Famous venture capitalist, speaker, and author Guy Kawasaki said in his book, The Art of the Start, “Of the effort you put into write a business plan, 80 percent should go into the executive summary. These are the most important paragraphs of your organization’s existence.” So how do you create an executive summary that will catch the eye of a venture capitalist? There are 7 keys to writing a business plan executive summary that will catch the eye of a venture capitalist.
1. Visually Appealing – This should be a no brainer, but many entrepreneurs write an executive summary like they would write a novel. If your executive summary is simply a number of paragraphs stuck together you might as well kiss your chances at venture capital good bye. Include graphs, tables, bulleted lists and even your company logo to add some color and break up the plain text. (A poorly designed executive summary is 1 of the Top 15 Executive Summary Mistakes of All Time)
2. A Strong Grab – If your first sentence does not grab the readers attention you have probably already lost your chance to make a great first impression. Don’t start out like every one else with a mission statement or some bold claim about the projected growth of your industry. Investors want to see traction in your business. Do you already have customers and are they satisfied? Have you signed any major contracts or partnerships that might be intriguing to the reader?
3. Explosive Growth Potential – Don’t ever forget that every venture capitalist has one goal in mind. Make a lot of money. Venture capitalists typically look for returns of 5 to 10 times their initial investment. If your best case scenario is to make a 100% return then you probably are not a good fit for a venture capitalist. Make sure to show them how your business can hit it big.
4. Simple Business Model – Not only do venture capitalists hope to make a lot of money they want it to be as easy as possible. You need to simplify your business model as much as possible. Typically venture capitalists are looking for innovation and creativity, but when it comes to your business model — simple is best. No one wants to risk millions of dollars on something they can’t understand.
5. Unique Competitive Advantage – You need to address your competition, but don’t stop at simply identifying your competition. You need to explain how your solution has a unique and sustainable advantage over your competition. If your competition can copy your business then why would any one want to invest in a business that has no unique, long term advantage?
6. Sound Financials – A set of financial projections that are built upon sound, data-driven assumptions will catch the eye of venture capitalists. It does not have to be too in depth because investors know that no one can project what is going to happen in 3 to 5 years. If someone could make accurate predictions then venture capitalists would be far more successful.
7. A Clear Request – Imagine the frustration a venture capitalist would have after reading your entire executive summary if you did not clearly request a next step. Request the exact amount of investment you are seeking or request that the reader meet with you in person or even that they review the rest of your business plan.
Make sure to follow these 7 tips if you want to write a powerful business plan executive summary to catch the eye of venture capitalists. Also Check out the 30 Most Common Business Plan Mistakes of All Time