How to Write a Compelling Executive Summary

The job of the executive summary is to sell not to describe. There are tons of articles, books and blog posts that will tell you all the things that you need to cover in your executive summary, but most of them miss this key point.

The executive summary, in most cases, will create the first impression for your potential investor. You have about 30 seconds to grab an investor’s interest and you want to be clear and compelling. You do not need to explain the entire business plan, you just need to convey its essence, and its energy.

I’ve listed the key components that should be part of your executive summary. You should be able to do all this in six to eight paragraphs, possibly a few more if there is a particular point that needs emphasis and make each point in just two or three simple, clear, specific sentences. This means that your whole executive summary should be about two pages (maybe three). Most investors find that there is not enough information in one page to understand and evaluate a company.

Few tips for the road: Use simple English. Check your grammar and spelling. Avoid meaningless adjectives such as ‘top notch’ and ‘next generation’. State your value proposition and competitive advantage in positive terms, not negative terms. It is what you can do that is important, not what others cannot do. Lastly, Investors would rather invest in a company solving a desperate problem for a small growing market, than a company providing an incremental improvement for a large established market.

There is no template the fits all companies hence make sure you touch in each key issue, but don’t apply these points rigidly. You need to think through what points are most important in your particular case, what points are irrelevant, what points need emphasis, and what points require no elaboration.

1. Grab Attention – Start with the most compelling statement (a sentence or two) that explains of why you have a really good idea. Explain the unique solution that you have for a very big problem. Be specific, not abstract or conceptual. If you have some impressive names involved such as advisors, well known investors, companies you’re already working with etc. use it here.
2. The Problem – Explain the problem that you are solving, and make it clear why it’s a big problem (current or emerging). Your description should lay the foundation for your value proposition.
3. The Solution – What specifically are you offering and to whom? Service, software, hardware, combination? Use simple words and commonly used terms (avoid acronyms) to explain what you do to solve the problem you have identified. This is the place to briefly explain where you will integrate with the current value chain or who will you work with in your ecosystem. If you already have customers, and/or revenues, make it clear. If not, state when you will.
4. The Opportunity – Explain the basic market segmentation, size, growth and dynamics—how many people or companies, how many dollars, how fast the growth, and what is driving the segment. You will be better off targeting a meaningful percentage of a well-defined, growing market than claiming a microscopic percentage of a huge, mature market. Don’t claim you are addressing the $190 billion market of E-Commerce if you are only addressing the $5.7 billion of the mobile E-Commerce market.
5. Your Competitive Advantage – Whether it’s a direct competitor or an alternative solution – you have a competition, and you need to explain how are you better and what are your unique benefits (and no, ‘first mover advantage’ is not considered as competitive advantage).
6. The Business Model – Explain how are you going to generate revenues, from whom and how much. I’ve seen startups succeed without a clear revenue model (e.g. facebook in its early days, Twitter, etc.) however don’t rely on it when going to investors. Build a sustainable model and mention what are the critical metrics you’re going to be measured upon (e.g. number of licenses, subscriptions, page views, etc). What are your metrics showing today, and where will you be in 3 -5 years.
7. The Team – introduce your founding team, their roles and the relevant experience which made them the most suitable people for that role. If you can, state the names of brand name companies your team has worked for (don’t mention a name you aren’t happy to give the contact as a reference at a later date).
8. Summary Financial Projections – Your fundamental promise is to make your investors richer. The only way you can do that is if you can achieve a level of success that far exceeds the capital required to do that. You should show five years of revenues, expenses, losses/profits, cash and headcount. It might also make sense to show a key metric, such as number of customers or page views (e.g. in an advertising eyeball model).
9. Funding Required - This section details the amount of funding the organization requires, how those funds will be used, and the milestones the organization hopes to achieve using the funds. If you expect to be raising another round of financing later, make that clear, and state the expected amount.

And one more thing before you go – the most important sentence will not be in the executive summary, but in the email you (or your friend) will send to the investor. This email has to be short, well crafted, and to the point. It should sell your company, not describe it.