While I appreciate this is sobering to entrepreneurs, the good news is anyone can prepare a persuasive document.  It’s more about content choices rather than style. Big words and long snake-like sentences are not required. 

Before we review how to prepare three pages of brilliance, it’s important to consider the expectations of your target audience.   In my experience there are two primary types of angel investors:  “sophisticated angels” and what I like to call “sideline angels.”   

Sophisticated angels are generally active in the venture community, make at least one angel investment a year, and may belong to an angel investment organization.   These angels understand the current deal climate (meaning they won’t overpay to invest in your company) and will scan for proven points of investment promise much like a skilled venture fund manager. You could easily call sophisticated angels the “speed daters” of angel investing because they know exactly what they want before committing time to learn about a company.

Sideline angels tend to be in and out of the venture market or simply want to help family members start a business.   Whereas sophisticated angels emphasize management experience and how they will get new products to market with the least amount of competitive risk, sideline angels focus on the innovative attributes of a new product and achieving first-market advantage.

My recommendation is to write the executive summary for sophisticated angels.  Within the first four paragraphs describe your business purpose and why it solves important growing market needs.  Remember this is a summary, so use statistics selectively.

Save space by avoiding lengthy emotional appeals about market need, deep technical jargon, Dilbert cartoons, exaggeration and language like “the children are our future.”  The point is to get to the point.

Next, highlight if members of your management team previously worked for other successful start up companies, quarterbacked similar development projects or have been top revenue producers at larger companies.  Angels are drawn to patterns of accomplishment.  If your team consists of rookies, consider engaging credible key advisors to fill in management gaps. 

State the amount of money you will need to reach critical milestones and how management will spend this money.  Raw startups should attach 24 month detailed financial projections.  More advanced companies should attach 3 to 5 year projections.  I always look at the company’s projected gross profit margins as a key measure of investment qualification.

Other points of emphasis include why targeted customers will buy your solution, evidence of cost-saving benefits to customers; intellectual property protections; prior funds raised, and key partnerships that can speed market entry. Information on competitors who have been recently bought out for large sums is always memorable to angel investors.

I’m frequently asked what entrepreneurs forget to include in their executive summaries.   Surprisingly, it is simple contact information.  Executive summaries that are lifted out of larger business plans and sent around as stand-alone summary document often omit the CEO’s phone number and address. So let’s make it easy for investors.  Tell them where to call and where to send checks!