When your startup is in its seed stage, you face a catch-22. On the one hand, you need investors to power your growth. But, on the other hand, you need to grow to have something tangible to show investors why it’s worth betting on you.
Fortunately, you can lean on an executive summary to help you get through this tricky phase. In fact, this summary is the only thing some investors read.
Unfortunately, that puts a lot of pressure on your executive summary. This definitely isn’t something you want to slap together. Because it can be the key that unlocks your early funding rounds, you need to make sure yours hits all the right beats and piques the interest of people and groups you want to woo.
With that in mind, here are five tips to help.
Show the problem you solve
Your startup will generate value from continually finding and retaining consumers. Showing that your company solves a widespread need shows investors that you understand your place in the market and your value-add.
When you can demonstrate a roadblock you help people over or a hole you fill in, you tell an investor why consumers will come to you. This builds a level of peace of mind for them because it boosts their confidence that they’ll see ROI if they offer you funding.
All that said, it’s not enough to show that there’s market demand for your startup’s solution. You also need to underscore what sets your company apart from other plays in the game.
It’s pretty obvious, for example, that most companies today want and need a customer relationship management (CRM) tool. But there are about a thousand CRM providers right now. A good executive summary would not just call out the rising demand for CRM solutions but also clearly spell out how your startup’s CRM solution is different from existing options in the marketplace.
In that vein, you should call out key employees and their certifications, experience, or degrees that could catch an investor’s eye.
Other key differentiators might include:
- A patent
- A partnership of note
- An existing customer base
- Media buzz
Keep it brief and engaging
Remember, your executive summary is the preface for your business plan. It’s a little like the blurb that goes on the back of the book. If the blurb doesn’t interest you, you’re not going to bother flipping the thing open.
The same goes for your executive summary. It needs to be both highly informative and highly engaging. Try to inject a little personality into it. This is your elevator pitch. You’ve scored a very brief amount of the investor’s time, and you don’t want to blow it by boring them.
If you’re not sure what should go in your summary to capture what your startup offers while also capturing an investor’s attention, try these two exercises:
- The pare-down. Start by writing a paragraph that summarizes the highlights of what your company does. Again, remember to include market needs and your startup’s differentiators. Now, take that paragraph and rework it to cut one sentence out. Do that again. Rinse and repeat until you get down to one sentence. This won’t be easy, but you’ll land with the true core of your startup.
- Dinner with the in-laws. Set up a conversation to tell someone you want to impress, like an in-law, about your growing business. What will you tell them about your startup to wow them about what your startup does and what it offers? Try your hand at getting their jaw to drop. You might say something you hadn’t thought to verbalize before.
Just as importantly, at the end of the conversation, ask that person what they found most impressive about your startup. Something that piqued their interest may be an aspect of your startup that you take for granted. Founders often get so into the weeds with their product that they forget what makes it interesting to the general public.
Then, bring back what you learn from those exercises and integrate it. As you do, tailor the tone to the investor. If you know someone is jovial and likes a good laugh, you might add a little humor. If the investor is notoriously metric-focused, you might keep the language drier and more data-driven.
Hit the high notes
Again, tech startup investors are busy. By the time they finish your executive summary, they should know exactly what your startup offers and exactly how you plan to scale.
That means you should clearly state:
- Your business model. Who will your customers be? How will you make money from them? Investors will likely want to know key pieces like your pricing, anticipated volume, and profit margin.
- Your marketing and sales strategy. How will people find out about your product or service? How will they buy it?
- Your competitors. Specifically, call them out if there are any big players who might give investors pause. Then, show how you can edge them out by specifically laying out what your startup offers that they don’t or can’t.
- Your financial projections. Lay out what you expect in the next five years or so. Investors will also want to know what kind of return they can expect to see and your plan to pay them back.
- Your milestones. Where is your startup now? What are the major benchmarks you plan to hit? How and when will you reach each one?
Dot your i’s and cross your t’s
The tech space moves fast, and you might not think that relatively small things like grammar and punctuation matter. Investors may feel differently, though. An executive summary free from grammatical errors demonstrates a level of competency. On the flip side, a misspelled word or a missing period could suggest to an investor that you’re not detail-oriented or don’t put a high level of care into your work.
At the very least, run your summary through a spell checker tool and have at least one other person proofread it.
As you’re doing your own proofreading, look for cliches and ax them. Investors see far too many executive summaries claiming the solution is best-of-breed, leading-edge, etc.
A wow-worthy executive summary can transform a startup. If you want help finessing the financials to land the funding you need to get past your seed stage, our team of CPAs who specialize in serving tech startups can help.