How to write an Executive Summary within 24 hours

Dr  Bernard  LeongCo-­‐Founder,  Chlkboard  &  SGEntrepreneurs.comPartner,  Thymos  Capital  LLPhCp://www.bernardleong.comTwiCer/GMail:  bleongcw

1

2

The  Big  Picture

2

3

What  is  the  problem  you  are  trying  to  solve?

Are  there  customers  or  there  is  an  exisOng  market  for  your  soluOon?

Who  are  the  exisOng  players  from  partners  to  compeOOors?  How  are  they  benchmarked  against  your  idea?

What  type  of  resourcesdo  you  need  to  solve  your  problem?  Mentors,  Partnerships  orResources?

Once  you  work  that  out,  ExecuOon  is  key.

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

6

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  ...”

“We  will  make  $X  by  the  end  of  the  year.”“Based  on  our  financial  projecOons,  we  esOmate  our  sales  revenue  to  be  $X  and  profit  margins  to  be  $Y.”

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

11

Industry Sample  Introduc:on

Materials  Engineering  ProductMaterialSoi  aims  to  be  the  provider  in  creaOng  proprietary  fabrics  that  can  withstand  harsh  condiOons.  We  sell  our  fabrics  to  the  users  in  the  defence  and  coal/mining  industry.

IT  based  Product

RealTime  is  a  Singapore  based  company  that  focuses  on  delivering  an  innovaOve  real  Ome  adverOsing  soluOon  to  brands.  Our  chief  consumers  are  brand  marketers  and  digital  markeOng  agencies.  

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

13

Opportunity Example  Descrip:on

Facts/StaOsOcs/News

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  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.

 EsOmateBased  on  the  assumpOon  that  Singtel  has  sold  a  100K  iPhones,  we  esOmate  each  smart  phone  will  purchase  about  5-­‐10  applicaOons  and  spent  on  average  S$10  on  them  each  month.  

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

15

Technology Example  Descrip:on

Materials

MaterialSoi  uses  an  improved  composite  ceramic  material  to  build  fibres  which  can  efficiently  hold  vehicles  on  muddy  grounds.  Our  soluOon  supercedes  the  present  ones  with  half  the  cost  but  twice  the  material  strength  to  hold  vehicles  above  muddy  grounds.

Digital  MediaOur  soluOon  uses  a  proprietary  based  algorithm  developed  to  resolve  blurred  objects  of  movies  in  a  format  1000  Omes  beCer  than  the  formats  which  are  adopted  by  the  industry.  

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

17

People Example  Descrip:on

Experienced

John  Ho  is  the  CEO  of  MaterialSoi.  Prior  to  joining  this  company,  he  was  the  Vice  President,  Sales  in  Nippon  Fabrics,  a  MNC  specializing  in  fabrics.  His  experience  with  the  market  will  help  to  generate  sales  lead  for  the  company.  

Young  Rookie

Larry  Pang  is  the  founder  of  Project  AceFire.  Currently  a  second  year  undergraduate,  he  has  spent  a  year  working  in  Prof  Johnston’s  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

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

24

4  Ps  of  MarkeOng

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

26

Route  to  Market/Business  Strategy

Example  Descrip:on

Partnerships/Licencing

MaterialSoi  engages  directly  with  known  industry  partners  in  the  fabric  industry.  The  company  does  not  deal  directly  with  customer  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.

Freemium  Model

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  (with  addiOonal  features)  of  the  soiware.  The  company  is  currently  in  negoOaOons  on  strategic  relaOons  with  different  gaming  companies.

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

31

Barriers  to  Entry/Compe:tors

Example  Descrip:on

TradiOonal  Industry  Mindset

MaterialSoi  faces  the  risk  of  a  saturated  and  tradiOonal  ceramics  industry  mindset  not  to  adopt  new  technologies.  To  miOgate  the  risk,  the  company  will  launch  markeOng  campaigns  and  present  the  product  in  various  conferences  to  provide  industry  players  an  awareness  of  the  product.

Unique  Selling  Point

The  compression  format  of  RealTime  soiware  cannot  be  replicated  based  on  the  proprietary  algorithm  used  in  performing  the  compression.  We  are  in  the  process  of  patenOng  the  product  to  act  as  a  deterrence  against  our  compeOtors.

31

32

SWOT  Analysis

32

33

33

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

Financials Example  Descrip:on

FundraisingMaterialSoi  seeks  US$300K  as  an  iniOal  investment  to  build  a  proof  of  concept  and  will  raise  US$2M  to  bring  the  prototype  to  market.  The  company  generates  revenues  via  sales  in  producing  fabric  for  the  defence  and  coal/mining  industries.  

BootstrappingRealOme  generates  revenues  via  the  number  of  purchases  made  on  the  premium  version  and  online  adverOsing  with  the  huge  traffic  generated  by  visits  from  the  site.  The  company  seeks  to  bootstrap  via  hisng  1M  sales  target  within  two  years.  

35

36

36

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

39

39

40

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

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

42

Exit  Strategy Example  Descrip:on

Trade  Sale/BuyoutMaterialSoi  hopes  to  exit  in  3  years  with  a  profit  margin  of  20M  via  a  trade  sale  to  a  larger  player  within  the  industry,  for  example,  Cepheus  Ceramics.  

IPO RealTime  seeks  to  IPO  in  3  years  as  an  exit  strategy.  

42

43

Appendices

43

Top  10  Lies  by  Entrepreneurs1. 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  Investors1. 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

47

hCp://www.ipos.gov.sg

47

Resources:  Business  Info

48

hCp://www.business.gov.sg

48

Resources:  InnovaOon  &  Tech

49

hCp://www.exploit-­‐tech.com

Go  to  this  page  only  if  you  are  looking  for  a  technology  to  commercialize49

Resources:  Business  RegistraOon

50hCp://www.acra.gov.sg50

Resources:  CommuniOes

51hCp://www.sgentrepreneurs.com

51

Resources:  Other  CommuniOes

52

hCp://www.e27.sg

hCp://www.youngupstarts.com

52

53“Study  the  past  if  you  would  define  the  future.”  -­‐  Confucius53