Commercializing Technologies

(The following document was adapted from a PowerPoint presentation made by Erik Nierenberg to the Rady School in October 2005)

Commercialization Thought Process

There are four key areas where you should focus your time and energy when assessing a potential technology/business opportunity

  • Market
    • Size, growth, customers, competitors, product positioning, pricing...
  • Technology
    • Functionality, Intellectual Property, uniqueness...
  • Financials
    • Revenue potential, cash position
  • Management
    • "It's the people"
Key Questions – Market
  • What problem does this technology solve?
  • Who is the customer, and why will they buy this?
    • "Vitamin or Vicodin"
  • What is the proper way to define/segment the market?
    • Size, growth drivers, target verticals
  • What is the potential go-to-market and distribution strategy for this product/technology?
  • What is the competitive landscape?
    • Incumbents, new entrants, barriers to entry
    • How are you different from a value proposition/competitive positioning perspective?
Key Questions – Technology
  • Does the technology do what people say it does?
  • Is the technology/approach truly unique and does it offer a sustainable differentiator vs. others?
  • Is it patent protected/IP defensible?
    • How much is proprietary vs. COTS/open source/commodity?
  • Can it scale easily and cheaply with increased usage/customers?
  • What is the current and projected product development roadmap to get it to market?
    • Costs, resources, timing
Key Questions – Financials
  • What is the revenue opportunity in current and future markets?
    • Customer pipeline, sales cycle analysis
  • How should the product(s) be priced and how can pricing be maintained and increased over time?
    • Set value, not price
  • What are the costs associated with developing the product and a company?
    • Opex, capex, headcount, R&D, manufacturing, etc.
    • Break even analysis, margin analysis
  • What are the cash needs to get it to sustainable profitability?
Key Questions – Management
  • What are the short term and longer term HR needs to build a successful company?
    • Key hires within management
  • Are the founders the right people to run the company?
    • What are the right roles for the founders and early team?
  • Does the current management team have relevant industry and product experience?
    • "gray hairs vs. newbies"
  • Should there be an Advisory Board in addition to traditional Board of Directors?
    • What skills and experiences provide the highest value for the company?
Financing an Idea or Product
  • Once you decide you have a product that you would like to take to market, you are likely to need funding
  • Range of financing options include:
    • Bank loan, venture debt, venture capital, bootstrap
  • Venture capital is expensive money, but provides additional value added services
    • Relationships, strategy, board guidance, hiring, etc.
  • Venture financing tips
    • Use referrals to make an intro to a VC firm, no cold calls
    • Make people decisions, not money decisions
    • Have a well developed executive summary, business plan before initial meeting
    • EPVC Download – Business Plan Structure
Summary
  • Invest significant initial time analyzing the potential product/business opportunity
    • Market, Technology, Financials, Management
  • Be creative and think "out of the box," but be realistic
    • Push the thinking and get perspective from others
    • Don't throw "good money after bad" (or more time into something that is likely to fail)
  • If the technology/idea passes your analysis filter, then prepare an executive summary and business plan
    • Use business plan to obtain funding, hire team, build a board, develop partnerships, etc.
  • Be selective in your financing strategy and partner with those who are “true believers” and will grow with your company