Q&A on Writing an Executive Summary

Less than two weeks to go before the ICE 2008 Registration Deadline - have you started your Executive Summary and Initial Presentation yet???

Not to worry, we're here to help!

I'll run through my way of approaching all types of pitches, whether written or spoken, text or PowerPoint - whatever.  Next Monday, we'll tackle the nuts and bolts of PowerPoint but let's talk about what needs to come across and then how.  In the mean time, if you have questions about executive summaries or presentations, please post them as comments at the end of this blog.  I'll respond as quickly as I can because there's nothing that I'd like better than for our Judging Committee to have an impossible job selecting the top thirty applicants to be Semifinalists!

In my coaching experience, one of the toughest challenges for technology-based entrepreneurs is putting themselves in the shoes of the people they most want to get excited about their business: investors.  When I was still completely on the technology side of the fence, I wanted to talk about the cool kinetics of thin film diamond growth and how DC plasmas worked at high pressures because that's what I and my colleagues really cared about: precise, accurate representation of the physical processes responsible for the outcome I had produced.  To us, this type of information was inherently interesting and exciting.

Most investors want to know why they should care about what you do before they start learning about how it actually works.  This sometimes causes serious misunderstandings: some inventors decide from this attitude that investors are stupid, lazy, or shallow.  Not only is this almost always wrong, it's a very dangerous conclusion to leap to - you never want to underestimate someone with whom you might strike a deal! 

Look at it from the perspective of the investor, say a Venture Capitalist: well-known firms receive literally hundreds of business plans every year, most of them coming in cold, i.e., without a referral from someone they know and trust.  They may read a handful of business plans each month.  Of these, they may request a meeting with a few.  And in the end, they are likely to fund less than five per year.  If you had to find the top five business investment opportunities out of a pile of hundreds, could you afford the time to learn about the technologies associated with each, most of which are going to be different from the rest and for which you are unlikely to have the proper technical background? 

A more efficient way to proceed is to examine the business opportunity, something with a more universal language than a given, specific technology, and decide which are most promising.  A well-written executive summary or presentation can provide all the information a good investor needs to make that initial assessment.  And if a compelling case has been made, then it starts to be worth his time to start investigating the technology, either directly or via hired experts.

So our purpose in the ICE Competition is to help you make the most compelling case you can for your business.  It's best to do this with fewer, better chosen words and images than with detail.  Assert the advantages of your business concept and then validate them with brief but plausible information.  The details are for the next meeting, after you have gotten them excited about the opportunity and convinced them that they would be foolish not to learn more.

As many of you know, writing something compelling in few words is challenging.  My goal with this blog entry is to provide guidelines on what is compelling to an investor.  I like to think of this in terms of questions that I know an investor would like to have answered.

1. Why should I (the investor) care?

This is probably the most important question.  If you can't capture their attention within the first few lines, you may lose your opportunity.  Here is where it is the most important to think about what it is that an investor cares about.  Remember that we're talking about why they should care about the business opportunity, not the technology.  Save the latter for when you are facing your thesis committee!  The two items to be sure to cover here are

• the size of the market and
• the extent of the market 'pain'

In other words, how many customers are there?  And how serious is the problem that you are going to solve for them?  How much pain for the customer can you ease?

For example, let's say you have a great way to produce ethanol from the cellulose in the used cigarette butts that gather at curbs where people toss them, so you can promise an ethanol filling station at every street corner.  Who is your customer?  Is it the town because you'll be cleaning up their streets?  The public transportation office because you are providing a cheap source of fuel for buses?  The average driver who can zero out his carbon emissions without going out of his way?  The answer to these questions depends on exactly what your technology produces in what quantities and for what price, etc. (ignoring, of course, the physical limitations inherent in this preposterous idea that I got off the top of my head).  But once you figure out who your customer is, you can estimate how many of them there are and you can identify the exact problem your solving so that you can gauge at some level how much pain you'd be alleviating.

In fact, it's usually better to go in the opposite direction: identify the problem, determine the number of potential customers, and ensure that your technology can satisfy their needs so that they will buy it like there's no tomorrow.  This is known as a 'market pull' approach in contrast to a 'technology push' where you develop a very cool technology but then have trouble figuring out who would pay to buy it.

One thing to be careful of is to not overstate the potential size of the market.  I've had several entrepreneurs propose clean hydrogen generation technologies who then state the market size to be all the hydrogen consumed annually worldwide.  But most of those consuming the hydrogen don't care if it's particularly pure just as long as it is very cheap and available.  They're not going to pay for some fancy new technology because they're perfectly happy with what they already have - they aren't feeling any pain, at least not in this regard.  Make sure you identify who is feeling pain, how many of them there are (as best you can) and how much they might be willing to pay for it.  For help in figuring out these numbers, turn to the business people on your team and work with them to figure it out.  And I strongly urge all of you to visit the Kirstein Business Branch of the Boston Public Library (or whatever business library is available to you) because the free resources and excellent staff at this institution will help you find all the sources you need to put together a realistic picture of your market size and pain.

Oops, look at the time!  I'll just list the remaining questions below and discuss them in more detail in the next blog entry.

2. What is it that you (the entrepreneur) do in language that I can understand?

3. Why are you better than existing and near term solutions provided by others?

4. How are you going to stay better?

5. Why are you the right team to turn this idea into reality? 

6. What are the milestones your team needs to achieve in order to make this business a success?

7. How much money and time will it take you to reach these milestones?

More later!

Linda