2007 Edward L. Kaplan New Venture Challenge How to Write a Feasibility Summary Workshop. Linda Darragh Ellen Rudnick January 10, 2007. Proudly Sponsored by:. EDWARD L. KAPLAN, '70 Chairman and CEO Zebra Technologies Corp. GUY P. NOHRA, ‘89. AGENDA. Review of Timeline
January 10, 2007
Proudly Sponsored by:
EDWARD L. KAPLAN, '70
Chairman and CEOZebra Technologies Corp.
GUY P. NOHRA, ‘89
Jan. 10 Guidelines for writing Executive Summaries
Feb. 5 Phase I Summaries due
Feb. 26 Teams advancing to Phase II announced
Mar. 5 Orientation Meeting in Hyde Park 6 – 9 pm
Mar. 26 Bus. 34104, Developing a New Venture, Begins
Apr. 27 Full Business Plans due
May 21 Finalists announced
May 24 Finals at Hyde Park Center, all day
Technology or Proprietary Aspects of the Product/Service (if appropriate)
Financial Information (if available)
Business RisksKey Elements of a Feasibility Summary
What are you selling?
What business problem are you solving?
How big is this problem?
Why should an investor read any further? What is different?Key Elements for a Feasibility Summary
The company has developed the SalivaSac™, a proprietary semi-permeable membrane that enables the collection in saliva of biochemical markers below 12 kilodaltons. The company will focus on finding those applications which meet this criteria and where there is an advantage to collecting a non invasive sample.Which is better?
The Company’s objective is to develop non invasive medical diagnostic tests. The first application is for using a proprietary saliva collection device
to measure glucose levels in diabetics.
Describe technology if it is a key differentiator / element of plan.
Is it proprietary? Are there patents?
Are there key milestones in terms of development or product testing?
What are the technology risks?Key Elements for a Feasibility Summary
How do you define the market?
Who is the customer?
What is the potential size of the market?
How many customers? How much do they buy?Key Elements for a Feasibility Summary
Surfaces: 21% or $558 Million
75% market is price sensitive
25% Prof artists or $147Million
$ 2.8 Billion art supply industry
Competitive Landscape -- Why will you win?
Who are current players in the market?
Who could be your competition in the future?
What are your competitive advantages / disadvantages
What barriers to entry will protect you?
How are you positioned with respect to the competition?Key Elements for a Feasibility Summary
Main Competitors Feature Comparison
*In-house, allow third party hosting
How will you deliver this product or service?
- Make internally or use external resources?
Do the costs of providing this product or service provide a sufficient profit?
Are there execution risks?
Revenue Model / Go to Market Strategy?
How will you make money?
Why will the customer buy your product?
What will the customer pay?
- Why are you sure the customer will pay this?
- Have you spoken to customers?
How will you get to the customer? i.e., distribution channel.
How many customers will you get?Key Elements for a Feasibility Summary
Value-Add of Sale
Cost Per Transaction
Source: Friedman and Furey, The Channel Advantage
Who are they?
Why are they relevant for this business?
Do you have any holes in the management team?
How do you plan on filling these gaps?
e.g. Frank Smith, our CTO, has extensive experience in managing and building data warehouses. He previously served as Vice President in charge of Thompson Financial’s database management systems, and worked as a consulting manager with IBM for organizations building data warehouses. Frank received a B.S. in computer science from MIT and an MBA from the Chicago GSB with a concentration in operations.
e.g. We currently are looking for a Director of Sales. We have identified several individuals in data/information companies also selling to the Fortune 500 companies, consulting and investment firms that would be interested once we have secured our financing.Key Elements for a Feasibility Summary
What are your economics? (use unit model analysis if appropriate)
What are your key assumptions?
Why will you eventually make money / go cash flow positive?
- When will this happen?
How much money do you think you will need?
How big will you get?
Eventually, this section will need to get very detailed.
What are you worried about / unsure of?
What do you plan to do about it?Key Elements for a Feasibility Summary
Sales & Marketing
Sensors, Gateways and Other Technology
Maintenance, Insurance and Overhead
% of Company ABC Revenue
Transaction Processing and Wireless Data
Contracts: 3 45 135 267
Markets:SF LA Seattle HoustonFinancial Projections
Cash flow positive in Q4Y2
Sales cycle: 6 months
Installation: 50% at contract signing, 30% mid-term, 20% upon completion
Annual subscription fee: $xx per seat
2 contracts signed by x/x/0x; 4 by x/x/0x, …..
Payroll: see attached table of payroll and benefits for founders, new hires and independent contractors
Work virtually until x/x/ox, then move into incubator
Marketing plan for ‘0x includes 2 trade shows in Feb and Sept., new trade booth purchased in January, development of collateral material, ……..Assumptions
Are there comparables in the industry or other industries that validate your business model?
Who are they and why have they been successful?
How are they valued and how did they get funded?
Have there been successful exits? Multiples
Also look for the ‘corpses’. Have similar businesses failed? Why?Comparables
Clichés to Avoid: that validate your business model?
We have no competition.
We are the low cost provider.
We only need a 5% market share.
Our numbers are conservative.
We have the first mover advantage.
Avoid Acronyms (or at least explain them)
Don’t assume everyone reading plan has your knowledge base
Make sure the car has a driver.
Someone should be the current CEO. OK to say you will find a permanent / better one later.Dos and Don’ts
Be Clear and Brief that validate your business model?
Yes: Middleware for wireless networks
No: Develops and delivers an integrated suite of packaged applications for web and wireless deployment. Global enterprises use these applications to become more competitive and profitable by establishing and sustaining high-yield interactions and transactions with customers, suppliers, and employees.
Avoid the hockey stick effect unless you have assumptions to back it upDos and Don’ts
Capture the reader’s attention – fast that validate your business model?
Typical VC will not read past the first page
Should answer the following questions in the first page
- What is the opportunity?
- Why does anyone care?
- How will it be achieved?
- What is your unique differentiator?
Provide tangible examples / experiences wherever possible:
- Actual customers best. Potential customers next best.
- TALK TO CUSTOMERS. Describe what you discovered.
- There is nothing more important than a customer! Focus on how you are going to get that first customer.
Credible partners, suppliers, advisors, etc.
Identify comparable businesses or business modelsDos and Don’ts