Www.knowledge2innovation.eu From Research To Business Concept Assessing commercial potential and...

www.knowledge2innovation.eu

From Research To Business ConceptAssessing commercial potential and develop the business proposition

www.knowledge2innovation.eu - -

Purpose of the material

The purpose of this training material is to provide research staff with hands-on advice, good examples, tools (e.g. check-lists and templates) and the typical tips and

tricks, which are useful when determining the market value of a research project and when approaching investors or business partners.

The ambition is not to go into detail, there is a multitude of books that already do this better, but to provide a first introduction.

www.knowledge2innovation.eu -


Demystifying the market

Idea

Technology

IPRService

CapitalFinancing

Soft funding

Venturecapital

Product

Business development Patents

Licensing

Intellectualproperty

Due Diligence

Business plan

Assets

USP

Networks

Cooperation

Partner

Liabilities

Guidelines

TeamInvestors

Market

Share

Taxes

Management

Development

Vertrieb

PR

Customers

4P

DemandMarketing

Balance Reports

PLC

ResearchProductionSoftwareTools

IT

Support

Communication

Potential

Statutes

Solvency

Cash-flow

Deal

Human capital

Negotiations

Top-down vs. bottom-up


„It‘s not ready yet!“

„The technology will sell itself!“

„First product development, the rest will come later“

„Small and slow means low risk!“

„Venture capital investors are all criminals, who want to take over my company!“

„My technology is the best!...“

„Scale-up“

Typical misconceptions

„…there are no competitors!“

Citations matter, the rest can come later!


The two topics of the presentation

Assessing the commercial potential

1. Key markets

2. Commercialisation strategy

3. Internal valorisation

4. Tools and methods

Creating a business proposal

1. What is a business plan?

2. How to write a business plan?

3. Who are potential investors?

4. What will I be asked?


Part 1

Commercial potential


Part 1: Key markets

Objective: Assess all potential market applications for your technology. There will be more than you think!

Advantages:

Save costs and time in the R&D process

Maximise sources for funding

Maximise the success of the actual business

Prevents:

Development of the “wrong” product

Unattractive IPR

Unattractive business case


Part 1: How to identify potential markets

?MarketColleagues, experts, professionals

(e.g. scientific experts, intermediaries,

technology transfer specialists, industry

professionals)

Creativity techniques (e.g. brainstorming, 6-3-5

method, analogies)

Market studies(e.g. non-public & public sources, primary & secondary sources, Google, commercial

databases and market studies, interviews and questionnaires)


Example 1: The story of The Microwave


It all started with the Magnetron..


And melting chocolate..


And ended up with..


And maybe some less commercial products..


Example: The patent


Example 2: SmartFreshTM


Example 3: Splenda® Sweetener


Part 1: Evaluation and selection criteria

Current situation

Current status of the market?

Geographical markets?

Actors and market share?

Products?

Niches?

Sales?

Evaluate the market applications you have identified

Competitors

Who are they?

Their strengths/weaknesses?

Market share and prices?

What is your USP?

Market segment

Size?

Growth?

Match product – demand?

Differentiation?

Always be prepared to rethink your proposal!


Many options

Select the one you are most comfortable with

Risk vs. reward

-

Part 1: Selecting a commercial strategy

Different strategies

Low risk – low gain

e.g. EU projects

(Further development and research through a public funded programme)

Medium risk – medium gain

e.g. contract research, fee-for-service and

patenting & licensing

High risk – high gain

e.g. joint venture, start-up company


Value (in Euro) is determined by market knowledge and market maturity

The more information about the market and the actual value of your product you have, allows you to better put a value on your product

The closer you are to a proof-of-concept, the higher the value of your product (idea stage: high uncertainty and risk = lower value; first sales: lower uncertainty and risk = higher value)

Increase value through

Market knowledge (incl. business case/plan)

Professional IP strategy

Validation studies / publications

Prototype

Demonstrators available to customers

Pilot customers / first sales

-

Part 1: Increase value thr. internal valorisation


Questions?


Attracting investorsPart 2


Out of my own pocket

My employer (e.g. many universities/PRO have internal funding programmes and can help to finance smaller amounts or through the use of equipment/personal)

Public financiers (e.g. regional, national and international bodies all have programmes to support technology development, early stage companies and SME)

Banks (e.g. through loans)

Business angels (individuals/benefactors, steady increase over the last 10 years, usually contributing with cash, expertise and networks)

Venture capital (private companies focusing on creating revenues through early stage investments in high potential, high risk ventures, contributing with cash, expertise and networks)

-

Part 2: Who can finance my idea?

Early stage/smaller investments

Later stage/larger investments


Usually through a business plan

Why do I need a business plan?

Point of departure for your company

A living document combining current status with future vision

Forces you to constantly rethink and reassess your business idea

Marketing material for your business idea

Gives investors insight into your concept

Can be evaluated

-

Part 2: How do I present my idea?


The business plan shall convincingly show:

How the idea will be developed and successfully exploited

The capabilities and experience of the team responsible

How the associated costs will be financed (incl. future rounds)

Proposed exit mechanisms and timing

Key questions that shall be addressed:

What is unique about the idea?

How is it protected (IPR)?

Who will buy it and why?

What price will it sell at and what will it cost to deliver?

Who will be the competition and how will it be resisted?

When will the company start having income and will break-even be reached?

-

Part 2: What is the aim of the business plan?


Keep it short (no more than 30 pages)

Adapt the content towards the relevant target group (i.e. several versions okay!)

Supporting data is best presented in the appendix

Aim for an easily understandable language (not too technical)

Mesmerise the reader

Use sources for backing up facts and figures

The information should be sufficiently concrete to base decisions on

Ask colleagues and experts for feedback

There is never a final version of a business plan, only a latest version!

-

Part 2: Instructions for writing a business plan


Executive summary

Capture the interest of a reader

Summarise the most important details

Keep it short (1-2 pages)

Business concept

Describe in a clear and understandable way how your business idea solves a problem

Focus on the USP

Cover IPR

Go easy on technical detail and use graphics to illustrate your product

Management team

General rule: The people behind the idea are just as important as the idea itself!

Present the members and their distinguishing features

Do not be afraid to point out which competencies you lack

-

Part 2: Components of a business plan (1 of 3)


Example: Executive Summary

Kubr, T., Marchesi, H., Ilar, D., Kienhuis, H., Starting up - Achieving success with professional business planning, McKinsey & Company, 2003Source:

Type of BusinessCatchMabs will be a specialist biotechnology company with a focus on agroindustrial applications for designer affinity proteins.

Company SummaryCatchMabs will apply specially constructed protein molecules to capture valuable or harmful compounds from bulk industrial waste flows, using affinity chromatography columns. These molecules, called industrial molecular affinity bodies (iMab), have the ability to bind with specific organic compounds, much like antibodies do in blood. The proprietary, stable molecule design allows for application in bulk scale industrial process flows. We will supply complete purification solutions with immobilized affinity bodies at unprecedented low prices bringing together two separate worlds: molecular protein engineering and agro-industrial processing industries.

Etc…


The start-up team combines decades of experience in molecular and processing technology in agro industry and is complemented with commercial business and financial backgrounds.

Dr. Peter C. Sijmons (founder, technology acquisition and strategy) has a long track record in plant biotechnology. After a PhD in plant physiology, he was one of the first science employees of Mogen in Leiden, now a Zeneca Subsidiary…

Henk-Jan de Ruiter MSc (co-founder, early stage development / finance) is involved in start-up and financing of innovative companies and public-private (real-estate) projects. He was manager of a seed-capital fund…

Sijmons will be the CEO during the start-up phase, but when the growth of CatchMabs requires additional expertise, a CEO with a strong business background will be attracted to strengthen the management team and Sijmons will transfer to another management position in CatchMabs. Tournois and De Ruiter are actively involved in the establishment of CatchMabs but will eventually transfer to a board position. A start-up team of scientists and technicians with relevant hands-on experience is already selected and will be available for CatchMabs on short notice…


Example: Management Team


Marketing

Who are your customers (segmentation)?

Who are your competitors and which substitutes exist?

How will you position your product?

How large is the market and what will be your market share?

Business system and organisation

The business system described the activities that need to be performed to deliver your product to the customers

Organisation: How are the responsibilities allocated? What characterises how you work together in your organisation (corporate culture)?

Realisation structure

How will you realise your business idea? Use work packages and milestones to visualise and to reduce risk.

How will the work packages and milestones change as the company grows?

-



CatchMabs will focus on R&D and the development of applications for the iMabs technology. Within the agro-industry it will be active in product development, marketing and sales. For other sectors these activities will be organized in spin-offs, joint-ventures or licensed partner companies.

CatchMabs will generate three forms of revenue:

• Bulk sales of iMabs for industrial applications kg quantities, production outsourced to third party manufacturers)

• Royalties related to the value of recovered products (depending onquality and stability of our iMabs, market price of the target product, etc)

• Licenses to sectors outside our core-business (pharma, chemical, etc.)


Example: Business System


Example: Business System



Example: Realization Structure



Risks

Be open about the risks you see.

What risks can threaten the success of your company?

How will you mitigate these risks?

Base case vs. best case scenarios

How will you survive and tackle a worst case scenario?

Financing

Cash-flow, profit/loss statements, balance sheets are a requirement.

Forecasts for the next 3-5 years

What is the financial requirement until break-even?

Where will this capital come from?

What does the deal for potential investors look like and how will investors realise their profits?

Appendices

-



Example: Financing


Our growth forecasts predict a break-even in the 4th operational year, with sales volume (excluding subsidies) reaching €2.4 million in year 4 and €13.8 million in year 5. Sales and gross margin can grow at a high rate as a result of royalty income on industrial applications and license fee income.

Net income is expected to reach €7.5 million in year 5. The founders have provided start-up equity of €140,000. An initial investment of €250,000 in equity and debt is planned from a launching customer, matched by the Biopartner investment fund. Combined with subsidies, this will suffice for the proof-of-concept for industrial applications that is based on our proprietary technology.

Once the technology is validated, venture capital will be attracted for product development and marketing activities into different industrial sectors. Already at this stage, the valuation of the company can be substantial, as is illustrated by comparable technology platforms, yielding a high ROI for the first investors.


Part 2: Check-lists and templates


Questions?


Thanks for listening!

XX Person, Company

www.xxxxxx.com; [email protected]+xx xxxx (office); + xx xxxx (cell)

http://www.inno-group.com/

mailto:[email protected]

Www.knowledge2innovation.eu From Research To Business Concept Assessing commercial potential and...

Documents

Transcript of Www.knowledge2innovation.eu From Research To Business Concept Assessing commercial potential and...