1. www.baeworkshop.com How to Write an Executive Summary (one that gets read) How to Write an Executive Summary (one that gets read) June 15, 2011

2. © BAE Workshop 2010 Executive Summaries Last week we talked about a VC firm in SF that gets 6,000 executive summaries per year They fund six companies a year They interview about 100 firms for every one they fund Therefore they toss 5,400 summaries a year Larger firms have similar ratios, toss more summaries Firms can’t read all of every summary they receive 1,000 pages a month for a small firm, more for larger ones So what do they do?

3. © BAE Workshop 2010 Let’s Find Out We will do some role playing You have just joined a VC firm But you are not a VC – you are an associate

4. © BAE Workshop 2010 What to Look For Do they describe their customers? Is it a large, or a growing market? Do they describe the customers pain, or opportunity? Do they describe how they solve the pain, or exploit the opportunity? Are their number projections credible? If ‘No’ to any of the above – Toss

5. © BAE Workshop 2010 Executive Summary Exercise You have 30 minutes to evaluate today’s batch of executive summaries Find two or three that you would recommend to senior partners to be brought in to pitch If there are none, that’s OK If there are more than three, be prepared to justify your selections – you’re probably too lenient Do not start until told to

6. © BAE Workshop 2010 Did You Do What They Do? Scan the first paragraph? Does it make the company look interesting? Does it make a credible business case?  Does it explain who its customers are?  How they are benefited?  How the company makes money ? Does it tell you something you didn’t know? Does it tell you something that excites you? IF real VCs were interested at that point, they may scan a couple of other paragraphs If they continue to be interested, the company gets invited in Otherwise they toss the executive summary

7. © BAE Workshop 2010 How Do You Fight The Odds? How do you get your executive summary read, let alone to be one of the six that gets funded, or at least the 5% that get invited back? How do you do this in two pages or less? What is your objective?

8. © BAE Workshop 2010 Executive Summary Overview First Paragraph The most important one The one that determines if the rest will be read Other Paragraphs Explain the business Market, pain (opportunity), solution (benefit), technology, team, IP, business model, etc. Financial Projections Remember, you are pitching your company, not your technology Why is your company a good thing to invest in? How will the investor (and you) get very, very rich?

9. © BAE Workshop 2010 Side Bar Value Statement Most important preparation for finding funding Many, many uses Used in Elevator Statement  Add how much money you are looking for now Executive Summaries  Forms the core of the first paragraph Investor Pitches  First slide Social Settings  Omit the crass parts about money

10. © BAE Workshop 2010 First Paragraph Summary of the Executive Summary Recapitulation of your value statement What you do/are (what do you make or do)? Who are your customers? How do they benefit from buying your thing or service?  How much do they save?  What pain do you alleviate? How do you make money (if not obvious)? How big is the opportunity (if not obvious)? How much money are you looking for? Anything else that truly sets you apart, or is exciting Anything that will get the investor to read on

11. © BAE Workshop 2010 Other Paragraphs Paragraph 2: Market & Customers Describe simply (Gen Yers, consumers with a home network, small business owners, etc.) Explain their pain (or the opportunity they represent) Market definition (if not covered above) Market size (if not obvious) Paragraph 3: Your Solution How you solve the problem, alleviate the pain, cure the illness

12. © BAE Workshop 2010 Other Paragraphs Paragraph 4: Technology Stay at 10,000 feet Don’t reveal your “secret sauce” Don’t kiss on the first date Explain briefly what you have and how it works Paragraph 4½: IP Can be part of Technology paragraph Describe licenses, patents, know-how

13. © BAE Workshop 2010 Other Paragraphs Paragraph 5: Competition Who else does something similar? What are customers doing now? Why won’t they keep doing it? Why is your sauce better? Remember, everybody has competition Paragraph 6: Business Model How you make money (may not need if you are building and selling a gadget) Include your selling and distribution channels and partners, if any and if necessary

14. © BAE Workshop 2010 Other Paragraphs Paragraph 7: Market Entry How do you get your first N customers? Paragraph 8: Marketing -- growth How do you grow to your first N 2 customers? What partners do you need (if not covered in previous paragraph) Paragraph 9: Team Short bios of actual team members Describe relevant experience of each Don’t include board or advisory board members unless so impressive

15. © BAE Workshop 2010 Final Paragraph: Financial Generally a table and text Table Starting from funding, show annual revenue for 5 years plus costs, money from unusual sources, and year-end cash Show assumed financings Show headcount (you want to show headcount & revenue don’t have to grow at the same rate) Text Summarize the data in the graph Point out when cash flow turns positive, subsequent financings and anything else noteworthy Mention how much money you are looking for now, and in next round(s)

16. © BAE Workshop 2010 Final Stuff Add your contact information Make sure the whole thing is about 2 pages long for a VC (if it spills over onto a third page, it’s OK) For an angel a different layout and a single page are used (and it has to fit onto just one page) You can find detailed instructions at www.angelsoft.com Or talk to me

17. © BAE Workshop 2010 Contact Ralph Patterson CEO, Bay Area Entrepreneurs Workshop ralph@baeworkshop.com 925-200-1895