Transcript Lecture 040207

Agenda






Class schedule update & Presentation Forums (5’)
Commercialization Checklist (20’)
Team prep and updates: Commercialization Plan &
Customer Value Proposition (30’)
Preparation and arrangements for Bill Newman Visit (5’)
Revenue and Cost Projection- Example (30’)
Team work time- Questions for Bill Newman, revenue
and cost projections (30’)
Schedule Update






Only 7 more class meetings till presentations and
competition!!
Teams meet with Bill Newman (NW Tech Ventures) next
Wed, April 4th
Teams present at SWOT (Corvallis business leader
forum) on Tue, April 24th
Commercialization plans judged by Portland Business
Round Table panel on Wed, April 25th
Written commercialization plans due- Mon, April 30th
Top two commercialization teams present at AEP
Signature event in Portland- Thu, May 3rd ($$$)
Technology Commercialization
Checklist
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Patent or IP selection
Understanding of IP scope, status, limitations
First Pass Market Survey
Commercialization option brainstorming
Product form and commercialization approach selection
Customer Value Proposition
Revenue, Staffing & Costs- Second Pass Market Survey
Startup Timeline
Cash Flow, Funding Needs, and Break even point
Funding Strategy
Next Steps and Outstanding Issues
Team Breakout Session

From your work to date, spend 10’ in your group preparing responses to these
questions to the best of your ability (and be ready to defend your answers!). If
you don’t know, explain follow up work or research you have planned to get
the answers









The exact form of the product or service you will sell
Your exact position in the value chain and your competitors
Why your product or service is superior to your competitors
Your choice of a start-up and licensing approach and why
If multiple products are planned, which will be pursued first and why
Your exact customer profile (consumer or business)
Specify the problem solved that your customer will pay for
Estimate how much your customer will pay for this product or service and
why
Each team gets 5’ to present their answers and respond to questions
Venture Capital Visit (Wed)

Bill Newman is a managing partner of NW Tech Ventures
“ NTV’s charter is to provide early-stage funding, management
assistance, and business development support for new
companies. NTV’s priority is to provide the early-stage capital to
commercialize technology developed at Oregon’s public and
private universities and research institutions - medical, public
funded, and corporate.”
“ NTV is a $14 million fund addressing the “capital gap” between
conventional early-stage venture funds and research discoveries
and technologies. Our goal is to create and build businesses
and commercialize the knowledge created in Oregon’s scientific
and research institutions. “
Preparations for Bill’s visit

Verify your assigned time for Bill. Meeting place is Weatherford Hall Library on 5th
floor. Take elevator underneath the arch to 5th floor.

Please prepare a 150-200 word executive summary for Bill describing the
technology, your market research completed so far and details on product form,
commercialization option, and customer value proposition:







The exact form of the product or service you will sell
Your exact position in the value chain and your competitors
Your choice of a start-up and licensing approach and why
If multiple products are planned, which will be pursued first and why
Your exact customer profile (consumer or business)
Specify the problem solved that your customer will pay for
Estimate how much your customer will pay for this product or service and why

Also prepare specific questions for him about your next steps in developing your
commercialization plan

Also bring additional work you’ve done from my feedback or recommendations of
your mentors.
Bill Newman Discussions
All discussions will be held in the Weatherford Library- 5th floor,
access by elevator under the arch






2:00-2:30 Photonic Funnel
2:30-3:00 Novel Tablet
3:00-3:30 Avian Flu Antibodies
3:30-4:00 Printable Electronics
4:00-4:30 BREAK
4:30-5:00 Expander/Compressor
Next Step in Commercialization Plans:
Estimating Revenue and Start Up Costs
The following assumes the following information has been
collected and decisions have been made on
a) Overall commercialization approach,
b) Market research and product positioning
c) Product or service definition, and potential customer cost
d) Position in the value chain- suppliers and customers are known
Revenue and Cost Projections
Various financial tools are available for tracking costs for a start up.
For simplicity, we suggest a cash flow model. A simple tool for this
method is available from the Small Business Administration at
http://www.sba.gov/library/cfbudget.xls
To use this tool, you will need estimates on the following
Step 1: Projected revenue vs time
Step 2: Projected development and start up costs
Step 3: Projected manufacturing costs vs time
Revenue/Sales ProjectionsExample

“Nano-reactor Systems” is a start-up company which plans to manufacture
microchannel reactors for pharmaceutical applications.

Market research has shown that there are approximately 50 tools of similar
function are purchased worldwide each year.

An analysis of the pharmaceutical companies costs, suggests that they would
still realize a quick return on their investment if the reactors were priced at
$800K to $1M each

Market research has shown that beneficial new tooling in this industry is
adopted by these manufacturers, typically (Yr 1=10%, Yr 2=20%, Yr 3= 25%)

How would you generate a revenue projection from these data?
Development and Start Up
Costs- Example
•
Nano-reactor Systems has developed a “bench top” microchannel reactor but needs
lab space, additional staff, materials, and outside services to develop a prototype
system to demonstrate to potential customers
•
Here are some of the detailed development costs to develop a prototype system in
the first year
•
•
•
•
•
•
•
In the latter part of the year, they must also begin a sales and advertising effort with
the following costs
•
•
•
Materials- $500K
Operating supplies- $20K/mo
Wages: 2 development engineers@$75K/yr, CEO@$80K/yr
Rent/Utilities: $1000/month
Taxes, Insurance, Licenses: $5000/yr
Outside design services: $100K
Travel- $20K
Wages: Salesperson@$60K/yr
What would the development and start-up costs look like over the year?
Manufacturing Costs- Example

Once orders are received, Nano-reactor Systems believes they can manufacture up
to 3 reactors per year with their present staff for the following additional costs per
reactor

Materials and components- $200K

Shipping and transportation- $15K

Machining and design services- $20K

Licenses- $15K

Operating supplies- $30K

In addition to the costs above, for each additional 3 reactors per year, Nanoreactor Systems must increase its staffing and space with the following
additional costs



One additional manufacturing engineer@$70K
One manufacturing technician@ $40K/yr
From the revenue/sales projection, how would you calculate manufacturing
costs for the first several years?
Team Work Session

Discuss with your team where you are on Tech
Commercialization Checklist




Be realistic- make necessary decisions and complete
research before moving to next steps
Complete any discussions on product definition or
commercialization approach
Assign additional market research needed
In the remaining class time and out of class before
Wednesday, please


Prepare summaries and questions for Bill Newman
Begin work on Revenue & Sales Projections