1 Accelerate! © Cartezia 2011 technology businesses Accelerate! Commercialising Ideas and...

1 Accelerate!

© Cartezia 2011www.cartezia.com building technology businesses

Accelerate! Commercialising Ideas and Technology@

The University of Southampton

9th March 2011

Dr. Uday Phadke

Chief Executive

Cartezia

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Goals:

By the end of this workshop, we hope you will:

Have a better appreciation of the process of taking high science to the market

Develop insights on the key step of connecting ideas/ capabilities to markets

Understand how start-ups can be resourced; and facilitating mechanisms and processes.

Be aware of components of an innovation ecosystem and how to leverage them

Have worked on a real technology/idea and helped it to progress to a business proposition

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Cartezia

Cartezia specialises in the design and building of new products, services and businesses with a strong innovation focus.

Cartezia works in partnership with its clients to build technology businesses in:Media, Computing and TelecomsClean TechBio-MedicalAerospace, Automotive and Defence Systems

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Session 1: Landscaping the Process of

Commercialisation of Technology and Innovation

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Framework for connecting Technologies to Customers

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Technologies

Narrower‘audiences’

(size, geography,demographics)

Brand‘focus’

Increasing‘footprint’

Increasingcustomer focus

Business Consumer

Customers

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Market segmentation of customers

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Customers

Consumer

Corporate

KnowledgeWorkers

Brand‘focus’

Increasing‘footprint’

Narrower‘audiences’

(size, geography,demographics)

Increasingcustomer focus

Business Consumer

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Market Segmentation OverviewVertical Segments (based on primary usage or consumption of content, data, information )

ConsumersNewspapers & Magazines

MusicFilm & TelevisionInternet Services

I Niche SitesII Portals

III-Personal focusIV-Social Networks

Mobile ServicesMessaging

Location-aware servicesAdvertising & Promotion

PPCNon-PPC

Adaptive AdvertisingShopping

Gaming & EntertainmentSearch & ComparisonPersonal Publishing

KnowledgeSTM Publishing

Information RepositeriesHealthcareEducation

GovernmentDefense & Security

CorporateFinancial Services

Retail & DistributionTravel & Transportation

EngineeringHuman ResourcesMarketing & Sales

ITTelecommunications

FoodPharmaceutical

Media & AdvertisingManufacturing

Hotels & Catering

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Base vs Application Technologies

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- Saviotti 1985, / Boden 1992 / Savin 1995

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Base Technologies vs Application Technologies

Application Technologies

Content Generation &

ExtractionContent

Management

Content Distribution &

DeliveryContent Service

ManagementContent Usage Management

End-to-end Integration &

Life-cycle Mngt.

Base Technologies

Taxonomies ●●● ●●● ●●

Frameworks ●●● ●●● ●●● ●● ●

Ontologies ●●● ●●● ●●● ●●Referencial Integrity ●●● ●●● ● ● ● ●●

Agents ●●● ●● ● ● ●●● ●

Search ●●● ●● ●●● ●

Visualization ●● ●● ●●● ●●

Key

● Low Impact

●● Medium Impact Based on Savin, MIT (1994)

●●● High Impact9

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Commercial Exploitation of Technology and IP

I: License/sell Components and Base Technology

II: License/sell Applications Technology

III: License Technology and provide Know-how and consulting services

IV: Create and sell products

V: Create and sell products and provide additional consulting and know-how

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Commercialisation approaches in computing

Commercial ModelsType Approach Customers Rev Model Examples

Typical $! Prop.tech&s/w 3rd party s/winteg./consult.W'flow&Proc. PubDatMngt UserDatMngtServiceWrap Cust.Mngt

I License/sell components, base technology S/w or Tech Company License √

II License/sell s/w applications technology S/w or Tech Company License √ √Large Corp,Govt Users

III License s/w & provide integration services Large Corp, Govt UsersLicense+fee √ √ √ e-prints

IV Manage and run applications in data-centres Large Corp, Govt UsersASP model √ √ √ √SMEs (Fee + Rental)

3rd party brand

V On-demand services based on applications Corporates SaaS(Subs,PAYG) √ √ √ √ √ √ √SMEs GeodiseIndividual Users Garlik

Components

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Candidate Areas for ExploitationCommercial Model Type I II III IV VConsumers

Newspapers & Magazines √Music √ √Film & TelevisionInternet Services

I Niche Sites √II Portals √III-Personal focus √IV-Social Networks √

Mobile ServicesMessaging √Location-aware services √

Advertising & PromotionClick-basedNon-Click-basedAdaptive Advertising √ √

Shopping √Gaming & Entertainment √Search & Comparison √ √Personal Publishing √ √

KnowledgeSTM Publishing √ √ √ √ √Information Repositeries √ √Healthcare √ √Education √ √Government √ √Defense & Security √ √

CorporateFinancial Services √ √ √Retail & Distribution √Travel & Transportation √ √ √Engineering √ √ √Human Resources √ √ √Marketing & Sales √ √ √IT √ √ √Telecommunications √ √Food √Pharmaceutical √ √Media & Advertising √ √Manufacturing √ √ √Hotels & Catering √

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‘Diffusion Curve’ for Innovative Products

Early

Adopters

Early

Majority

Laggards Late

Majority

Innovators

Enthusiasts

Based on Rogers, 1962

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Manage

go -to-marketSwat

Teams

PrototypingConcept Generation

Chasm II

Chasm III (‘Classical’ Moore) Typical IPO

territory

Target Market Enthusiasts Early Adopters Early MajorityBusiness Objective Establish ‘Beachhead’ Build Revenues

Investment Profile Seed < £0.5m 1st Stage typically £2-5m 2nd Stage typically £10-20m

DemonstrateConcept/prototype

Chasm I

After Phadke, 2006

The 3-Chasm model

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Ecosystem components for business building

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Building a new business: Key Start-up Skills

Creativity & Opportunity Evaluation

Real-time Strategy & Decision Making

Comfort with Change & Chaos

Teamwork

Evangelism, selling, and negotiation

Motivation through influence and persuasion

Oral & Written Communication

Basics of start-up finance & accounting

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The Entrepreneurial Team

The entrepreneurial team is a key ingredient for success.

The leader needs to learn and teach; deal with adversity; be resilient; exhibit integrity, dependability, honesty; and build entrepreneurial culture.

The team needs to have relevant experience and track record; motivation to excel; commitment, determination and persistence; tolerance of risk, ambiguity and uncertainty; creativity; team focus of control; adaptability; opportunity obsession; leadership; communication.

Timmons, 199917

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PersonalSkill

Self Awareness

Financialexpertise

Technicalexpertise

Marketing expertise

SharedVision, values

& beliefs

Building andManaging

Relationships

Suitability

Based on the work of Vyakarnam and Jacobs – Cranfield School of Mgt

Eligibility

Core competences for entrepreneurial teams

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Key roles in a start-up

Role Responsibility

Chief Executive Officer (CEO)

Day-to-day running of the company, formulating policy proposals and implementing the Board’s decisions

Chief Financial Officer (CFO)

Keeps the books and is usually a qualified accountant, prepares management reports and budgets, advises on fundraising

Chief Scientific/Technology Officer (CSO/CTO)

Manage the scientific, technical (new developments and technical or scientific strategy) work of the company.

Vice President, Sales & Marketing

Position and market the product or service. Develop go-to-market strategy and channels. Direct Selling to early customers

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Challenge for new businesses

Most new businesses often suffer from a limited availability of people with commercial skills

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Session 2Break-out session:

High Level Opportunity Identification - Matching technologies to markets

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Opportunity identification

Focus:

Synthesising session - develop the selected ideas, refine them and start working on the pitch

Format:

Work with your group to identify key components of the proposition

Develop an initial pitch for the business idea

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Speed

Size

Production method

Operational ease

Faster 10x

Smaller 2x

Cheaper 0.7x

New effects

Application Concept

Viable Application Prototype

CapabilitiesProof of Concept

Novel Technology

Characteristics

Mass market product

Significant win

Technology filter

ComparisonWith rival

technologies

Brainstorm

Identify Potential applications based

on capability of technology

Market filter

Assess Market dynamics,

Routes to market andCommercialisation

Commercial filter

Assess the level of commercial

advantages relevant to an application

‘Impedance’ matching of technology capabilities with specific customer needs in promising markets is essential

Business creation

Market sizePotential buyersReturns

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Session 3: Commercialisation Journeys

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Challenges in Building Technology Businesses

Technology businesses face all the usual challenges of Start-up Businesses plus some special challenges!

•Technology

•Continuous investment to maintain edge

•Cost and Complexity of IP protection

•Product/Service Packaging

•Accessibility

•Usability

•The Challenge of shortening product ‘shelf life’

•Market/Customer Development

•Technology Adoption follows Diffusion Curve Model

•Techno-demographic segmentation

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Challenges in Building Technology Businesses

Technology businesses face all the usual challenges of Start-up Businesses plus some special challenges!

•Promotion and Marketing

•Challenge of educating the Customer

•Differentiating the Product/Service in a confused space

•Channels to Market

•Getting through the Retail bottleneck

•Meeting the Online Challenge

•Shift from Product to Service

•Changing Business Models

•The impact of 24X7 delivery

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And it’s tough to succeed in Tech Markets!

•In Public markets, ~2% of Technology Companies have created ~100% of net worth

•On average, 2 technology ‘ten-baggers’ (stocks that rise 1000%) go public each year

Source: Morgan Stanley Technology IPO Yearbook, 2006

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Session 4: Building the Business case

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Process for selecting promising ideas

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Selection process of promising ideas in detail

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Creating a Business Plan

• There are several approaches to creating a Business Plan

• All approaches cover similar elements

• Differences between Business Plans often reflect the expectations of different types of investors - for example:

• Angel Investors more likely to be interested in strength and sustainability of the core proposition

• Venture Capitalists more likely to be interested in overall size, risk mitigation and exit strategy

• Typical Fund-raising Materials consist of:

• Investor Presentation (usually 20-25 Powerpoint slides)

• Summary Business Plan Document (usually 12-15 pages)

• Financial Model (usually Excel Spreadsheets) covering: Projected P&L, Balance Sheet, Cash Flow, Funds required, Sensitivity analysis

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Key questions addressed in a Business plan - I

Target Market/Customers:

How do I describe and quantify the market? What are the key factors which will affect take-up?

Competitive Environment

Who else is already in the Market? How do I position my offering?

Key Intellectual Property

What IP do I own that allows me to make a difference? How is it protected?

What is my Product/Service Proposition

What am I selling? How is different from what is already available?

How does my Service fit into any existing infrastructure or environment

Does it need to be compatible with existing service offerings? Does it need to be compatible with existing business models?

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Key questions addressed in a Business plan - II

Go-to-Market Strategy and Execution Plan

How will I sell my product?

Retail distribution, Online Or Hybrid? How will I market and promote the product? What is my execution Plan?

Commercial Model

How will I generate revenues? What will my costs be? What is my projected profitability?

Funding Requirements

How much money will I need and when will I need it? The Investment Proposition What is my Overall Pitch to investors?

Exit

How will investors realise profits?33

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Making it happen

Develop your personal and company vision and goals

Define a viable market segment for your product

Develop your marketing strategy

Prepare a milestone chart and write a venture plan

Determine your financing needs and type of finance required

Form your initial teams: founders, and advisors

Develop a start-up business plan

Market your venture to appropriate sources of funding

Raise initial capital for your venture and build management team

Start business operations, review your business plan continuously

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