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Notes on how to write an executive summary.
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How to write an Executive Summary within 24 hours
Dr Bernard LeongCo-‐Founder, Chlkboard & SGEntrepreneurs.comPartner, Thymos Capital LLPhCp://www.bernardleong.comTwiCer/GMail: bleongcw
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The Big Picture
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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.
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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.
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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.
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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 projecOons, we esOmate our sales revenue to be $X and profit margins to be $Y.”
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Layout of ExecuOve Summary• IntroducOon -‐ 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 meeOng demand.
• Have robust market, profit margin and money markeOng.
• Good fit with founder & management team at the right Ome & place
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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.
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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
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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.
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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.
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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.
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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 Otles to your team.
• Be mature about your experience.
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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.
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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?
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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.
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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.
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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.
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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)
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• 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).
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4 Ps of MarkeOng
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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?
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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.
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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?
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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.
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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.
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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.
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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.
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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
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.
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Who do you raise funds from?• Friends, Family and Fools.
• Business Angels.• Venture Capitalists.• Government InsOtuOons.
• FoundaOons and Agencies.• Private Equity Firms
• Banks
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Source: Meng Weng Wong and published on SGEntrepreneurs.comhCp://sgentrepreneurs.com/dummys-‐guide/2009/03/05/a-‐map-‐on-‐venture-‐capital-‐in-‐singapore/
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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!
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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.
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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• 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
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Resources: Intellectual Property
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hCp://www.ipos.gov.sg
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Resources: Business Info
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hCp://www.business.gov.sg
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Resources: InnovaOon & Tech
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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
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Resources: Other CommuniOes
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hCp://www.e27.sg
hCp://www.youngupstarts.com
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53“Study the past if you would define the future.” -‐ Confucius53
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