Executive Summary StartUp@Singapore

How to write an Executive Summary within 24 hours Dr Bernard Leong Co-‐Founder, Chlkboard & SGEntrepreneurs.com Partner, Thymos Capital LLP hCp://www.bernardleong.com TwiCer/GMail: bleongcw 1

The Big Picture 2 2

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

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

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

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

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

The Mantra • Name of your Company/Project/Idea. • Logo and Tagline. • Mission Statement 8 8

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• 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

4 Ps of MarkeOng 24 24

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

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

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

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

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

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

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

SWOT Analysis 32 32

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

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

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

Source: Meng Weng Wong and published on SGEntrepreneurs.com hCp://sgentrepreneurs.com/dummys-‐guide/2009/03/05/a-‐map-‐on-‐venture-‐capital-‐in-‐singapore/ 40 40

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

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

Appendices 43 43

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

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

References • StarOng Up, New Venture, McKinsey & Co. • The Art of the Start by Guy Kawasaki • Singapore Entrepreneurs blog (Dummy’s Guide) hCp://www.sgentrepreneurs.com • Gladstone, Venture Capital InvesOng • CompeOOve Strategy, Michael Porter • Crossing the Chasm, Moore • ACRA -‐ hCp://www.acra.gov.sg 46 46

Resources: Intellectual Property hCp://www.ipos.gov.sg 47 47

Resources: Business Info hCp://www.business.gov.sg 48 48

Resources: InnovaOon & Tech hCp://www.exploit-‐tech.com 49 Go to this page only if you are looking for a technology to commercialize 49

Resources: Business RegistraOon hCp://www.acra.gov.sg 50 50

Resources: CommuniOes hCp://www.sgentrepreneurs.com 51 51

Resources: Other CommuniOes hCp://www.e27.sg hCp://www.youngupstarts.com 52 52

“Study the past if you would deﬁne the future.” -‐ Confucius 53 53

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Executive Summary StartUp@Singapore

by Bernard Leong on Jan 23, 2010

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