intro to tech companies & business creation
DESCRIPTION
Speaker: Raphael Ronen, Commercialization Manager, The Innovations Group (TIG) Within universities and research institutions there are no shortage of good ideas; but not all of those ideas make commercial sense. In this lecture, we explore what makes a technology worthwhile commercializing. We also touch on some of the lessons we can take from the university setting and apply to any start-up technology. Part of the CIBC Presents Entrepreneurship 101 lecture series: http://www.marsdd.com/ent101TRANSCRIPT
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` Introduction to technology commercialization
Presented by:
Raphael Ronen Commercialization Manager -The Innovations Group University of Toronto
16 October 2009
“At TIG, we bring together researchers and businesses to capitalize on the ideas developed at the University of Toronto and the hospitals affiliated with the university, where more than $2 million worth of research is conducted daily. . .”
-Tim McTiernan
Idea Research or ??
Commercial Potential?
Technology D
evelopment
Business
Developm
ent Value established
-financing
-licensing
Tech Transfer
• Assess
• Protect (patent) • Funding • Business Plan • Marketing
• License / Start-up
Commercial Potential?
Business Development
Value established
-financing
-licensing
Outline
• Assessment – Understand your product/company’s
strengths/limitations • Lessons learned from commercializing
from an academic armchair – Start-up versus License – Funding/Financing – Ownership
Technology Commercialization Evaluation
• Intellectual Property Factors • Technology Factors • Market Factors • Team Factors
• Impact
Intellectual Property Background
• Patents . . . also copyright, trade secrets, trademarks
• Principle: – Reward to disclose – 20 year monopoly where
right to exclude everyone else – Greater good: Everyone can practice
afterwards
Why Patent
Competitive Advantage
Invest in R&D – Recoup costs
• Development Costs – Pharma: $500M-$1.2B – Device: $50M-$160M
• Development Time – Therapeutic: 8-15 years – Device: 3-6 years
Patent
R&D / Approvals
First Sale
Revenue
Patent expiry
Patent Factor Evaluation
• Invention has protectable IP – Novelty (i.e. new and not disclosed) – Non-obviousness – Utility
• There is freedom to practice the IP • IP is defensible and infringement
detectable
Patent costs and timelines
Abandon
Provisional Patent
1 yr
$2-4k
PCT 18 months
$10-12k
EP
US
CAN
JP
$$ $25k
+$50k
Office Actions
Issuance
Technology Commercialization Evaluation
• Intellectual Property Factors • Technology Factors • Market Factors • Team Factors • Impact
Technology Factors
• Scientific basis understood • Scientific data is thorough • Technology is well developed • Team has product development capabilities
IS IT REAL – WILL IT WORK?
Value in developed technology
Micro-CT System
• Scientific basis understood • Scientific data is thorough • Technology is well developed • Team has product development
capabilities
Technology Commercialization Evaluation
• Intellectual Property Factors • Technology Factors • Market Factors • Team Factors
• Impact
Market Factors • Need is well defined • Product addresses the need • Market is large and growing • Competition and barriers are low • Time to market is short • Profit margin of product is high • Market receptors can be easily identified • Investment or funding can be easily obtained
Example • Need is well defined • Product addresses the
need • Market is large and
growing • Competition and barriers
are low • Time to market is short • Profit margin of product
is high • Market receptors can be
easily identified • Investment or funding
can be easily obtained
Technology Commercialization Evaluation
• Intellectual Property Factors • Technology Factors • Market Factors • Team Factors • Impact
Rectal Wall
Heating Pattern
Thermal Damage Boundary
Bladder
Multi-element Transducer
Urethra
Cooling Balloon
Need is well defined ? Product addresses the
need Market is large and
growing Competition and barriers
are low Time to market is short Profit margin of product is
high Market receptors can be
easily identified Investment or funding can
be easily obtained
Technology Commercialization Evaluation
• Intellectual Property Factors • Technology Factors • Market Factors • Team Factors
• Impact
Technology Commercialization Evaluation
• Intellectual Property Factors • Technology Factors • Market Factors • Team Factors
• Impact
Team Factors
• Team has product development capabilities
• Team has time and is willing to support • Team has realistic expectations • Team has commercialization experience
Team Factors
• Team has product development capabilities
• Team has time and is willing to support • Team has realistic expectations • Team has commercialization experience • Team is reasonable, ethical, can work well
together and deliver
Technology Commercialization Evaluation
• Intellectual Property Factors
• Technology Factors • Market Factors • Team Factors
Understand your strengths, understand your weaknesses and plan accordingly
Idea
Commercial Potential?
License versus Spin-Off
License
• “Sell” technology to an established company
• Return: – royalty paid based upon sales attributable to IP (a
percentage of net sales) – Repayment of patent costs
– Milestones – if license is exclusive then minimum royalties typically apply as well as development milestones (especially in drug development.)
Spin-Off
• Build: – Team – Product – Sales – Financing
• Return: – IPO – Acquired – Dividends
Create a new company
Licensing Considerations
• Good Licensee fit: Can Leverage development, sales and marketing capabilities of an established company
• Add-on technology • Time and risk constrictions
• Willing to pass control (and responsibility) of your technology
• Lack of suitable receptor capacity (licensee) for IP • Platform technology with solid IP potential for
additional synergistic IP • Potential to be a multi-million dollar public company • Committed team with long term perspective • Funding and management can be attracted (team) • Potential return
Spin-Off Considerations
• Belief that you can advance the technology better than another company
• Spin-Off’s are time consuming, risky, and take up a lot of time that may or may not, be better spent on licensing the IP
• Have potential for big upside under right circumstances.
• Decision to do spin-off needs careful consideration and commitment from all parties involved.
Spin-off Company
• Some companies and sectors not well suited to generating new lines of business and divisions; others have sophisticated in-licensing experience
• Large companies sometimes look to M&A (Mergers and Acquisitions) as an alternative.
• Companies will pay premium for small companies that are synergistic with their business mission.
Industry Need
It takes 10 times more time to manage a spin-off than it does a licensing transaction
License vs. Start-up Summary License
Good fit with company Add on
Less effort In hands of experienced people Chance of success
Less control Lower potential returns
Start-Up
Platform technology No good licensee
Under your control Higher potential returns
Time consuming Risk of failure
Early stage funding • Government (Check with your TTO)
– NSERC I2I – CIHR POP – OCE market readiness – HTX – Accelerator Funds – IRAP – Next Generation of Jobs (MRI)
• 3 F’s (friends, family and fools) • Angel / VC funds
Returns to the financiers
• Government – Job creation – Training of HQP – Return to region
• Angel / VC – Multiples of their
investment (5-10x) – Tangible exit
• Money • Tax credits
• Money • Guidance • Contacts
GIFT
NEGOTIATION
Ownership and rewards Who owns the intellectual property? • If you work for a company Company
– Might get a reward recognition-$1000 per patent • If you just left a company/university Be careful
– Developed (or appeared to be developed) from work done while at the company ~company owns
– Agreements (confidentiality, non-competition) • If you work for a university varied
– You own / University owns / Jointly own (talk to your TTO) – Reward: 33%-75% of the revenue
• If you work for a university on research funded by a company company probably has some rights
Clear ownership is needed before investors will fund!
• Pay to Protect IP – patents, trademarks, copyrights. • Assist in the developing of Business Plans and
commercialization strategy. • Assist in getting additional grant funding to further
develop IP (sometimes mandatory that the technology transfer office is involved NSERC –I2I).
• Create start-up company when appropriate vehicle for commercialization.
• Assist in raising financing for company. • Negotiate agreements with licensees.
What TTOs do
• Overestimating the science/technology and one’s capabilities – Lack of realism regarding the actual stage of development of the
science/technology (“the next Google”) – Someone else is probably developing the same technology in
their basement
• Poor understanding of the customer and his/her value chain – Proactive ignorance of challenges involved in developing and
realizing value
• Disconnect between business and the science – Underweighting of importance of demonstrating progressive
commercial achievement
Recurring Pitfalls and Themes
Questions