Executive Summary Workshop - Ideas, Innovation & Purpose

Dr  Bernard  LeongPartner,  Thymos  Capital  &  Co-­‐Founder,  SGEntrepreneurs.comh=p://www.bernardleong.com

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Outline•Why:  Idea  against  Problem?

•What:  Developing  from  Prototype  to  Product?• How:  Writing  an  Executive  Summary?• Q&A

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Team Cash

Idea Cashflow

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In  everyday  life,  we  are  trying  to  solve  problems.

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Then  an  Idea  sparked  in  your  head  and  ....

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You  gather  the  People,  Resources  and  Partnership  to  Make  It  Happen

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What  is  the  problem  you  are  trying  to  solve?

Are  there  customers  or  there  is  an  exisSng  market  for  your  soluSon?

Who  are  the  exisSng  players  from  partners  to  compeSSors?  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,  ExecuSon  is  key.

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Idea  without  ExecuSon  is  useless,  ExecuSon  without  Idea  is  dangerous.

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ExecuSon  depends  on  a  A-­‐Team

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“I  am  a  winner  because  I’m  good  at  what  I  do  and  because  I  am  surrounded  by  people  who  think  they  are.”

“A  players  hire  A  players;  B  players  hire  C  players;  and  C  players  hire  D  players.”

Steve  Jobs,  Apple  Inc

Jose  Mourinho,  Coach,  Inter  Milan  FC

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You  will  definitely  not  make  it  ifyou  submit...

• Ideas  that  can  be  easily  replicated.• Ideas  that  has  no  business  or  tech  innovaIon.• Ideas  that  are  not  scalable.

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The  Big  Picture

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Why  write  an  ExecuIve  Summary?

• Organizes  and  clears  the  confusion  and  ambiguity  of  your  business  idea.

• Correct  posiIoning  to  convince  potenIal  investors.

• PotenIal  investors,  partners  and  clients  have  no  Ime  for  your  grandmother  stories  about  the  idea.  

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Criteria  for  ExecuIve  Summary

• Organized  and  Understandable.• Use  plain  language  and  vocabulary.• Present  the  Problem  and  SoluIon  on  the  same  page.

• The  Purple  Cow  effect:  making  your  summary  disIncIvely  different  even  if  it  confines  to  basic  rules.

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Language

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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  projecSons,  we  esSmate  our  sales  revenue  to  be  $X  and  profit  margins  to  be  $Y.”

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Layout  of  ExecuIve  Summary

• IntroducIon  -­‐  Type  of  Business• Problem  &  Opportunity

• Technology/Service/Product• Management  Team

• Business  Strategy  &  Route  to  Market

• Financials• Exit  Strategy

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The  Mantra• Name  of  your  Company/Project/Idea.

• Logo  and  Tagline.• Mission  Statement

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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?

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When  is  an  idea  an  opportunity?• Create  or  add  value  to  customer.

• Solve  a  significant  problem,  removing  a  pain  point  or  meeIng  demand.

• Have  robust  market,  profit  margin  and  money  markeIng.

• Good  fit  with  founder  &  management  team  at  the  right  Ime  &  place

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RelaIonship  -­‐  Markets  &  Tech

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Industry Sample  Introduc:on

Materials  Engineering  ProductMaterialSod  aims  to  be  the  provider  in  creaSng  proprietary  fabrics  that  can  withstand  harsh  condiSons.  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  innovaSve  real  Sme  adverSsing  soluSon  to  brands.  Our  chief  consumers  are  brand  marketers  and  digital  markeSng  agencies.  

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Problem  &  Opportunity

• You  are  selling  the  soluIon  to  a  problem.

•What  is  the  “blue  ocean”  you  are  exploiIng?

• Is  there  any  interest  in  your  business  lately?

• Lies,  Damn  Lies  &  StaIsIcs

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Opportunity Example  Descrip:on

Facts/StaIsIcs/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  soluSon  we  proposed  is  in  the  life  sciences  market,  where  we  can  reduce  drug  development  process  by  a  half  with  our  technology.

 EsImate

Based  on  the  assumpSon  that  Singtel  has  sold  a  100K  iPhones,  we  esSmate  each  smart  phone  will  purchase  about  5-­‐10  applicaSons  and  spent  on  average  S$10  on  them  each  month.  

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Technology  or  Idea

• You  must  make  your  technology  or  idea  understandable  to  your  audience.

• For  an  execuIve  summary,  never  put  too  much  jargon  into  your  descripIon.

• Make  comparisons  on  how  your  soluIon  can  increase  producIvity  and  efficiency.

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Technology Example  Descrip:on

Materials

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

Digital  MediaOur  soluSon  uses  a  proprietary  based  algorithm  developed  to  resolve  blurred  objects  of  movies  in  a  format  1000  Smes  be=er  than  the  formats  which  are  adopted  by  the  industry.  

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Team• Diversified  and  Complementary  Skill  Sets.

• Get  Grey  Hairs  and  put  them  in  your  advisory  board.  

• Don’t  give  too  much  Itles  to  your  team.  

• Be  mature  about  your  experience.

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People Example  Descrip:on

Experienced

John  Ho  is  the  CEO  of  MaterialSod.  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  mulSmedia  laboratory.  He  will  act  as  the  CTO  of  AceFire  and  will  seek  to  find  a  CEO  who  can  mentor  and  guide  the  team.  

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Route  to  Market  &  Business  Strategies

• How  do  you  sell  your  service  or  product?

• 80-­‐20  rule  on  market  segmentaIon?

•What  are  the  markeIng  channels  on  your  product?

•What  business  strategies  do  you  use  to  generate  revenues?

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Route  to  Market/Business  Strategy

Example  Descrip:on

Partnerships/Licencing

MaterialSod  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  alternaSve  strategy  to  generate  revenues  is  done  via  licensing  of  the  proprietary  technology  to  other  fabric  producing  companies.

Freemium  Model

RealSme  offers  the  customers  a  free  beta  version  of  the  sodware  with  limited  features  so  that  they  can  enSce  them  to  buy  the  premium  version  (with  addiSonal  features)  of  the  sodware.  The  company  is  currently  in  negoSaSons  on  strategic  relaSons  with  different  gaming  companies.

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How  to  EsImate  Market  Size• Start  with  simple,  reasonable  and  valid  assumpIons.

• Approximate  to  the  closest  figure  (10K,  1M)?

• PracIce  makes  perfect  by  making  esImates  to  problems.

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PracIce  Problems• How  many  Internet  users  are  there  in  Singapore?  (Hint:  Start  with  the  populaIon  and  number  of  households)

• How  many  mobile  handsets  each  person  will  hold  on  average?  (Hint:  make  a  guess  from  how  many  people  losing  phones?)

• How  many  students  are  playing  World  of  WarCrae?  (Hint:  Demographics)

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Gartner’s  Hype  Cycle

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4  Ps  of  MarkeIng

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Risks  &  Barriers  to  Entry

•Who  are  your  compeItors?

• How  do  you  prevent  your  compeItors  trumping  you?

•What  are  the  problems  you  face  against  them?

• Don’t  assume  that  you  are  the  only  one  or  have  indefensible  patents.

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Barriers  to  Entry/Compe:tors

Example  Descrip:on

TradiIonal  Industry  Mindset

MaterialSod  faces  the  risk  of  a  saturated  and  tradiSonal  ceramics  industry  mindset  not  to  adopt  new  technologies.  To  miSgate  the  risk,  the  company  will  launch  markeSng  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  sodware  cannot  be  replicated  based  on  the  proprietary  algorithm  used  in  performing  the  compression.  We  are  in  the  process  of  patenSng  the  product  to  act  as  a  deterrence  against  our  compeStors.

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SWOT  Analysis

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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?

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Financials Example  Descrip:on

Fundraising

MaterialSod  seeks  US$300K  as  an  iniSal  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.  

Bootstrapping

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

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Who  do  you  raise  funds  from?

• Friends,  Family  and  Fools.

• Business  Angels.• Venture  Capitalists.• Government  InsItuIons.

• FoundaIons  and  Agencies.• Private  Equity  Firms

• Banks

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Source:  www.mengwong.com/capital

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Exit  Strategy

•What  happens  to  the  company  in  3  to  5  years  Ime?

•  Possible  Exits:–IniIal  Public  Offerings  (IPO)–Trade  sale/Merger/Management  Buyout

–Family/Company  Succession

–Wind  it  Down!

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Exit  Strategy Example  Descrip:on

Trade  Sale/BuyoutMaterialSod  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.  

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Appendices

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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.

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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.

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References• StarIng  Up,  New  Venture,  McKinsey  &  Co.

• The  Art  of  the  Start  by  Guy  Kawasaki• Singapore  Entrepreneurs  blog  (Dummy’s  Guide)                                            hmp://www.sgentrepreneurs.com

• Gladstone,  Venture  Capital  InvesIng• CompeIIve  Strategy,  Michael  Porter

• Crossing  the  Chasm,  Moore

• ACRA  -­‐  hmp://www.acra.gov.sg

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Resources:  Intellectual  Property

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h=p://www.ipos.gov.sg

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Resources:  Business  Info

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h=p://www.business.gov.sg

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Resources:  InnovaIon  &  Tech

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h=p://www.exploit-­‐tech.com

Go  to  this  page  only  if  you  are  looking  for  a  technology  to  commercialize56

Resources:  Business  RegistraIon

57h=p://www.acra.gov.sg57

Resources:  CommuniIes

58h=p://www.sgentrepreneurs.com

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Resources:  Other  CommuniIes

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h=p://www.e27.sg

h=p://www.youngupstarts.com

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

Contact:  bleongcw  (GMail)

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