Detailed guide for writing each section of the executive summary
 

 

 

Overview: 2-4 sentences that summarize your company’s value proposition and traction.

 

Sentence 1: This is your ~5-seconds pitch when someone asks what your company is/does. What does your company do? What is your value proposition?

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• To write your value proposition, this sentence should include all of the following?

  • What is the “thing/service” you’re selling?

  • Who is it for?

  • How/why does this help the customer?

 

• Example of a “Do”: NEWco’s CBD-infused dog bodycare products remove irritants and increase moisture for long-term odor and itch relief.

  • The product/service: CBD-infused dog bodycare products.

  • The customer/user: dog owners.

  • The how/why: remove irritants and increase moisture for long-term odor and itch relief

 

• Example of a “Don’t”: NEWco helps keep your pet happy and healthy.

  • This is more of a mission statement than a value proposition.

  • There’s no clear sense of what the company is selling.

  • Is this software, consulting service, or a magic elixir?

  • There’s no clear sense of who the company serves.

  • There’s no clear sense of how and why this helps the customer.

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Sentence 2: who is your customer and how do they use your product/service?

 

• Remember: your value proposition is the “value you provide to the customer”. Your customer and your user might be different. If the customer and the user are different, then you can make this part 2 separate sentences that explain the value to the customer and the user.

  • Example of a customer who is also the user: AnotherNEWco’s desktop app allows software developers to automatically run unit tests immediately after build and detect errors in real-time.

  • Example of a customer who is different than the user: YetAnotherNEWCo’s AI-enabled stuffed toys teach empathy and adapt to individual children’s learning progress based on playtime interactions. Parents use YetAnotherNEWCo’s app to receive weekly progress reports and review and edit the toys’ learned behaviors.

 

• Example of a "Do": NEWco’s CBD-infused dog shampoos and in-bath lotions penetrates deep into the dermis to eliminate unhealthy bacteria, reduce skin inflammation, and lock in moisture.

  • The customer: dog owners

  • The product: shampoos and lotions

  • How the customer uses the product: during bath time

  • Why the customer might find value: eliminate unhealthy bacteria, reduce skin inflammation, and lock in moisture.

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• Example of a "Don’t": NEWco’s CBD-infused products are moisturizing, smells great, and affordable.

  • This is a marketing statement/sales pitch, not a description of your product/service.

  • Who is the customer? People who own cats, dogs, birds, koalas?

  • What are the products? Lotions, shampoos, oils, clothes?

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Sentence 3: Your traction. What is something exciting about your company’s progress/achievements? This is where you show your accomplishments to-date and why the reader should continue to read the rest of your executive summary.

 

• Types of traction to mention: 1) revenue and/or users, 2) major contracts and/or customers that are difficult to get, 3) major awards/patents/publications

 

• Example: Since launch in February 02, 2020, NEWco has sold over 2500 kits of shampoo and in-bath lotions, generated over $25K in revenue, and is stocked in 17 brick-and-mortar shops.

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Team: Introduce the key members of your team, emphasize the roles and responsibilities, and explain why they have the management, technical, AND venture skills/experience necessary to execute on the plan.

 

Answer the question: Why are you the right/best team to do this at the right time?

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• List 2-3 key team members, their role, and their skills/experience. No more than 3 sentences per team member.

  • Focus your experience on things relevant to the startup, vertical, or domain expertise

  • Name drop major companies, collaborators, universities/education experience

  • Focus on the achievements, numbers, and names of previous employers, customers, etc.

  • If you have a technical component to your business, discuss the relevant technical skills of the technical founder

  • Example of a "Do": Jake Shah (COO) - Jake has 6 years of finance experience as a senior analyst at BIGco and has worked on $10MM contracts for clients such as BragCo and BigNameCo. He has managed teams of 18+ on-site and remote junior analysts from 7 different countries. Jake graduated with his BS in industrial engineering from Georgia Tech and MS in finance from Yale.

  • Example of a "Don’t": Jake Shah is very passionate about entrepreneurship and has wanted to start his own company since he was in middle school. Jake is hard-working and has the skills needed to serve as the company’s COO.

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• If there are several members with the same role/responsibilities, list together them based on role

  • Example 1 (all the same roles): Software developers - Jane Smith (12 years of back-end dev experience at Microsoft), Dante Engler (7 years of unity experience at Oculus), Phi Nhung Nguyen (full stack developer, Carnegie Mellon Computer Science MS).

  • Example 2 (different roles on the same team): Sales and deployment team - Priya Patil (outside sales, 8 years experience at startups including Bird), Akash Jones (inside sales, 3 years inside sales at Patagonia), Sueng Mo Lee (implementation, 4 years solutions engineer at Akamai).

 

• If you have an extremely impressive board of directors/advisors and investors, include them to show that you have the advise/knowledge/guidance needed to succeed

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Market/Problem: One paragraph that answers: what problem are you solving, who are you solving it for, and how big is this problem?

 

To quantify the size of the problem, do a bottoms-up analysis to quantify the TAM, SAM, and opportunity cost.

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• What are TAM, SAM, and Opportunity Cost?

  • Total available/addressable market (TAM): Total number of customers who COULD use your product/service and the maximum amount of money they might spend.

    • This will be a large number that captures all the potential customers who might be interested in your product or service type. It doesn’t account for your competitions, your operating budget, the limitations of the product/service, the price point, etc.

    • This number is important because it tells you how large of a space you are entering and, if you were to be able to get 100% of the opportunity, how much money you could potentially make.

  • Serviceable Available Market (SAM): The segment of the TAM that is realistically within your reach (price point, geography, etc).

    • This takes into account several factors, including: 1) the price/volume/geographic limitations of your current business model, 2) how much of the market you vs your competition will be able to capture, 3) your specific competitive advantage and how that will likely draw in specific subsets of the TAM

    • Remember that this number is what you can realistically potentially capture over the lifespan of your company if you were to continue with just this current iteration of your business model. If you have a plan to expand the product offering/price point/geographic region in the future, your SAM can potentially increase.

  • Quantify the opportunity cost: For some, it might be possible to add opportunity cost/cost savings to demonstrate how large the need vs solution gap is. For example: “Current heat and cooling leak through dryer vents cost single-family homeowners $82 in electric and gas cost per year”.

 

• To do a bottoms-up calculation of your TAM and SAM, follow these steps:

1. Identify the customer segment/type/identity (example: age, gender, race, patient population, etc) and find the exact number of that segment.

2. Specific whether the numbers are for your country’s market or the global market

3. Multiply: Total number of customers x Total cost of your product/service

4. DO NOT rely on top-down market analysis (example: the global market for cars is $110M with a CAGR of 11.5%). While you can include this number to show how of an overall market your particular niche fits in, don’t use this as your only market numbers. Why? Because it is extremely inaccurate and doesn’t reflect the particular problem you’re trying to solve and how your potential solution fits in. For example: if you make electric cars, the entire global market for cars will include SUVs, tractors, and customers for other types of vehicles who will never be interested in your product.

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• If your market is very technical and/or will require deep domain expertise to understand the basic problem, add an additional paragraph to provide a lay-person’s level of background information. Make sure this is something a high school student with the basic science and math background will be able to understand. If you are preparing this executive summary for investors/readers who are experts in this field, adjust the background information for the appropriate average education/training level.

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Product/Solution: Discuss your product/service as the solution to the problem for the customers stated in the Market/Problem section.

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• To discuss your solution, answer the following questions:

1. What is your product/service?

2. How does your customer/user interact with the product/service?

3. What benefit does the customer/user receive from the product/service? Why is your product/service the solution to the customer’s problem?

 

• This is where you can go into detail about the most compelling features, discuss important details that explain your competitive advantage, and explain why/how those specific features/details help solve the problem for the customers. By tying the “what” to the “why”, you’ll demonstrate that your solution was problem-driven and developed out of need instead of “a solution trying to find a problem to apply to”.

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• If you are a deep tech company that is pre-MVP or pre-product:

  • IF IT MAKES SENSE: combine the Market/Problem and Product/Solution sections

  • Describe the technology, IP protection, and why the technology confers some sustainable competitive advantages

  • The technical traction and data that demonstrates how your technology (even in the early form) provides significant time/cost/money/capability advantages relative to existing solutions for your target customer's problems

  • Explain the current form factor you are building and how the underlying foundational technology (or your team's deep domain expertise and know-how) allows you to easily adapt and build additional products/solutions to address additional problems/opportunities 

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• Show images of your product/service, method, diagram of the process, etc. if it is relevant and you have room available in the executive summary.

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Revenue Model: How does your company make money?

 

This can be in a table that encompasses all your products/services. This doesn’t need to be in sentence/paragraph format. It does need to include real numbers that you can justify. This section can be combined with the Product/Solution section if it logically flows.

 

• Difference between business model, revenue model, and revenue stream:

  • Business model: is the structure that encompasses all the different parts of your company (example: revenue model, revenue streams, supply chain, etc) and how they all work together

  • Revenue stream: the individual products/services that allow your company to make money. A company can have one or many revenue streams.

  • Revenue model: the strategy for managing the individual revenue streams and the resources required for each revenue stream.

 

• Common business classifications:

  • Business to business (B2B)- Businesses sell products/services to another business.

  • Business to consumer (B2C)- Businesses sell products/services to individuals/ consumers.

  • Consumer to consumer (C2C)- businesses that help consumers trade, buy, and sell items to each other. Oftentimes marketplace types of business, C2C businesses generate revenue by helping to facilitate these transactions in exchange for a small commission.

  • Business to government (B2G)/Business to administration (B2A)- Businesses whose customers are governments or different types of public administrations.

 

• Common ways to generate revenue

  • Sales of goods 

  • Sales of services (e.g. consultancy, servicing and maintenance, design and development, manufacturing of goods)

  • Access to content, product, facilities, or intellectual property (e.g. subscription, rental, or licensing fees)

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• Common types of revenue models:

  • Transactional: A customer pays a specific price for the goods/service provided, on a one-time basis per goods/services exchanged. Examples: you pay 1) $10 for a piece of jewelry, 2) $1200 for the electrical work in your basement, 3) $4.99 to download an app.

  • Recurring: revenue that reoccurs on a regular basis such as monthly or annually (example: rentals/leasing, subscription services/products, memberships, etc.). Examples: you pay 1) $1.99 per month subscription fee to get access to an online newspaper, 2) $79.99 per quarter subscription fee for quarterly wine delivery, 3) $45 per year for membership access to a gym.

  • Licensing: Other companies pay you for use of your intellectual property

  • Consulting: Companies pay for your expertise. This can be as simple as a payment for your time/advice or it can be payment for you to use your know-how/facilities/staff to design/engineer a product/process for them.

  • Ad-based: Other companies pay for your company to post digital or physical advertising of their product/services and generate visibility on strategic, high-traffic channels/locations. This can typically be billed as a daily fee or on the basis of the number of views/engagement clicks. Examples: 1) a billboard at a busy intersection, 2) a banner on the outside wall of a busy storefront, 3) a banner on a busy blog/website.

  • Affiliate: You promote other companies’ products/services and, in exchange, you collect some portion of the sales. Example: 1) $10 for every person you refer, 2) posting a link that redirects to an ecommerce store and then collecting 2% of each sale, 3) posting a promo code and collecting 2% of all sales for anyone who used that promo code.

  • Freemium: You offer basic/limited access to your product/service and then charge for continued/upgraded access. Examples: 1) Traditional/classical freemium = LinkedIn has a basic profile that everyone can access for free for ever, but you can upgrade to unlock additional premium features, 2) Ecosystem freemium = the base environment/platform (such as iTunes) is provided for free but user have to pay for add-ons (such as music and movies), 3) Land and expand freemium = free access to proprietary software/platform, but the business then invests so much time and money into integration that the switching cost becomes too high for the customer to use a competitor when their operations scales above the free access level.

  • Data: You have access to high-quality data that other businesses want. There are several ways to increase the value of the data: 1) if you have exclusive access to the data, 2) if the data is accompanied by profound analysis and insight, 3) if the data can be automatically used to develop actionable next steps/recommendations. Examples: 1) An app that has a large user following and all the behavioral use/demographics data is collected and sold, 2) a store monitors their customers to provide manufacturers with information about which types of customers buy what products, 3) a market report company does their own research and sells the insight.

  • White labeling and private labeling: You create a product/service that is then branded for a reseller to sell to their customers. White labeling businesses brand the product/service for the reseller to sell as is and can often re-brand the same product/service for another reseller. Examples of white labeling: 1) online software platforms where the color scheme and logos are edited for each company/school, 2) t-shirt manufacturers who provide the same shirts but change the logos for each sports team, 3) you buy a large supply of generic backpacks from a manufacturer and relabel it with your brand/logo. Private labeling businesses often have exclusive contracts with a specific reseller and the reseller is allowed to modify to product/service however they want. Examples of private labeling: 1) a store’s branded snacks or chips slightly modified to be different than major brands, 2) a business uses their customer insights to create a modified version of commonly-sold products so that it can be cheaper or altered for the most desired feature combinations from all the competitors, 3) celebrity lines of cosmetics, clothing, etc where they’re able to modify the product slightly to suit their specific brand/personas.

  • Drop shipping: You sell a product but don’t actually hold the product in your inventory. Instead, you rely on a third party (usually a wholesaler or manufacturer) to fulfill the order. When a customer places an order through your store, you send the order to your drop shipping supplier and they ship the order directly to the customer. You generate revenue by setting the selling price to be higher than what you pay the supplier for the product + shipping/fulfillment. Example: an e-commerce store (such as Wayfair) that doesn’t hold inventory but just lists and sells products that is curated from several different suppliers.

 

• Common type of pricing strategies:

  • Economy/COGS-based pricing: Pricing that accounts for the total cost to make the product/service + the logistics to implement/deliver + a margin. Example: a dressmaker accounts for the cost of supplies/labor/time to make the dress and a profit margin percentage to determine how much the dress would cost to the end customer.

  • Competition-based pricing: Setting the pricing based on the price point set by your competitors for their products/service. This is a strategy that businesses use when there are existing and widely-known competitors in the market that will limit the price range that users might be willing to pay. Example: 1) Coke and Pepsi soft drinks are priced relatively close to each other because both competitors are vying for the same group of customers and don’t want to risk a lost of market share, 2) a company adds a premium feature that other competitors don’t have and sell their product/service slightly higher than the competitors’ pricing to demonstrate the added value, 3) pricing slightly below your competitor in a very crowded market so you can drive a higher volume of sales.

  • Value-based/Premium pricing: Pricing based on the buyer’s perception of the product/service’s prestige. Examples: 1) diamond prices are inflated based on the perception of rarity when, in fact, the supply is intentionally controlled and released on a schedule to limit the availability, 2) a seller uses the same manufacturing facility as other companies but has spent significant time and money in building their specific brand, so items with their logo and marketing are regarded as higher valued and more luxurious.

  • Performance-based pricing: Pricing strategy based on some level of guaranteed results. Examples: 1) a sales team that sets a specific goal and gets paid different amounts based on the difficulty to achieve the goal, 2) staffing firms that charge 20% of the 1st year’s income of any candidate they can find that you hire, 3) an ad agency charges based on the total number of views or clicks on your specific ad banner.

  • Bundle/package pricing: Selling packages, sets, or multiples of goods/services for a lower cost per unit than if the goods are sold separately. This is a strategy commonly used to either drive more revenue per customer per transaction or save on the cost of logistics/implementation/delivery/shipping, etc. Example: 1) a set of three deodorants is sold for $25 whereas individual deodorants are $10 each, saving the buyer $5 overall, 2) a skirt and top set sells for $18 whereas each would be sold for $10 each.

  • Pay what you want pricing: the price is decided by the buying based on how much they want to pay for the product/service (above some set minimum threshold). This can lead to a higher volume of sales because: 1) you convey confidence that the customer will like your product so much that they will want to pay for it as a show of appreciation, 2) you empower the customer to determine the value based on how much they enjoy/find value in the product/service. Examples: 1) last-minute sale of tickets to events or venues that allow people to pay any amount for remaining supply/capacity that would have originally generated zero revenue, 2) businesses that have previous personal relationships with their customer and allow the emotional connection to allow the customers to tip or reward based on the interaction, 3) a grocery store allows customers to pay what they choose for products/services where the profits generated will end up being donated to charity.

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Competition/Competitive advantage: What is the competitive landscape and what is your sustainable competitive advantage?

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Who else sells the product/service/provides a solution to the problem you’re solving, for the customer base you’re selling to? Why are you better/different and how is this sustainable (“sustainable competitive advantage”).

 

• What is a sustainable competitive advantage?

  • Sustainable competitive advantages provide a favorable long-term position over the competitors. These are often a company’s assets, abilities, attributes that would make it difficult for a competitor to either duplicate or exceed the company’s offerings.

  • Note that a competitive advantage are the aspects that allow your company to outperform your competitors. A sustainable competitive advantage are the enduring aspects that can be maintained for years. It’s difficult to demonstrate long-term success, scalability, and potential profitability of your business if you can’t demonstrate sustainability.

 

• Common types of competitive advantage:

  • Strategic assets: patents, trademarks, copyrights, long-term/exclusive contracts that make it difficult for other companies to provide your same product/service or capture a specific customer base

  • Product differentiation: a unique product or service can help build customer loyalty. This quality, flexibility in ordering/implementation (example: custom services/products), and superior customer service in a market where customer engagement isn’t prioritized, can all positively differentiate your product/service.

  • Powerful brand: a good brand with customer loyalty can help you drive sales of new products and services. Brand loyalty can help because 1) existing customers will help bring in new customers and 2) existing customers are less likely to switch to a competitor

  • Strong balance sheet/cash: companies with more cash or operational resources than competitors have the flexibility to move faster and make more strategic decisions

  • Barriers to entry: high initial startup cost/time to enter the market, government regulations that make it difficult for new competition might prevent competitors from successfully selling to the same customer or capturing a large share of your market.

  • Outstanding management/people: this is hard to quantify, but management team with more experience, a better reputation, or unique relationship and deep domain expertise can help 1) connect with specific customers that others might not have access or insight to connect with, 2) make the right decisions at the right time based on prior experience, and 3) motivate and get the most out of the employees and partners. Additionally, management teams who have previously successfully started, managed, or sold companies can be afforded a unique level of confidence from or have access to financing/investors/collaborators that others might not be granted.

  • Comparative advantage: the factors that can allow a company to offer the a product/service of the same value at a lower price point without compromising profit margins. For example, economies of scale (lower pricing per unit because of a larger volume), efficient internal systems and processes that decrease materials/time/labor costs, and geographic location that can reduce time/shipping cost/access to customers can all help reduce how much it cost for you to make and deliver your product relative to the competition’s abilities.

 

• Suggested formats for listing your competitors:

  • Start with an overall paragraph that describes the landscape (example: “there are many competitors, but few have ABC features that solve the specific need of XYZ” or “the market has three main categories of competitors that uniquely solve this problem”) and then list your sustainable competitive advantage

  • If you have a limited number of competitors in the market: list each one, describe the competitor, and explain your sustainable competitive advantage in 2-3 sentences.

  • If you have many competitors that can be group together based on some common factor then try the following format → Category + (examples of companies in this category): describe the category. One sentence about why you’re better/different than all the other competitors in this category.

  • Competitors can often be categorized based on business models, targeted customer base demographic or geography, features offered, or price points

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• You will ALWAYS have competition! If you think you can’t find any that sells the same product/service, you also need to consider the following:

  • What is the status quo? If the customer won’t use your solution to their problem, what are they currently doing about the problem? Sometimes a customer might see switching cost as too high or there’s too much logistical friction for them to either 1) solve the problem they have or 2) switch from what they currently use to solve the problem.

  • Are there similar solutions in another vertical that can be repurposed to address the unique needs of your customer base? These are companies that can potentially offer a new product/service to expand their customer base.

  • Are there solutions that target the same problem but for a different customer base, geographic area, etc that, with additional time/funds/operational support, can potentially expand into your specific market? These are companies that can potentially have increased resources to expand and use their pre-existing brand/logistical advantages to compete with you.

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Comparables: What companies in your space have exited? When, to whom, and how big was the size of the prize they exited? What was their traction/what were they able to accomplish when they exited? Why were they able to exit?

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You’re looking for companies that have liquidation events to show your investors that trends in your industry suggest that investors can make their money back and a healthy profit on their investment.

 

• You are using comparables to show that 1) this is an active market and large lucrative exits happen, 2) there is potential for the investors to make their money back and how large the return on their investment can be, and 3) how much time/money you and the investors will need to invest in order for you to get there.

 

• Types of companies to include:

  • Companies that provide the same product/service to the same customer segment to solve the same problem

  • Companies that provide a different product/service to to the same customer segment to solve the same problem

  • Companies that solve a different, but similar problem to the same customer segment

 

• What information you should include and why:

  • The acquirer: these can also be potential acquirers for your company

  • When did the exit happen vs when the exited company started: this shows the activity in your industry over time and reveals how long it took for your specific market to be able to make an investor return. A market where there are numerous exits in the last several years indicates that the trend in the industry suggests there will be more exits. If there were exits several years ago but few in recent years, this could suggest that the market appetite is waning. If there haven’t been any exits in your market, but there are several companies in the space that have been in operation for a long time, this could signal that there isn’t an opportunity to make a return on the investment. If there hasn’t been exits in your market, but the companies in your industry are young, this could signal that the market is still young.

  • How big was the exit: this reveals the potential size of the prize. It helps inform you and the investor of whether the amount of money/time needed to get to an exit is appropriate given the potential return on the investment. For example, if you will need $10 MM in total funding to get to an exit, but the average exit size in your industry is $15M, this might signal that this isn’t a profitable industry to invest in. However, if you will need $100 MM in funding to get to an exit, but the average size of exit in your industry is $1 B, then the higher capital requirement is justified

  • What is the traction at exit: this reveals what milestones you might need to achieve in order to be appealing for a potential exit. Company traction will include 1) revenue and/or users, 2) major contracts and/or customers that are difficult to get, 3) total amount of funds raised to get to that point. Note that, total fundraising is included as traction here, but not in the overview section. It’s important to list here so you can get a sense of how much money is realistically needed to get the revenue/user/customer milestones listed.

  • Exit multiple (aka exit revenue multiple): what is the value if you divided up the exit price by the 1-year’s worth of revenue that the company has generated at the point of exit? This helps quantify the value of the company based on the net revenue. While some use this as an estimate of valuation, note that this will differ from investors’ valuations of the company because it doesn’t account for several other aspects that can contribute to value (example: inventory, assets, etc.)

  • Why the exit happened: Knowing “WHY” the comparables were able to exit will help inform you of the appeal in the industry. This will thereby help you develop your strategy to potentially have similar appeal for a potentially similar exit trajectory and size.

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• Suggested formatting: (On mobile devices: see tables at the bottom of the page)

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Exit Strategy: How and when will you be able to give your investors a return on their investment? How big will that potential exit be and how much time/money will you need to get there?

 

This is particularly important to include when you are looking for outside investments! When an investor sits in on a potential investment pitch, they expect the company to cover exit strategy. Without an exit, investors won’t be able to make their money back.

 

• If the company doesn’t have a clear idea of how and when to exit, it will be difficult for the investor to know:

  1. If they will ever make their money back

  2. When they will make their money back

  3. How much profit they can potential make on this investment

  4. How much total money and time they’ll have to invest in order to get that profit.

 

• If you already have relationships with potential acquirers/exit opportunities, explain it to demonstrate the completed initial legwork necessary to lead to the exit

 

• Common types of exit strategies:

  • Mergers and acquisitions (M&A): when your company merges (two separate companies combine force to create a new, jointly-managed company) or is acquired (when a larger company consumes a smaller company, takes over all the operational management decisions, and the smaller company ceases to exist. In these exit scenarios, the investor gets some percentage of the merger/acquisition price based on the percentage of equity they own. These scenarios tend to happen when the buyer wants to acquire strategic assets (patents, contracts, etc), customer base, logistical know-how and physical assets (building, etc), or to continue to develop a product/service instead of creating a competitive product/service by starting from scratch.

  • Acquihires (acquisition + hiring): a buyer acquires a company in order to acquire the team and talent. Investors make money by receiving a percentage of the sale price according to the percentage of equity they own in the company. This scenario tends to happen when the company has people with tacit knowledge and skills (difficult to teach and transfer to others)

  • Initial public offer (IPO): selling part of your business to the public in the form of shares available for purchase in the public stock market. Here, the investor can potentially sell or trade their shares (originally obtained by providing a small amount of capital in exchange for share in the company) at the higher price at the point of IPO

  • Cash Cow: when your company has a high market share, has healthy margins and profits, and has enough money to keep paying dividends to the investors and shareholders. This is a common strategy for lifestyle/mainstreet businesses.

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Financing and Milestones: This section outlines all the major milestones (past, present, and future) and the financing/time requirement to get your company to a point where it will be able to exit.

 

Use the information about your competitors, comparables, and exit strategy to help determine 1) what milestones you need to accomplish before you are appealing for a liquidation event, 2) how much money and time you will need to get there, and 3) what metrics to provide in order to demonstrate growth. If your milestones, timing, or amount of funding needed skews too far from your competitors’ and comparables’, this will raise a red flag with investors because it signals you haven’t done your research.

 

Timing terminology:

• “Closing” is when you need the money to hit the bank. This is NOT the date when you intend to start fundraising. Typically, it takes several months to fundraise, therefore you have to factor that in as you consider your time need to achieve specific milestones

• “Runway through” is how long the money will last you. Typically, aim for a runway of 12-24 months. If your runway is too short, this will mean that you will have to be out fundraising soon after the investor gives you money, therefore you won’t be spending time growing the company during that time. You always have to allocate time for fundraising. If your runway is too long, this means you’re not getting frequent enough feedback from the market to clearly indicate that you are growing the value of your company. Additionally, when you have too long of a runway, you have less pressure to demonstrate growth as well as too much time to potential steer your company in a direction that is less palatable to investors

• Note that the “Closing” and “Runway Through” dates follow each other consecutively and continuously

 

• Suggested formatting: (On mobile devices: see tables at the bottom of the page)

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