05-31am_1045_RohitShukla_Commercialization

The Long and WindingThe Long and Winding Road

Key Factors in Commercialization

14th Annual NIH SBIR/STTR Conference14 Annual NIH SBIR/STTR ConferenceLouisville, Kentucky

May 31, 2012

Rohit ShuklaLarta Institute

2

Mission: Larta InstituteMission: Larta Institute

To vastly improve the transition of scientific and technologicalscientific and technological

breakthroughs from the laboratory to the marketplacemarketplace

3

Larta Institute Overview

• Founded in 1993Founded in 1993• Non-profit, private corporationBackground

• Innovation Policy: Thought Leadership• Personalized One-on-One Mentoring• Industry Feedback• Strategy Development and

Our Services

Strategy Development and Implementation

• Strategic Introductions• Interactive Webinars on issues across• Interactive Webinars on issues across

the spectrum of commercialization

4

An “Innovation Intermediary”yLarta connects emerging companies across all sectors to

th i ht l it l dthe right people, capital and resources.

5

Client Engagement LevelsEnd to End Services across the Innovation Ecosystem

Governments and S&T Ministries

University & Research Institutes Hands-On Programs

Industry Alliances, Partnerships,

Funding & Virtual Networks

World BankWorld Bank

OECDOECD

Network T2 Consortium (US)

Network T2 Consortium (US)

Global: Canada, Japan, Korea,

Taiwan, Russia,

Global: Canada, Japan, Korea,

Taiwan, Russia,

Industry Advisory Board: 50+ Fortune

1000 technology scouts and

Industry Advisory Board: 50+ Fortune

1000 technology scouts and

Malaysia et al.Malaysia et al.

National Institutes of HealthNational Institutes of Health

Crown Research Institutes (NZ)

Crown Research Institutes (NZ)

Brazil, New Zealand, Malaysia, Finland,

Sweden and Australia

Brazil, New Zealand, Malaysia, Finland,

Sweden and Australia

scouts and executivesscouts and executives

T2 VC--Venture Capital for GlobalT2 VC--Venture

Capital for GlobalUS Dept. of AgricultureUS Dept. of Agriculture

National Science FoundationNational Science Foundation

National Science Foundation –

Partnerships for Innovation (PFI)

National Science Foundation –

Partnerships for Innovation (PFI) U.S: 300+ R&D-U.S: 300+ R&D-

Capital for Global Innovation

Finistere Partners

Capital for Global Innovation

Finistere Partners

Department of EnergyDepartment of Energy

TATRCTATRC

University of Zagreb (Croatia)

University of Zagreb (Croatia)

based companies in 50 states

based companies in 50 states VAI Global Platform:

Online social media community

VAI Global Platform: Online social media

community

6

A “Networked Organization”

E t N t kFinancial Networks

Expert Networks• Domain experts,

investors, and entrepreneurs

• Angels, VC, Corporate, Non-

traditional• Affiliated Seed

Venture Fund

Industry Networks• Advisory Boards

• Strategic partners

Global Networks• Global Bridge country network in N. America, Asia,

Europe and Middleg pto companies Europe and Middle

East

Larta Larta University Networks

Entrepreneur Networks

• Grantees from US

HubHub• Partnerships for Innovation

• Network T2

Federal Agencies (NIH, NSF, USDA,

DOE, etc.)

7

Client Programs

8

Larta’s Success MetricsLarta s Success Metrics

9

The Innovation Landscape: C fl d C t tConfluence and Context

• Multi disciplinary imperatives• Multi-disciplinary imperatives• The convergence of the sciences (look for adjacent

innovations)innovations)

• Global need for leadership• Common challenges: energy food health care• Common challenges: energy, food, health care

• Interdependence and interconnectednessScience/sector/markets; global technology development• Science/sector/markets; global technology development

• “Knowledge flows”: among and between researchers and “rainmakers”rainmakers

10© Larta Institute 2012

Commercialization isCommercialization is….

A Body Contact SportA Body Contact Sport


Commercialization is notCommercialization is not…

…a linear process from the lab to the marketplace.

So plan for unplanned opportunitiesSo, plan for unplanned opportunities and deviations from any “market plan”


Today’s reality… today’s opportunity

• The unpredictable is suddenly permanent– Non‐linear– IADDIADD– Movement toward open innovation, outsourced innovationinnovation

– Ease of entry• Scale up by allying and relying on others


Challenge for youg y

How to accelerate deployment ofHow to accelerate deployment of good innovations (whether incremental or otherwise)

• No such thing as “too early” (feedback• No such thing as too early (feedback, where do you sit, or can sit in the spectrum?)

R li d ’ f h di bl• Reality doesn’t favor the predictable: “stages”


The commercialization phenomenonphenomenon

• Is: the art of developing, mining and extending market t iti b d ti d i d f i lopportunities based on a core expertise derived from a single

discipline, or, increasingly, from multiple sources.

o Value directly related to innovations over current practice, current players and current expectations

• Is: a long and winding road that combines mindsets, assets and daring to achieve revenue, relevance and position in the marketplaceposition in the marketplace.

© Larta Institute 2012

15

Challenges faced by SBIR companies:M k t M MMarket, Manpower, Money

• High & intense capital needs to see a product from idea to g p pmarket.• In Life Sciences, unusually long development time (5-12 yrs) for

clinical evaluation and FDA approvalclinical evaluation and FDA approval• High potential burn rate for investment funds

• Multiple rounds; venture investors looking upstream

• Large player interest (buyers, partners) is often restricted to more developed innovations

• Data is key; outsourcing of innovations is a trendData is key; outsourcing of innovations is a trend• “Small company” syndrome: “founder-itis”

• What is “control?”• Recruiting managers, advisors, directors (not window-dressing)


Commercialization challenges for SBIR companies:companies:

What’s the business?• Commercialization and SBIR companiesp

– Grant funding versus strategic market entry– Eye on execution: focus on the core, what you CAN do

• Critical success factorsStrategic thinking and business model; consider alternate– Strategic thinking and business model; consider alternate business models and financing scenarios

– Commercialization roadmap; what customers buy and why; how d k it ll it k it (M k t d t di )do you make it, sell it, make money; exit (Market understanding)

– Identify partners early– Conceptualize, validate, iteratep , ,


Planning for success –knowing what it looks likeknowing what it looks like

• Early planning – even before you can deliver– What do you have? Core IP – freedom to operate,

lateral/derivative innovation? benefits to potential buyer? market alliances – with similar companies to achieve scale?alliances with similar companies to achieve scale?

– Consider trademarks – brand strategy– Become the “visible expert” – part of the dialogue (blogs, RSS

feeds etc )feeds, etc.)

• Web site – clean, clear, informative, the “pull” factorConstantly updated– Constantly updated

• Focus on the customer – requirements, needs, benefits


Some commercialization tips…1• Embed your product in existing customer use

k t t tor market structure- Where possible, focus on integration with, instead of

replacement of e isting prod ctreplacement of, existing product- Don’t over-focus on the “wow”, focus on the solution to

(a) the problem (cost/recurring cost, scale, ease of use, ( ) p ( gmargins, performance) faced by your customer (existing or potential)

- How will it be deployed? Build the model with variables- How will it be deployed? Build the model, with variables, discuss it with industry professionals/potential customers


Some commercialization tips 2Some commercialization tips…2

• Get comfortable with any regulatory and certification issues

- Know what you’re in for, seek consultations and support, clarity on pathway/s, choices

G t t ti l• Get protection early- Know your IP – prior art, trade secrets, trademark,

copyright, provisional filing, where is this heading?copyright, provisional filing, where is this heading? - Managing your IP “portfolio”


The People are paramount• Innovation is the direct consequence of the application of

minds and effort – people make it happenminds and effort people make it happen- Be open to innovative people

• Make explicit the roles of your advisorsy- Reach far and wide

• But it must be exciting, far-reaching, making an impact, even if smallsmall

• Invite (potential customers) into your circle – get their feedback no sales pressurefeedback, no sales pressure

• Keep your eyes peeled for fresh talent!- Social media (LinkedIn, Facebook)- Blogs (become the visible expert)


Patents & Sustainable Advantage• Patents are tacks in the road, more likely to slow competitors down

- Improve your odds of sustaining a “freedom to operate” (expensive to litigate)

• Seek to patent innovative integration of technologies already in the public domain

- May create more value than a “home run” utility patent- Defeating “obviousness” is becoming more difficult- Secure the home front

O fili f ll l t t i ( k t d t t ti l)• Overseas filings - carefully select countries (market and partner potential)- Seek overseas partners for filing, enforcement, and prosecution of

offshore patents - Provide certain marketing rights keep control of the worldwide patent- Provide certain marketing rights, keep control of the worldwide patent

portfolio

• Retain Patent Counsel with startup experience that can optimize IP strategy p p p gygiven financial and technology constraints


Financing: A dose of reality

• Make a realistic assessment of your product development, marketing and management requirements (Quantify and bemarketing, and management requirements (Quantify and be conservative)

• SBIR companies require absolute focus on the first customerSBIR companies require absolute focus on the first customer and low hanging fruit applications

• 99.9% of business owners and entrepreneurs struggle alone (i.e., never accessing third party financing)

• Operate as if you will never obtain outside capital


Alternative Sources of Financingg

• Affinity Investors• Friends and Family (Money Pool)• Professional Affinity and “Super angels”

• Angel Groups• Peer to Peer Lending

k• Investment Bankers• Foundations• Bootstrapping• Bootstrapping

• Sales and profits, and a modest lifestyle are your cheapest source of capital• Leasing of alpha and beta systems to early adopters who also receive non‐qualified stock

optionsp


Putting your best foot forwardCommunicate the essentials, make them your own!

The Beginning, Middle and End, a story to tell

• Why YOU? (setting the stage, hooking them)- What drove you to this?- What is the “passion play?”

• What is the objective? (the big picture)• Where is the pain? (why is this product important?)Where is the pain? (why is this product important?)• What are the current solutions? (what’s out there?)• What makes yours special? (summarizing the value proposition)• Where are you heading? (the exit, the “fade out to black”)


Putting it all together• Customer first, product second• Intellectual property (IP) is not always a critical success factor, but you

need a planneed a plan• What would “additional capital” enable?• When your bank account is “full”, operate in non-strategic areas as y p g

though the tank is “empty”• Share the upside (Equity) with employees, advisors, and qualified

board members but pay for performanceboard members but pay for performance • Surround yourself with the best and the brightest, and build a team

that is stronger and smarter than the sum of the parts• Life is short, so surround yourself with people you enjoy working with


For Discussion

• What do you have – what pain is it resolving?– Why are YOU doing this? (Your story)Why are YOU doing this? (Your story)

• Who is it for? Who cares?– How do you specify the benefit? (research)

• How will you roll out what you have?y y– Phase III – for government use (DoD/VA)

Networks of influence branding social– Networks of influence – branding, social media


Thought for Today And alwaysThought for Today.. And always

The only way to discover the limits of the possible is to go beyond them into the possible is to go beyond them into the impossible.

~ Arthur C. Clarke's Second Law ~

28

R hit Sh klRohit [email protected]@larta.org

http://blogspot.larta.org

05-31am_1045_RohitShukla_Commercialization

Documents

venture capital

innovation pfi u

states vai global platform

emerging companies

statesbased companies

us hubhub partnerships

middleg pto companies

larta instituteto