technology commercialization valuing the idea laura j. kilcrease [email protected] 6300...
TRANSCRIPT
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Technology Commercializatio
n “Valuing the
Idea”Laura J. [email protected] Bridgepoint Parkway
Building 1, Suite 500Austin, Texas 78730
(512) 795-5821
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Founding Director of the Austin Technology IncubatorATI dominant catalyst for Austin’s transition to a technology centerCorporate Experience: M&A for Fortune 500 CompaniesEntrepreneurial Experience: Instrumental in the launching of 120 Austin start-upsUnparalleled network
PeopleLaura Kilcrease
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Valuing The Idea
Valuing the Idea 1 - What technology gets the attention?
Valuing the Idea 2 - Can we make a business out of this?
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Valuing The Idea
What technology should get the attention?
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The Fundamental Problem of Technology Commercialization:
1. All technology is developed to satisfy a need (necessity really is the mother of invention).
2. The need the technology satisfies may not be one people are willing to pay for.
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It’s the market!
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Build a Commercialization ProcessThe Three Phases of Technology Commercialization
Information Gathering
Opportunity Analysis
Implementation
TechnologyAssessment
Licensing/
Startup
TechnologyIdentification
MarketAssessment
PreliminaryTechnology
Ranking
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Technology Ranking: Criteria
Technology Assessment: How does the technology compare to state of the art?
Market Opportunity: Is it a large, growing market with a current demand?
Stage of Technology: How imminent is the opportunity? How much development, regulatory approval is still required?
• ““Me Too”Me Too”• IncrementalIncremental• RevolutionaryRevolutionary
• ““Me Too”Me Too”• IncrementalIncremental• RevolutionaryRevolutionary
• WeakWeak• ModerateModerate• StrongStrong
• WeakWeak• ModerateModerate• StrongStrong
• EarlyEarly• MidMid• LateLate
• EarlyEarly• MidMid• LateLate
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Technology Assessment
“Me Too” Development : Follow-on technologies to the state of the art that represent little fundamental change. (Ex: Microsoft’s Internet Explorer)
Incremental Improvement: Technology that represents a next logical step in the evolution of a product or process. (Ex: The Pentium processor from Intel)
Revolutionary Breakthrough: A new - often unforeseen - approach representing a quantum leap beyond conventional technologies. (Ex: The Integrated Circuit)
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Market OpportunityFactors Affecting the “Strength” of a market:
Size• For substantial financial investment, needs to be
$500M+
Expected growth over next 5-10 years• Better be positive (No buggy whip technologies)
Potential Customer Base• Be wary of something that only the government
will buy
Market Share Distribution/Competitive Environment• You’re not likely to join the “Big 3” in automaking
or semiconductor equipment manufacturing• More on this later...
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Stage of Technology
Time to Market (numbers vary by industry):Late: <18 monthsMid: 18 months - 36 monthsEarly: >3 years
Not all hurdles to market entry are technological:
Regulatory approval (EPA, FDA, OSHA)Industry Certification
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Technology Ranking: Matrix Diagram
Prioritize: Focus on technologies with best chances of success
Late Stage
Mid Stage
Early Stage
Mar
ket
Mar
ket
Technology
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The Case to CommercializeThe University/Laboratory/Institute’s Perspective
Market potential for the technologyMarket may be identified by only the technologist
Presence of an industry partnerMore common: License to an established companyLess common: License to a start-up
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The Case to CommercializeDrawbacks to licensing to a start-up
Less cash for up-front feesEquity is an option, but not all institutions can take an equity stake in a start-up
Much higher business riskLess experience (generally) in working with an institution’s licensing group
Licenses to start-ups can - and do - work, but it is often a long and difficult process »»
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Valuing the Idea 2
Can we make a business out of this?
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Can We Make a Business...
Do we have the pieces?Business acumenProduct development &
manufacturing competencies Technology licenses
Is it a business or just a product?Is the market appropriate for a start-up?
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All the Pieces 1Two views of what it takes to start a company
1) The Technology2) Personnel
(Technical)3) The Market4) Personnel
(Business)
1) Personnel (Business)
2) Personnel (Technical)
3) The Market4) The Technology
The Technologist The Venture Capitalist
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All the Pieces 1, (Cont.)
“I invest in people, not ideas.”
- Arthur Rock, famed venture capitalist who backed Intel and Apple Computer
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All the Pieces 1, Summary: What does a VC value?
Business modelAlliance partnersCustomersPeopleTechnology
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All the Pieces 1, Summary:So it’s not just the technology!
Technology has a lower value than the people running the company
How experienced are they?Do they already have a customer?
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All the Pieces 1, Summary:Risk vs. Value of Investment
Technology People Customers AlliancePartners
BusinessModel
Risk Value
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All the Pieces 2
Two central questions that have to be answered for any investor, major customer or business partner:
1) Can you make it?2) Can you sell it?
Each is equally important!
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All the Pieces 3
All that being said…You can’t have a technology company without technology
Well-prepared licensing agreementsProtection for existing corporate Intellectual Property
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Industry/Competitive Analysis
Direct Competitors
CustomersSuppliers
NewEntrants
SubstitutesTaken from: Michael Porter Competitive Strategy
Taken from: Michael Porter Competitive Strategy
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Industry/Competitive Analysis 2Examples of company threats
Wal-Mart: High Customer power relative to its suppliersIntel: High Supplier power relative to the computer manufacturersMicrosoft’s Internet Explorer: New Entrant threat in the Browser warsCoca-Cola: High threat of product Substitution
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Triton Ventures, LLC
Triton Ventures is an Austin, Texas-based venture capital fund specializing in high technology spin-
off companies and other promising startups.
Triton Ventures, LLC
6801 N. Capital of Texas Highway
Building 2, Suite 225
Austin, Texas 78731 USA
http://www.tritonventures.com