s business plan with a focus on obtaining investor interest, for potential investment. The goal of the executive summary is to grab the attention of the investor, such that they desire to engage further with the opportunity.
This final point is critical. It yields the key to the astute entrepreneur; the executive summary is a marketing document. However, it is not always recognized as such. As a result, executive summaries don’t always provide the results the entrepreneur desires. Here are some of the reasons why:
1. The Multi-page Executive Summary
It is not uncommon for investors to receive an executive summary that is eight to ten, even twelve pages long. Some are driven to multi-pages as a result of the inclusion of numerous pictures; some are embedded with significant detail, such as complete bios for all members of the management team. In this latter example, some sections of the business plan may be copied verbatim, while information from other “key” sections is left out entirely.
Multi-page executive summaries usually include detailed narratives, sometimes multiple paragraphs without headers or subject segmentation. Many of these are simply “mini” or scaled down business plans. Occasionally, a pitch deck is sent in lieu of an executive summary.
Investors lack the time to search lengthy executive summaries for nuggets of interest. Even if the opportunity catches the eye of the investor, they will not remain interested if they have to search for the details they believe are pertinent to moving to the next level of discussions. Provision of a multi-page executive summary likely reduces the probability that the opportunity is fully considered by the investor.
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2. Missing Pieces
Occasionally, key information sought by the investor in order to qualify the opportunity to move to the next level in the process is simply missing. Examples of key information concerning the opportunity which may be missing, resulting in rejection of the executive summary include:
- The problem being solved by the company’s product or service is not clearly articulated.
- The market opportunity is not clearly identified.
- The Founder and CEO are referenced but the team is not, or none of the team members are referenced.
- The entrepreneur does not share their funding need; they exclude “the ask”.
- The potential use of the funds required is not indicated.
- No address is provided and no reference to where the startup is located is shared.
- No contact information is provided.
While the investor may remain interested if one of the key pieces of information summarized above is missing, if multiple pieces are missing, the probability of their interest diminishing is increased. It leaves questions open and compelling competitive options may be complete, and without open questions.
If no contact information is provided and the executive summary was obtained at an event or through a means other than email, it becomes irrelevant. Even if the executive summary is otherwise compelling and complete, the investor has no way to reply to the entrepreneur without further research efforts. Unfortunately, this occurs more than one might expect.
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3. Other
If the executive summary is one to two pages but the breadth and depth of information included results in extremely small fonts being utilized, there is potential that the investor will prematurely discard the document. They simply may not endure the effort to read micro-print. Similarly, if the executive summary is a multi-page, glossy document with numerous photographs, the document may meet an early demise.
The entrepreneur should attempt to be balanced in their approach, providing the key information required while not providing too much detail. The executive summary should be crisp and professional, but the presentation should not be over the top. A multi-page, professionally developed glossy brochure with photos may result in the investors questioning your potential level of prudence related to the cash they are investing.
