SOFTWARE BEST PRACTICES
Case study: a software enabled spin-off | Folkert Teernstra
TNO
TNO knowledge creation and valorisation:
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Public legal entity created by law
Over 3000 employees (in public part of TNO)
Active in five core-area’s
TNO
Some examples of successful TNO software spin-offs in the past:
TNO DIANA
Displacement Analysis: High grade finite element analysis and simulation
environment
TASS International
Automotive safety products of TNO (strategic participation)
2013 merger of five independent TNO spin-offs / licensees
200 employees in 12 countries, yearly turnover of 20 Meuro
Prime Data
Recent spin-off (now joint venture)
Big Data applications and processing services
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TNO
Recent spin-off: Biodentify BV
TNO Diana, Tass international and PrimeData were pure software spin-offs
that sell or license software products to the market
Biodentify is enabled by TNO software
Only results of processing to be supplied to end-users
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TNO
The Idea What is the invention?
How can we protect it?
How can we realize the invention?
The Team Available & required competences
The Context Who is the Customer?
What is the structure of the market?
Which place in “valuechain”?
The Money What capital is required for first viable product ?
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TNO
The Idea
The idea: exploration of shale gas/oil reservoirs on the earthsurface
Certain tell-tale hydrocarbons migrate over time to the surface
Creating a change in the surface microbiological ecosystem
Microbes can be detected in surface soil samples
Problem: VERY low signal and microbes also depending on other soil
parameters, e.g. acidity, moisture level and presence of oxygen.
Solution: DNA-pattern recognition method and software developed by the
TNO microbiology department for human intestinal flora.
Finding so called “sweet spots” avoiding costly “grid drillings”
Patent(s) pending and know how protection
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TNO
The idea
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Micro-seepage
Soil-samples
TNO
The Team
Having the right people is key issue for start up:
Mix of competences available:
Commercial (former TNO department head)
Entrepreneurial (CEO outsider, VC provided)
Competences required:
Technical lab facilities to costly for start-up
TNO “wet” microbiology services provided under SLA
Scaling-up facilitated
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TNO
The Context
Having the right people is key issue for start-up:
Target customers:
Exploration companies
Oil & Gas Service Companies
Problem:
Current low energy prices due to geopolitics
Temporarily decreased demand for exploration technology
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TNO
The Money: role of TNO Companies
Formally establishing the company:
Ownership of shares, often minor amount for key personnel
Providing office spaces
Providing basic legal and business support to spin-off (not provided by
TNO Public)
Approaching outside VC’s, finding out requirements of VC, creating the
right circumstances for a “soft landing”
VC stepped in !
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TNO
The Money: some challenges…..
TNO Companies/VC wishes to have ownership of all IP(patent/software)
Transfer of IP not always possible:
Requires up front payment, valuation issues
Licensor might have other interests
Problems here: software developed by TNO microbiology dept. needing
this software for variety of other applications
Did not want to disclose source code
Software needs to be operated by specialised microbiologist
Solution: Services to be provided by TNO under SLA
Back up: software to be made available to spin-off by means of third party
hosted SaaS service (software as as a service)
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TNO
The Money: some challenges…..(continued)
Solution: modelling services to be provided by TNO under SLA
Results of processing (models) owned by spin-off
Back up: software to be made available to spin-off by means of third party
hosted SaaS service (software as a service)
Patents licensed for specific Field of Use.
Access to methodology and software ensured to company and VC
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TNO
The Money: RoI for TNO
The spin-off company to pay license fees in conformity with market prices
Valuation by benchmarking, cost-based approach and market-based
approach (cost of other means of exploration)
Microbiological analysis performed against normal fees, under SLA
Profit sharing with TNO Companies on final sale of shares
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THANK YOU FOR YOUR ATTENTION