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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
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
Valuing The Idea
Valuing the Idea 1 - What technology gets the attention?
Valuing the Idea 2 - Can we make a business out of this?
Valuing The Idea
What technology should get the attention?
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.
It’s the market!
Build a Commercialization ProcessThe Three Phases of Technology Commercialization
Information Gathering
Opportunity Analysis
Implementation
TechnologyAssessment
Licensing/
Startup
TechnologyIdentification
MarketAssessment
PreliminaryTechnology
Ranking
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
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)
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...
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
Technology Ranking: Matrix Diagram
Prioritize: Focus on technologies with best chances of success
Late Stage
Mid Stage
Early Stage
Mar
ket
Mar
ket
Technology
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
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 »»
Valuing the Idea 2
Can we make a business out of this?
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?
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
All the Pieces 1, (Cont.)
“I invest in people, not ideas.”
- Arthur Rock, famed venture capitalist who backed Intel and Apple Computer
All the Pieces 1, Summary: What does a VC value?
Business modelAlliance partnersCustomersPeopleTechnology
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?
All the Pieces 1, Summary:Risk vs. Value of Investment
Technology People Customers AlliancePartners
BusinessModel
Risk Value
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!
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
Industry/Competitive Analysis
Direct Competitors
CustomersSuppliers
NewEntrants
SubstitutesTaken from: Michael Porter Competitive Strategy
Taken from: Michael Porter Competitive Strategy
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
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