September 18, 2008

I found the following Executive Summary tips in an article in IP Marketing E-News, Tuesday September 16, 2008 edition.

Calling all angels: 11 tips for improving your executive summary

An executive summary is a great way to introduce a university start-up to potential angel investors, but not all of these documents are created equal -- and investors will quickly discard those that don't hit their hot buttons quickly. Here are 11 tips from Frank Peters, chairman of Tech Coast Angels, for getting the most out of your executive summary:

  1. Limit it to two pages. Keep the presentation short, and angels will be more likely to respond.
  2. Don’t use a fancy cover page or other "window dressing."
  3. Create a “footer” on each page with your contact information, but forget the confidentiality notice or NDA. "None of us sign non-disclosure agreements; we just see too many deals to be bound by your concerns about trust; get over it! If you really do have some secret sauce, keep it to yourself for now; we can agree on a NDA if we go into due diligence," Peters says.
  4. Make your audience feel they are getting a “sneak peek” for insiders.
  5. Use bullets: Busy angels may just glance at the summary. "I want to be able to scan the 2 pages and see the most important issues jump off the page," Peters advises.
  6. Get right to the point. Peters' advice: "Avoid the mistake of creating context; I don't need you to tell me how your opportunity fits into the history of the personal computer age. Tell me what this company is all about, quickly!"
  7. Cover all the bases: "What are you doing? What's the product or service? How will you market the product? Got competitors? How do you compare? Create paragraph headings (another form of eye candy) to delineate these topics," he says.
  8. Briefly describe your team, and your inventor. If you have an advisory board with top credentials, include that too. Recognizable names and institutions do impress investors.
  9. Provide financial projections -- a five-year estimate, if possible, using tables but no fancy graphs. Include revenue, units sold, cost of goods, "but keep it simple," Peters urges. And don't overstate the potential. "Avoid showing us projections with 70, 80 or 90% gross margins. You think we'll start drooling, right? Wrong! We see entrepreneur naivete. With margins like that you obviously have no idea what it costs to run a successful business."
  10. Specify the amount of money you are looking to raise, and make sure it's in the angel's range. "Like Goldilocks, not too much or too little," Peters says. "If you're asking for $6M then you're wasting my time, I'm an angel investor and our sweet spot is $1, $2 or maybe $3M; go to a Silicon Valley VC if you really need that much."
  11. Include a pre-money valuation if you have one. If you haven't gotten a good ballpark number from discussions with potential investors, Peters says, "leave it for a follow-up meeting where there will be some give and take. Many, many entrepreneurs overstate their valuation; it's a hot button and a huge turn-off for investors," he comments.

Go to: The Frank Peters Show

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