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corporate R&D

5 Tips For Finding the Right Industry Partner

By | collaboration, corporate R&D, open innovation, tech transfer | No Comments
Date: November 07, 2016 Posted by: Elysia Cooper In:Tips for Startups

We know you don’t need convincing about the benefits of industry collaboration, so it’s less a question of if, and rather more about how to find the right partner and negotiate a good deal. In terms of teeing things up and starting the dialogue, here are five important things to do that can help you get there more efficiently: 

Map Your Gaps

For a partnership between and early-stage technology company and an industry partner to really pay off, it needs to work for both sides. With financial investors, the goal is fairly straight forward: they put x money in and seek x in return via trade, sale, or IPO. But prospective industry partners, it is a strategic interest; with the goal of using your technology in their products for the markets they serve. 

First, do yourselves a favor and do a real gap analysis to figure out what it is that you need that a partner can bring to the table directly. For example, work out the broad areas of your development plan. Strategic partners want to know the development plan e.g., the purchase of equipment, hiring consultants or funding a lease, etc. There is a chance the partner can provide these directly and get to you faster than raising money and procuring. You also get things that are tough to acquire, i.e., first customers, regulatory knowledge, scale-up insights and so forth. Below is a link to an example of a one-page results summary for an H2 storage technology company. 

Think (and write) Like a Tech Scout 

Tech scouts are bombarded with technology offerings and exciting new inventions. Cut through the noise by doing the following:

Explain product’s value proposition, the needs it fills, and what it replaces in the market
The most effective way to get tech scouts attention is to give them specific examples of how you improve on existing market solutions. Use an attention grabber – a simple statement that impresses and supports why your technology/company deserves a deeper look. Within the constraints of non-confidential information, don’t be afraid to get very technical about what makes your technology so good, and how it’s different.

Technology description
Clearly state the development stage – proof-of concept, lab results, market-ready, and so forth. Don’t forget to mention what markets are you targeting and how large they are. It’s good to mention the advantages your technology has over the status quo and competitors. Note regulatory requirements to be met, if any, to bring your technology to market. State achieved milestones nice and loud, including any funding or awards received and any important publications – they are great proof of your commitment and help validate your concept and business model. 

Make your collaboration goal nice and clear
Finding the right industry partner for an emerging technology company is much more like dating than finding VC money, and don’t forget why: prospective industry partners are interested in long-term strategic benefits from the technology. Make sure they really know what’s so great about what you have, and what you want from an industry partner.

You can talk about the funding you’re looking for, but unless you connect it to development tasks so that a tech scout can understand it – you’re missing a huge opportunity. Keep the collaboration goal simple to reflect what your want to achieve from the partnership – look at the gap analysis you did, e.g., seeking a partner to test integration of your product or material into finished good.

Limit your text
Be merciless with editing text: make your message lean and mean – and get it on one page – okay maybe two. No one has the time to read through lots of text – especially if they’re not yet sure about the potential fit. Stick to bullet points whenever possible (and not six lines long!), and make liberal use of tables, graphs and images.

Compile a Potential Partner List

Most startups can produce an overwhelmingly long list in 20 minutes; the trick is to put those companies in order of likeliness of a fit. To do this, take some time and research their websites. It’s not just hard factors like areas of interests, targeted markets, key innovation resources, but also their vision and culture. See where they have research relationships, or from where they have licensed in technology. It will not only be easier to collaborate with people who share your values, but you might also avoid potential misunderstandings.

Protect Your IP

Trust is a very important part of every successful partnership, but at the same time you need to make sure that your IP is properly protected. Never disclose any sensitive information before signing an NDA. If you’re affiliated with an institution, ask the Technology Transfer Office if they have a ready-to-go form or download our free form of mutual (two-way) NDA to be used with prospective partners.

Reach Out Strategically

Tech scouts come in all stripes, but they are often very hard to get through. Use any common point you have, shared contacts via LinkedIn, industry associations, academic connections and so forth.

When a partnership has been launched regular meetings should be scheduled to allow strong two-way communication between you and your industry partner. Follow-ups and feedback is a best way to avoid failure of the partnership you spent so much time establishing. Any questions? Just drop us a note

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TAM, SAM, SOM – Why Addressing The Market Needs More Than An Envelope Stamp

By | corporate R&D, open innovation, tech scouts, tech watch | No Comments
Date: August 31, 2016 Posted by: Jon In:Tips for Institutions

 

Figuring how big the market is for your invention or new product idea can go from beguilingly clear to painfully opaque. There is a lot written about this topic, by Googling “addressable market” roughly 500k hits appear that range from very algebra-laden academic studies to rules-of-thumb with terse charts. In this discussion, we won’t be giving you a one-size fits all solution, but it will help you to break it down and make the assessment relevant for what you are trying to do.

ADDRESSABLE MARKETS

Total addressable market (TAM) is bigger than served (SAM).

The total addressable market is the potential sales revenue that would come from satisfying 100% of market demand for a product or service. In most cases it’s not that hard to think about and work out, i.e., the combined revenue of all firms selling solutions into that market. However, there are exceptions of very disruptive innovation:

  1. The market can expand significantly, and in the extreme;

  2. The market itself is created.

Uber is a great example of significantly expanding the market, where the TAM was greater than the value of taxi rides because the app also fosters usage where a taxi would not be in the running. Sony’s Walkman product is a case of the latter point of disruptive innovation. Introduced in the late 70s, the Walkman did not replace an existing portable device of pre-selected music, so TAM was not defined or constrained by existing products. This concept also goes the other way: TAMs shrink when innovation causes product or service to be included in another solution e.g., standalone, hand held GPS devices.

SAM, served addressable market, is amount of revenue actually being earned by one or more defined suppliers. The SOM, or share of market, is the amount in revenue or percentage of the total, help by a supplier or set of suppliers. Instead of thinking about other players, focus on the business you are trying to plan, your SAM and SOM.

TAM-SAM-SOM_blog.png

CALCULATING YOUR MARKETS

Try to calculate TAM from the bottom up, i.e., count values of the participants to come up with the total, and check from top down, with some other market estimate. For example, if you plan to sell a solution that enables vaccine to survive without refrigeration, count up vaccine sales by manufacturer. Sometimes this is in one and the same document, such as in an equity analyst’s report. Here is a checklist from an excellent report that Credit Suisse did on TAM. [link to CS TAM p.26]

For a much more in-depth review of TAM, covering base rates, Bass models, ecosystems and diffusion rates, try this report from Credit Suisse [link to CS TAM report]

Figuring out how much of the addressable market (SAM) you can serve is dependent on your capacity to produce, deliver and displace existing products due to your value proposition.

Even if you have the world’s most airtight patent, you still need to produce what you want to sell and get it to customers. While you could spend an unlimited amount produce and distribute your product, you would not do so as a business unless you expected to reach a point when your costs left some margin. This means that there are constraints and the constraints here can include: productive capacity, distribution, technology diffusion rates, and relative value proposition of your offering.

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WHERE DID THE IDEA FOR SEEDSPRINT COME FROM?

By | corporate R&D, open innovation | No Comments

With more than 25 years of private market M&A, capital-raising and other corporate finance projects, typically on behalf of strategic investors; my firm developed a practice called outventuring. Outventuring allows clients to realize value from technology projects and internal services they have developed that have become non-strategic to the developer, but could significant value for others, outside the firm.

Outventuring can’t help flawed technology, sloppily prepared IP, or products that have no imaginable demand. What outventuring can do is dramatically improve the fit between the project and its owner/operator. And, where outsourcing, is about capturing current value of an asset and ignoring the future value for others, outventuring goes after the opposite thing, i.e. the potential value from future activities.

Outventuring clients – the ones seeking to exit non-strategic corporate technologies and services and redeploy resources from non-strategic activities into strategic ones, finding the right partner had two economic benefits: (a) cash at closing and transfer of non-strategic expense, (b) development acceleration and therefore earlier receipt of royalties or other back-end payments. The other side got great benefits, too. They tended to be strategic investors rather than VC/PE funds – and you’ll see why in a second.

My team always got a kick out of the excitement on the part of incoming partners as they got to know the target project. While it was an exit situation for our client, because the project had become non-strategic, it was anything but that for the investing party. For them, the outventuring project was a like a time machine, and brought the train loaded with relevant IP, know-how and market potential back into the station. Beyond being interested in the target, the newcomers’ involvement had a turbo-charging effect on the target that came from the existing, specialized that could be put to work right away for the target technology. It is those specialized resources, e.g., scale-up know-how, ecosystem knowledge, access to first customers, and so forth, that really drove value.

We tried for a long time to come up with a way to deploy outventuring’s power in reverse for clients, and do in-venturing. I never saw a model that I liked. The technology search is well populated by firms with a lot of talented (and expensive) technical and scientific talent that I thought made no sense to recruit.

seedsprint was born when we figured out our clients’ tech scouts didn’t have enough time to comb through every potential collaboration, licensing or acquisition opportunity and wanted to find efficient ways to clear projects for due diligence.