No Slide Title technology start-up/spin-out companies
the business plan
raising finance
start-up finance seed capital = the $ capital needed to “seed” a new company or business,
early-stage funding = investment needed for a new company to survive the
“early” phase of growth and initial product development (typ. 0 – 5 yrs)
how does it work? - an investor’s decision to provide seed or early-stage capital is usually
based on their assessment of the IP and the business plan and hence the
“opportunity”
- IP position and business plan must both therefore be strong
- there may not be an existing product or service in the market with which
to compare
who might invest? - public innovation funds, banks, business angels, venture capital firms
(VCs), larger companies
innovation funds
funds are usually in the form of “soft” loans from the government
(i.e. no interest, no repayment, but they do expect results!)
directed at existing small and medium sized companies (SMEs) and
new start-ups
(typically 3 – 12 months, < $50000)
funds mostly provided for proof-of-principle demonstrator of a new
product or process and/or market research
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terms from 1 to 5 years typically
loan usually requires collateral “guarantee”
(often the directors/founders of a start-up will offer their
personal property, e.g. house/apartment as guarantee)
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• seasoned business professionals/individuals
• have money to invest in exchange for a “share” in the company
(usually 15 – 25%)
• typical angel will invest between $20k - $1M
• can have more than one angel investor, in a consortium
• angels get their initial investment back plus more when they sell
their share later, when the business has grown and is worth more
• unlike a bank loan, if the company fails, the angels loose their
money – which is why angels take a close interest in how the
company is run!
• VC’s are professional investment firms specialised in funding high-
risk ventures, especially early-stage high-tech companies
• investment typically at least $5M and upwards
• usually take a controlling/majority stake (51%+ of the shares) and
put a director on the board
• typically want a return on investment in 5 years and will drive the
company to achieve a trade sale (sell the company to another
company) or an IPO (initial public share offering, i.e. floatation on
the stock exchange)
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like independent VC funds or banks
• will invest in early-stage companies of interest to them e.g. which
have relevant technology
• exit strategy (how they get their money back) depends on the
specific case, but could be by:
• trade sale (sell the company to another company),
• IPO (floatation on the stock exchange),
• retain the company because it has become a very profitable
business!
innova tion fund
sale
time
value
of
business
* start-up companies often avoid taking bank loans because of the need to make regular cash repayments
the investor’s decision to provide capital is usually
based on their assessment of the IP and the
business plan and hence the “opportunity”
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business plan
what is it? • a written and/or slide-show presentation of your commercial idea
for a new business
what’s it used for? • to attract the attention of potential investors
• as a reference document to help keep the company focussed in its
early stages
the opportunity
the market potential
the investment required
the background & history of the company
A typed & bound business plan should have a cover page, an executive summary, and appendices of supporting data.
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• background on the business sector the company will operate in
• (e.g. medical diagnostics, tests for HIV)
• current practice in that sector
• (e.g. blood test at laboratory)
• limitations of the current practice
• (e.g. inconvenient, slow, expensive)
• (e.g. saliva test at clinic with result in 5 minutes)
You should not describe your new product/process here, only what it will do
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new product/process or service offering
o detailed description of the form and function of the new product,
process or service which the business will develop
• storyboards and/or graphics and pictures will help sell the product idea
• emphasise advantages compared to existing technology or practice
• “new-to-the-world” products must be clearly explained
• considers the product lifecycle and future product roll-out
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market potential
o describes the nature and estimated market size for the new
product, and who the main competitors are
• the target customers
• market share the new company expects to achieve with time
• (e.g. 1% in 1yr, 5% in 2 yrs, 50% …. etc.)
• and how?
• (better product, lower price, better service offering , new-to-the-world product etc …)
• how many units per annum and at what price the product will sell at
• consider the product lifecycle, and future product launches if appropriate
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technology and IP position
o describes the underlying science and technology of the new
product, and the IP that protects it
• basic scientific and technology principles
• existing IP coverage and ownership, and any licenses needed
• the company R&D strategy
• the company IP strategy
• consider different forms of IP for corporate and product “branding”, such as
trademarks (e.g. EZee-HIVee test)
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investment required
o an estimate of the cash investment the business requires for early
stage funding, and the sources and timing for that funding
• cash-flow projection table and graph (usually for at least 3 years ahead)
• indicates required funding against company’s objective (e.g. to completion
of NPD cycle, to first product launch, to trade sale or IPO, etc.)
the cash flow projection should cover business costs over the required period,
including salaries, capital equipment, R&D & IP costs, overheads, NPD
costs, manufacturing costs, sales & marketing etc
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• company name, legal status (e.g. d.o.o.) and registered address
• share holdings (who owns shares) and names of any other investors
• mission statement
• names and CVs of founders, directors and principle employees and
scientific advisors
• names and addresses of the company’s bank, accountant, & lawyers
• any other relevant information
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team assignment (mini-project)
• your team is forming a high-tech start-up company based on at least one of
your four patents
• present the slideshow as if to “potential investors”,
• each team member is responsible for a different part of the plan and
should expect to present slides for about 5 minutes,
• be prepared to answer questions, as a team
• presentations will be held in January 2011
• each team member will also need to submit their own short report on
their component of the business plan. Reports to be submitted on the
day of the presentations (600-1000 words)
• The presentations and reports for the mini-projects are part of the
formal examination for tm&i, and are compulsory.
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