Recently I attended a seminar about executive summaries, delivered by Steve Foster, Partner at Texas Pacific Group Ventures with long experience from the VC industry. The focus of the seminar was executive summaries, but Foster also shared an insider’s view on what VCs actually value when they chose what company to invest in.

Most people with some business experience have some idea of what goes into an executive summary. Although the information that goes into the executive summary might slightly differ between industries, the main objective is always to summarize your business idea in such way that an investor will be enticed to invest in your company.

So how long is an executive summary supposed to be? Traditionally most people say that it’s supposed to be about one page. According to Foster, he would rather see a three to four pages long executive summary, since it’s too hard to summarize all the information in a single page.

How do you get a VC to choose your company over the rest in the huge pile they’re reading through? Well, let’s face it, it’s very unlikely that an investor will get through even your executive summary and much less the rest of your business plan. If you fail to grab the attention of the person reading the executive summary within the first five seconds, it’s quite likely that he or she will stop right there and move on to the next project. One of the more interesting ideas that Foster suggested was to not to play by the rules. Imagine if you were personally going through maybe hundred executive summaries per day: it’d become quite boring with the typical layout and design. Therefore, it’s crucial to find ways to stand out from the crowd. Here it’s more important to use your imagination than what’s considered standard. Don’t only use blocks of text, but rather combine it with quotes, graphs, tables, bullet points and so on.

Now let’s just assume that you managed to get a person at the VC firm to read through your executive summary. When they read through your executive summary, there are a couple of things that they will look for:

References

Who referred you? This is the single most important element. If you have a personal recommendation from someone within the VC’s network, you’re far more likely to be considered than if you just cold call.

Don’t e-mail

We in the tech industry have a tendency to do all kind of communication through e-mail. However, when it comes to sending your executive summary, this is simply a big no no. You’re up to tough competition, and the fact that it takes more energy to open up an attached document than it is to briefly skim over a piece of paper plays an important role here.

Is there a market?

Is there a significant market for your product or service?

Is there room for a VC-backed venture in the market?

This relates to the previous point, and relates to the size of the market. Is the market really large enough to hold a VC backed company?

Is there urgency?

What is the team composition?

According to the presenter, the optimal team composition in the tech industry consists of one programming/tech genius and one business person who knows how to apply the technology to the market.

Ok, so now you know what to include in your executive summary and how to increase your odds of being selected. Next you might wonder if there’s any good or bad time to submit your executive summary to a VC firm. The answer is yes. Generally you should try to avoid the summer, since many VCs are out of town. Also try to avoid submitting before a major holiday. Conversely, it’s a plus if you get your executive summary read the day after major holidays, since people tend to be in a better mood then. Another time to target is January, since that’s when people come back from their long Christmas break with more energy than when they left.

This was part one in the series “Raising Capital.” In the next part we will dive deeper in how to write your actual business plan. Stay tuned…

             

For each ad, Craigslist charges $75, which must be considered quite low, considering the number of people you’ll reach and what the competitors charge.

Just a few minutes after we posted the ad the applications started to come in. Below you’ll find the distribution of applications we have received so far.

Next week, Alex and I are going to sit down and go through all the applicants in the ‘To Be Considered’-section to find the best applicants. When that process is done, we will contact the best applicants in order to set up an in-person interview.

Since we’re a startup, it’s always good to see new resource collections pop up like this. There is a lot to learn and figure out when starting up a company. After you have checked out all the essential Playing With Wire articles like, Notes about Filing for an LLC, Getting a Business Name and Filing for an EIN, you might as well head on over to Startupping and check out the coolest thing on their site: a startup wiki.

By the way, one of the people they interview is actually Paul Graham who wrote the great 18 mistakes that kills a startup article which we have mentioned before.

When you’ve handed this form in, they’ll go a head and process the application and send you a mail to the address you specified in the application. According to the lady at the post office, this should only take a couple of days. When you receive that mail, you need to head back to the Post Office and that’s when you actually get your box (and find out the address). That’s also when you make the payment for the box.

What you need:
– 2 forms of real ID (credit card is not enough)
– This form (or you can fill it out there)

What you get:
– A size ‘1’ box (3″ by 5.5″)

What you pay:
– $20 for 6 months

UPDATE: As it turns out, the local Post Office only charge $20 / 6 months instead of $37 as announced on the homepage.

Two day ago we finally sent out our FBN-filing to the Clerk-Recorder’s office. The process of filing these papers was very straight forward. Go to the Clerk-Recorder’s homepage and download the PDF-file. The form is really intuitive, and won’t take you too much time to fill out. However, in order to file these paper you need an EIN. In addition to that information, you just basically fill out what the FBN is, where you’re located and names etc.

After this filing is done, you need to run a small advertisement in a magazine or newspaper (San Jose Business Journal is cheap) for 4 weeks to establish your FBN. When these weeks are over, the magazine will send you the ads, which you will archive with your business papers. The reason for this is that if someone later on will claim the name which you filed the FBN for, you have these ads as a proof of that you were the first one to use the name.

Why do you need an FBN? First of all this establishes you company name. In the case when you use a name other than your real business-name when conducting business, you need to have a FBN that links your FBN to your company. If you file a FBN for your real business name, you simply just establish your business-name further legally. In addition to that, whenever you want to file for another FBN, for let’s say a product or service, you don’t need to go through and file all the papers again. Then you just file an Addendum to add the product/service.

What you need:
– A registered company (LLC in our case)
– An EIN
– The form for filing FBN
– The form to file for additional FBN (optional)
– Two envelopes and two stamps (one for the filing and one for the self-addressed stamped envelope)

What you get:
– An FBN that’s valid for 5 years

What you pay:
– $37 for the initial filing
– $7 for each extra FBN (Addendum)

Either that or we were dressed pretty much like normal and didn’t have a single form except in digital format. And when we entered the bank we had to sit down and wait like everyone else. :)

Either way we have now taken our first ‘official’ action as a company, and WireLoad has opened a bank account. The idea is mostly that we want to pay things out of a company account instead of our personal accounts going forward.

Just to let you know: Washington Mutual, the bank of our choice, was not able to accept digitalized copies of company documents. The following things were needed, at least here in California and for Washington Mutual:

• Articles of Organization, with the ‘File’ stamp indicating it had been filed with the government.
• Statement of Information. In particular the bank needed to know who owned the company. There might be other ways to demonstrate this but a statement of information is probably the easiest way.
• An Employer Identification Number (EIN) from the IRS.
• Two forms of identification for each person. Viktor previously had an account with Washington Mutual, so a single form of identification was sufficient there. I had to provide two pieces. This turned out to be easy: a primary id, my driver’s license, and a secondary id: a credit card with my name on it.
• A checkbook to make the initial deposit/pay fees.

All in all it wasn’t too bad. Apparently we can expect checks and a debit card to arrive within a few weeks. The terms for the account weren’t bad either. Free checks, free debit-cards, no minimum balance and no charges for deposits or withdrawals. That’s pretty much all we need at this point.

You need an EIN to be able to hire people and to open a bank account.

Then you can fill out the application on IRS homepage.
I’d recommend that you read Understanding EIN before you apply.

Today I’ll talk about two utilities that might not be very well known to the average user, and therefor deserves some extra attention. The reason why I chose these two softwares is because I use these softwares very frequently, and I love using them.

The first software is not so much of a software as it is a set of Perl scripts. The software is called awstats, and is a log-analyzer that creates a nice statistics page from a given log file (such as Apache or your FTP-server). We use this to analyze the traffic to this page, to see where our visitors comes from, as well as what they find interesting. Awstats also gives you other information such as how much time your users spent on your web-site, and what browsers and operating system they are using. If you enable the IP-lookup feature, you can even track down you users, to see from what country are from (assuming they are not using any proxy etc. in another country).

The setup of the software is fairly straight-forward. Just follow the instructions in the INSTALL-file, and you’ll be up running in no time. The only issue I’ve been experiencing with awstats has been related to the log-format in the config file. Make sure the config in you awstats config agrees with the log-config in your apache config file (assuming you’re using apache). By the way, do I need to mention that awstats is open source?

The second software is, in contrast to most of the other tools we use, not an open source application. If there was an open source replacement that could produce an equally good result as this software, I wouldn’t hesitate to switch. Anyhow, the software is called OmniGraffle Professional, and is a great tool for creating outlines, flowcharts and other types of drawings. Prior to using this software I always ended up with a bunch of papers laying around with numerous of flowcharts and drawings for every project I was working on. Still I usually start with some drawings on a piece of paper, but then I usually digitize it and throw away or shred the paper. The result is a fabulous looking flowchart or drawing. Not only do the result look better, it’s also much easier to send, print and share it with other people involved in the project.

I know there are plenty of similar tools out on the market to do these kinds of tasks, but I really like this software. Not only is the software easy to work with, it also uses graphics that make you want to show your work to others rather than hiding them from the world.

Nowadays I use this software for every possible usage. It doesn’t matter if I’m designing a web portal, a database or documenting a network or an organizational chart, this is where I begin. Another good thing is that it comes with numerous icons, and if these are not enough, you can download more of them from their website.

Stay tuned for the next article in this series. If you have any comments or suggestions, please post a comment.

As you may/may not have noticed, we’ve already changed the footer of into stating ‘(c) WireLoad, LLC‘ rather than just Alex and Viktor.

So what’s next? Now we’re going to apply for a FBN (Fictitious Business Name).