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Executive Summary StartUp@Singapore

  1. 1. How to write an Executive Summary within 24 hours Dr  Bernard  Leong Co-­‐Founder,  Chlkboard  & Partner,  Thymos  Capital  LLP hCp:// TwiCer/GMail:  bleongcw 1
  2. 2. The  Big  Picture 2 2
  3. 3. What  is  the  problem   you  are  trying  to  solve? Once  you  work  that  out,   ExecuOon  is  key. What  type  of  resources do  you  need  to  solve   Are  there  customers  or   your  problem?   there  is  an  exisOng   Mentors,  Partnerships  or market  for  your   Resources? soluOon? Who  are  the  exisOng  players  from   partners  to  compeOOors?  How  are   they  benchmarked  against  your   3 idea? 3
  4. 4. Why  write  an  ExecuOve  Summary? • Organizes  and  clears  the  confusion   and  ambiguity  of  your  business   idea. • Correct  posiOoning  to  convince   potenOal  investors. • PotenOal  investors,  partners  and   clients  have  no  Ome  for  your   grandmother  stories  about  the  idea.   4 4
  5. 5. Criteria  for  ExecuOve  Summary • Organized  and  Understandable. • Use  plain  language  and  vocabulary. • Present  the  Problem  and  SoluOon   on  the  same  page. • The  Purple  Cow  effect:  making   your  summary  disOncOvely   different  even  if  it  confines  to  basic   rules. 5 5
  6. 6. Language Avoid  Phrases  like  ... Use  Phrases  like  ... “We  would  like  to  be  the  leading  provider  of  ...” “We  aim  to  become  the  leading  provider  of  ...” “We  want  to  be  the  best  in  ...” “Our  company’s  core  competency  is  ...” “Based  on  our  financial  projecOons,  we  esOmate   “We  will  make  $X  by  the  end  of  the  year.” our  sales  revenue  to  be  $X  and  profit  margins  to   be  $Y.” 6 6
  7. 7. Layout  of  ExecuOve  Summary • IntroducOon  -­‐  Type  of  Business • Problem  &  Opportunity • Technology/Service/Product • Management  Team • Business  Strategy  &  Route  to  Market • Financials • Exit  Strategy 7 7
  8. 8. The  Mantra • Name  of  your  Company/Project/Idea. • Logo  and  Tagline. • Mission  Statement 8 8
  9. 9. Type  of  Business • What  is  the  Industry? • Product  or  Service   based? • How  Product  or   Service  delivers? • Who  are  the   customers  to  your   business?  B2B,  B2C? 9 9
  10. 10. When  is  an  idea  an  opportunity? • Create  or  add  value  to   customer. • Solve  a  significant  problem,   removing  a  pain  point  or   meeOng  demand. • Have  robust  market,  profit   margin  and  money  markeOng. • Good  fit  with  founder  &   management  team  at  the   right  Ome  &  place 10 10
  11. 11. Industry Sample  Introduc:on MaterialSoi  aims  to  be  the  provider  in  creaOng   proprietary  fabrics  that  can  withstand  harsh   Materials  Engineering  Product condiOons.  We  sell  our  fabrics  to  the  users  in  the   defence  and  coal/mining  industry. RealTime  is  a  Singapore  based  company  that   focuses  on  delivering  an  innovaOve  real  Ome   IT  based  Product adverOsing  soluOon  to  brands.  Our  chief   consumers  are  brand  marketers  and  digital   markeOng  agencies.   11 11
  12. 12. Problem  &  Opportunity • You  are  selling  the   soluOon  to  a  problem. • What  is  the  “blue  ocean”   you  are  exploiOng? • Is  there  any  interest  in   your  business  lately? • Lies,  Damn  Lies  &   StaOsOcs 12 12
  13. 13. Opportunity Example  Descrip:on Recently,  the  Singapore  government  has  allocated   S$13.5B  into  high  technology  research  and   development  and  placed  their  efforts  in  three   industries:  biomedical  sciences,  renewable   Facts/StaOsOcs/News energies  and  digital  media.  The  soluOon  we   proposed  is  in  the  life  sciences  market,  where  we   can  reduce  drug  development  process  by  a  half   with  our  technology. Based  on  the  assumpOon  that  Singtel  has  sold  a   100K  iPhones,  we  esOmate  each  smart  phone  will    EsOmate purchase  about  5-­‐10  applicaOons  and  spent  on   average  S$10  on  them  each  month.   13 13
  14. 14. Technology  or  Idea • You  must  make  your   technology  or  idea   understandable  to  your   audience. • For  an  execuOve  summary,   never  put  too  much  jargon   into  your  descripOon. • Make  comparisons  on  how   your  soluOon  can  increase   producOvity  and  efficiency. 14 14
  15. 15. Technology Example  Descrip:on MaterialSoi  uses  an  improved  composite   ceramic  material  to  build  fibres  which  can   efficiently  hold  vehicles  on  muddy  grounds.   Materials Our  soluOon  supercedes  the  present  ones  with   half  the  cost  but  twice  the  material  strength  to   hold  vehicles  above  muddy  grounds. Our  soluOon  uses  a  proprietary  based   algorithm  developed  to  resolve  blurred  objects   Digital  Media of  movies  in  a  format  1000  Omes  beCer  than   the  formats  which  are  adopted  by  the  industry.   15 15
  16. 16. Team • Diversified  and   Complementary  Skill  Sets. • Get  Grey  Hairs  and  put   them  in  your  advisory   board.   • Don’t  give  too  much  Otles   to  your  team.   • Be  mature  about  your   experience. 16 16
  17. 17. People Example  Descrip:on John  Ho  is  the  CEO  of  MaterialSoi.  Prior  to   joining  this  company,  he  was  the  Vice   President,  Sales  in  Nippon  Fabrics,  a  MNC   Experienced specializing  in  fabrics.  His  experience  with  the   market  will  help  to  generate  sales  lead  for  the   company.   Larry  Pang  is  the  founder  of  Project  AceFire.   Currently  a  second  year  undergraduate,  he  has   spent  a  year  working  in  Prof  Johnston’s   Young  Rookie mulOmedia  laboratory.  He  will  act  as  the  CTO   of  AceFire  and  will  seek  to  find  a  CEO  who  can   mentor  and  guide  the  team.   17 17
  18. 18. Route  to  Market   • How  do  you  sell  your  service  or   product? • Who  are  the  customers  or  clients?   How  do  you  reach  them  quickly? • What  are  the  markeOng  channels   on  your  product? 18 18
  19. 19. Market  Research:  Customers • Who  are  the  customers  for  the   products  or  services?  Iden>fy   common  characteris>cs  &  behavior. • Who  and  where  the  major   purchasers  for  the  products  are  in   each  market  segment? • Indicate  the  rela>ve  reach  for   customers  and  how  they  purchase   the  product  or  service,  and  what   influences  their  buying  decision. 19 19
  20. 20. Market  Size  &  Trends • The  size  of  the  market  based  on   market  segment,  demographic   by  sex,  region  or  country  and   poten>al  profitability. • The  poten>al  annual  growth  for   at  least  3  years  or  the  compound   annual  growth  rate  (CAGR)  of  the   business  based  on  industry. • Major  factors  affec>ng  market   growth,  for  e.g.  industry  trends,   socio-­‐economic  trends,   popula>on  changes,  government   regula>on.     20 20
  21. 21. How  to  EsOmate  Market  Size • Start  with  simple,  reasonable   and  valid  assumpOons. • Approximate  to  the  closest   figure  (10K,  1M)? • PracOce  makes  perfect  by   making  esOmates  to   problems. 21 21
  22. 22. PracOce  Problems • What  is  the  average  number  of  internet  users  are   there  per  household  in  Singapore?  (Hint:  Think  about   how  many  people  per  household.) • How  many  hospitals  are  there  in  the  first  Oer  ciOes  in   China?  (Hint:  define  the  first  Oer  ciOes  -­‐  how  many  of   them,  then  work  out  how  many  hospitals  per  city  on   average  based  on  a  certain  radius? • How  many  seats  are  there  on  a  A380?  (Think  from   the  numbering  of  seats) 22 22
  23. 23. • How  many  seats  are  there  on  a  A380?  (Think   from  the  numbering  of  seats): –Start  from  seat  number  30-­‐65  in  economy   class,  take  an  average  of  10  seats  =  350  seats. –First  Class:  4  seats  per  land  and  only  4  rows  =   16  seats –Business  Class:  6  seats  per  row,  and  15  rows  =   90  seats –Economy  class  on  2nd  floor  =  11  x  8  =  88  seats   • Total  number  of  seats  =  544  seats • Actual  number:  450-­‐654  (depending  on  which   airline).   23 23
  24. 24. 4  Ps  of  MarkeOng 24 24
  25. 25. Business  Strategies • How  do  you  generate  revenues   and  subsequently  profits  for  your   business? • What  is  your  business  model? • How  are  the  revenue  sources   available  for  your  startup? • What  business  strategies  do  you   use  to  generate  revenues? 25 25
  26. 26. Route  to  Market/ Example  Descrip:on Business  Strategy MaterialSoi  engages  directly  with  known   industry  partners  in  the  fabric  industry.  The   company  does  not  deal  directly  with  customer   Partnerships/Licencing base  but  sells  via  resellers  or  fabric  distributors.   One  alternaOve  strategy  to  generate  revenues  is   done  via  licensing  of  the  proprietary  technology   to  other  fabric  producing  companies. RealOme  offers  the  customers  a  free  beta  version   of  the  soiware  with  limited  features  so  that  they   can  enOce  them  to  buy  the  premium  version   Freemium  Model (with  addiOonal  features)  of  the  soiware.  The   company  is  currently  in  negoOaOons  on  strategic   relaOons  with  different  gaming  companies. 26 26
  27. 27. Revenue  Sources • How  many  different  revenue   streams  will  the  business  model   generate?   • What  is  the  source  of  each   revenue  stream  (sales,  service   fees,  adver>sing,  subscrip>on)? • What  is  the  rela>ve  size  &   importance  of  each  revenue   stream? • How  quickly  is  each  revenue   stream  likely  to  grow? 27 27
  28. 28. Revenue  Streams • Single  Stream:  Company  relies  on  one   predominant  revenue  stream   stemming  from  one  product  to  service. • Mul/ple  Streams:  Company  collects   mul>ple  revenue  streams  from   different  products  or  services. • Inter-­‐dependent:  Company  sells  1  or   several  products  or  services  in  order  to   s>mulate  revenues  from  another  set  of   products  and  services. • Loss  Leader:  Company  collects  mul>ple   revenue  streams  but  not  every  revenue   stream  is  independently  profitable.   28 28
  29. 29. Revenue  Models • Subscrip>on/Membership:  Customers   pay  a  fixed  amount  at  regular  intervals. • Volume  or  Unit-­‐Based:  Customers  pay  a   fixed  price  per  unit  and  receive  a   product/service  in  exchange. • Adver>sing  Based:  End-­‐user  is   exempted  but  adver>sers  pay. • Licensing  and  Syndica>on:  Customer   pay  a  one  >me  licensing  or  syndica>on   fee  to  be  able  to  use  or  resell  the   product • Transac>on  Fee:  Customer  pays  the   company  that  facilitates  the   transac>on. 29 29
  30. 30. Risks  &  Barriers  to  Entry • Who  are  your  compeOtors? • How  do  you  prevent  your   compeOtors  trumping  you? • What  are  the  problems  you   face  against  them? • Don’t  assume  that  you  are   the  only  one  or  have   indefensible  patents. 30 30
  31. 31. Barriers  to  Entry/ Example  Descrip:on Compe:tors MaterialSoi  faces  the  risk  of  a  saturated  and   tradiOonal  ceramics  industry  mindset  not  to   adopt  new  technologies.  To  miOgate  the  risk,   TradiOonal  Industry  Mindset the  company  will  launch  markeOng  campaigns   and  present  the  product  in  various   conferences  to  provide  industry  players  an   awareness  of  the  product. The  compression  format  of  RealTime  soiware   cannot  be  replicated  based  on  the  proprietary   Unique  Selling  Point algorithm  used  in  performing  the  compression.   We  are  in  the  process  of  patenOng  the  product   to  act  as  a  deterrence  against  our  compeOtors. 31 31
  32. 32. SWOT  Analysis 32 32
  33. 33. 33 33
  34. 34. Financials • How  much  do  you  need? • How  much  equity  you   want  to  give? • How  do  you  raise  that   amount  of  money? • Can  you  bootstrap  without   raising  funds? 34 34
  35. 35. Financials Example  Descrip:on MaterialSoi  seeks  US$300K  as  an  iniOal  investment  to  build  a   proof  of  concept  and  will  raise  US$2M  to  bring  the  prototype  to   Fundraising market.  The  company  generates  revenues  via  sales  in  producing   fabric  for  the  defence  and  coal/mining  industries.   RealOme  generates  revenues  via  the  number  of  purchases  made   on  the  premium  version  and  online  adverOsing  with  the  huge   Bootstrapping traffic  generated  by  visits  from  the  site.  The  company  seeks  to   bootstrap  via  hisng  1M  sales  target  within  two  years.   35 35
  36. 36. 36 36
  37. 37. Who  do  you  raise  funds  from? • Friends,  Family  and  Fools. • Business  Angels. • Venture  Capitalists. • Government  InsOtuOons. • FoundaOons  and  Agencies. • Private  Equity  Firms • Banks 37 37
  38. 38. 38 38
  39. 39. 39 39
  40. 40. Source:  Meng  Weng  Wong  and  published  on hCp://­‐guide/2009/03/05/a-­‐map-­‐on-­‐venture-­‐capital-­‐in-­‐singapore/ 40 40
  41. 41. Exit  Strategy • What  happens  to  the   company  in  3  to  5  years  Ome? •  Possible  Exits: –IniOal  Public  Offerings  (IPO) –Trade  sale/Merger/Management   Buyout –Family/Company  Succession –Wind  it  Down! 41 41
  42. 42. Exit  Strategy Example  Descrip:on MaterialSoi  hopes  to  exit  in  3  years  with  a  profit   margin  of  20M  via  a  trade  sale  to  a  larger  player   Trade  Sale/Buyout within  the  industry,  for  example,  Cepheus   Ceramics.   RealTime  seeks  to  IPO  in  3  years  as  an  exit   IPO strategy.   42 42
  43. 43. Appendices 43 43
  44. 44. Top  10  Lies  by  Entrepreneurs 1. Our projection is conservative. 2. (Pick your favourite market research company) predicts our market to be US$50B. 3. (A big MNC) is signing our contract next week. 4. Key employees will join us as soon as we get funded. 5. Several investors are already doing due diligence on us. 6. This big company is too old, big, stupid and slow to be a threat. 7. Patents makes our business defensible. 8. All we have to do is to get 1% of the market. 9. We have 1st mover advantage. 10. We have a world-class proven team. 44 44
  45. 45. Top  9  Lies  by  Investors 1. I liked your company but my partners don’t. 2. If we get a lead, we will follow. 3. Show us some traction and we will invest. 4. We love to co-invest with other venture capitalists. 5. We are investing in your team. 6. I have lots of bandwidth dedicated to your company. 7. This is a vanilla term sheet. 8. We open doors for you at our client companies. 9. We like early stage investing. 45 45
  46. 46. References • StarOng  Up,  New  Venture,  McKinsey  &  Co. • The  Art  of  the  Start  by  Guy  Kawasaki • Singapore  Entrepreneurs  blog  (Dummy’s  Guide)           hCp:// • Gladstone,  Venture  Capital  InvesOng • CompeOOve  Strategy,  Michael  Porter • Crossing  the  Chasm,  Moore • ACRA  -­‐  hCp:// 46 46
  47. 47. Resources:  Intellectual  Property hCp:// 47 47
  48. 48. Resources:  Business  Info hCp:// 48 48
  49. 49. Resources:  InnovaOon  &  Tech hCp://www.exploit-­‐ 49 Go  to  this  page  only  if  you  are  looking  for  a  technology  to  commercialize 49
  50. 50. Resources:  Business  RegistraOon hCp:// 50 50
  51. 51. Resources:  CommuniOes hCp:// 51 51
  52. 52. Resources:  Other  CommuniOes hCp:// hCp:// 52 52
  53. 53. “Study  the  past  if  you  would  define  the  future.”  -­‐  Confucius 53 53