This post will give a small glimpse into how we evaluate opportunities. It’s more about process than substance (i.e., what we look for).
When we receive an email from a referral source introducing us to a founder, we typically ask the founder if they have an executive summary. This may sound tedious and old-school. But it is a quick and easy way for us to decide if a call or meeting is a good use of both parties’ time as a next step. It’s also a decent way to evaluate the founder(s). The ability to communicate your idea concisely and articulately is essential. It not only shows a potential to persuade (i.e., sell) but also shows clarity of thought and priorities.
Below are some tips on how to create a good executive summary. There is no generic template or “one size fits all.” The goal is to simply persuade your reader that taking a next step is worth everyone’s time.
The best framework for pitching your company is here. I know that there are other posts that are just as good if not better but that post basically covers everything for me, and I don’t want to reinvent the wheel. You could basically stop reading if you just used that. But here are are some thoughts that I would add.
- Keep the summary in one page. Investors have short attention spans. Plus, brevity is key to good communication. You could even do it in the email itself – no attachment is even better.
- I would start with the Five Ws: Who, What, When, Where, Why.
- Who?
- Give team background. Sometimes this is relevant – if your startup is in a highly technical area, then we may look for indicators of high horsepower (e.g., college pedigree, academic achievement, etc.)
- Sometimes the quantifiable metrics aren’t relevant for the idea. But if I were pitching an idea, I’d emphasize anything unusual or remarkable about the team.
- How much money have you raised? How much money are you looking to raise?
- Any other social proof that would make someone lean forward. I’m not ashamed to say that I’m not immune to social proof. It is a basic human instinct whether we like to admit it or not.
- What?
- What does the company do? What problem do they solve?
- What are the metrics, if any? It’s always better to show and not tell. Don’t tell us what you’re going to – show us what you’ve done.
- If relevant, what is the addressable market? If you’re in a market that most investors probably don’t intuitively understand, I’d spend extra time describing the opportunity. But if you’re in a market that most investors understand (e.g., online advertising), don’t spend a paragraph describing the market. And if you’re in new market (e.g., most consumer mobile apps), don’t even waste your time talking about market size.
- When?
- Why now?
- Market timing is essential. A broken clock is right twice a day.
- Where?
- Pretty self-explanatory.
- Some startups pitch the international opportunity (e.g., a financial services company targeted at Latin America, Asia, etc.) We’re not opposed to this but it’s a higher bar for us. So we’d need to understand why we would be a good investor for this.
- Why?
- In addition to the market timing question, why are you successful?
- Why are you better than your competitors?
- Why do customers switch from their existing solutions?
- Some Don’ts
- Don’t tell us who your lawyers or accountants are. That’s not positive social proof.
- Don’t emphasize why your patents are a competitive advantage. I can’t think of one instance where we have invested in a company because of this. (I’m sure there are but I can’t think of any).
I can’t emphasize enough that each executive summary will be different. There’s no need to rigidly follow any template including the ones I mentioned above. But you just want to organize your thoughts so you clearly tell your story to make anyone – an investor, future employee, customer – interested in your company.