In raising capital, it is good practice to summarize the offering in a single page document – an executive summary.
It is correctly assumed that a prospective investor will have limited time and will prefer to familiarize themselves with the business opportunity before expending time in reading an entire offering memorandum.
So, what goes into an Executive Summary?
Just enough information to intrigue the prospective investor into wanting more information. There is no document that can be so beautifully drafted and presented that the investor will immediately pull out their check book and write a check. But it is easy to create a document that is boring, inconsistent and/or incomplete that it will bring consideration of your opportunity to a quick halt.
Tell your story. You have a product or service that creates a benefit for your customers. You have a business model that will generate a profit from selling your product or service. You have a management team that can execute a strategy to realize the opportunity. You need to say this much and no more. Your ability to tell your story concisely reflects your understanding of your business and generates credibility.
If you are so early in the start of your business that you cannot tell an entire story, you need to state the point where you are in your business launch and the next steps you intend to take to achieve critical milestones until you have a whole story. Don’t fudge your status. You will only generate temporary interest and then experience embarrassment when you can’t answer investor questions. Then the investor will walk away.
Don’t share any information that may be considered a trade secret or treated as confidential.
One page is enough, but I sometimes will use two pages with lots of illustrations/pictures/graphics that can tell a richer story in a manner that is more quickly and deeply understood. Try telling your story with just images. Then fill in words as needed.
Just because you have one page, don’t feel compelled to squeeze as many words as possible within a small space. This looks like a bad slide in a presentation with too many words. Confusing. Rambling. Too be ignored.
State how much capital you need and how you will spend it. Do not use descriptions that read like the names of ledger accounts. State what milestones you will accomplish and how achievement of the milestones improves the probability of success.
State what the investor will get for their investment in terms of percentage of ownership of your business or the revenue/profits from the project. A simple statement as to quantity of shares or units received does not give the investor a feel for the impact of their investment.
Don’t assume that the reader of an Executive Summary is a CEO, trained in investing, market savvy or an engineer/scientist. Use language that can be understood by someone with a high school education. Don’t use buzz words, slang, acronyms, or words of art. If you must use a technical term, provide a short definition.
Provide contact information so that the investor candidate can easily obtain more information or schedule a meeting.
Obviously, there is substantially more information that an investor will need and want in order to make an investment. And, there may be even more information that must be disclosed to meet regulatory requirements. But, that is for a later time – the second or third meeting, or the demonstration, or a question and answer session. All of this other information should be included in your investor package and ready to be provided when the investor asks for it.