5. 5
Establish a partnership with Mobileye to leverage
expertise, market power, and OEM contacts
Seek strategic alignment with OEMs and other
Tier 1 & 2 vendors
Continue to innovate on stereo vision expertise
while monitoring evolving market trends
2016 SICC CASE COMPETITION
RECOMMENDATION
OPPORTUNITY FOR FURTHER GROWTH
1.
2.
3.
+ approx.
$ 1.3 Billion
ANNUAL REVENUE
WITHIN 5 YEARS OF REACHING
PROFITABILITY
6. 62016 SICC CASE COMPETITION
TABLE OF CONTENTS
Industry analysis and trends
Company analysis
Strategic alternatives
Marketing plan
Risk factors
Financials
Summary
7. 7
ADAS INDUSTRY DEVELOPMENT
ERAS OF AUTOMOTIVE SAFETY TECHNOLOGY
1950-2000
Ph 2
Ph I
ADASSAFETY &
CONVENIENCE
2000-present 2016-2025 2025+
PARTIALLY
AUTONOMOUS AUTONOMOUS
Zzz
8. 8
ADAS INDUSTRY TRENDS
GROWTH AND DIRECTION
KEY DRIVERS OF GROWTH
• Technological breakthroughs
• New business models
• Consumer interest penetration
• Regulatory mandates
• UN Decade of Action for Road Safety
• Vision of autonomous driving
2016 SICC CASE COMPETITION
ATTRACTIVE MARKET,
RIPE WITH
OPPORTUNITY
$0
$20
$40
$60
$80
2015 2016E 2017E 2018E 2019E 2020E
ADAS INDUSTRY GROWTH ($ BILLIONS)
analyst estimates
Strategy Analytics TechNavio ABI Research
10. 10
FORESIGHT AUTO
CORE COMPETENCIES AND DIFFERENTIATING FACTORS
2016 SICC CASE COMPETITION
continuing
R&D
technology
R&D
superior
technology
raising
money
hardware
agnostic
FORESIGHT IS UNIQUELY
POSITIONED TO…
• Deliver differentiated value
• Gain end-user trust
• Work with any partner
• Remain a strong innovator
11. 11
COMPETITIVE THREAT ANALYSIS
BUYER
POWER
SUPPLIER
POWER
THREAT OF
SUBSTITUTES
THREAT OF
NEW
ENTRANTS
COMPETITIVE
RIVALRY
2016 SICC CASE COMPETITION
BUYERS
- MEDIUM -
OEMs and Tier1
suppliers are large
and command
market power;
many potential
partners
Foresight has a
unique solution
SUPPLIERS
- LOW -
Foresight has
reliable access to
human capital and
parent company IP
SUBSTITUTES
- LOW -
Capabilities of
alternatives such as
LIDAR, radar,
ultrasonic, and IR
are more limited
NEW ENTRY
- LOW -
Development of
Eyes On involved
extensive R&D
leading to patents
barrier to entry
in the near term
COMPETITORS
- HIGH -
Industry is
fragmented
Lots of players
Established
partnerships &
relationships
THIS INDUSTRY IS INTENSELY COMPETITIVE & REQUIRES ESTABLISHMENT OF KEY RELATIONSHIPS
12. 12
ANALYSIS OF LEADING STRATEGIES
CRITERIA
#1:
PARTNER
WITH
MOBILEYE
#2:
NETWORK
BROADLY
WITHIN
ADAS
#3
SMART
PHONE
DEV.
MARKET
Growth opportunity
Mitigates competitive risks
FIT Aligns with core competencies/values
FINANCIALS
Long-term stability & exit opps.
Guarantee of high financial returns
2016 SICC CASE COMPETITION
PURSUE
STRATEGIES
1 & 2
+
MONITOR
SMART
PHONE
MARKET
13. 132016 SICC CASE COMPETITION
CONNECTING WITH MOBILEYE
Approach leadership with partnership proposal
(VP of Automotive Projects, Advanced Technology, or R&D)
Discuss capability improvement from integration of
Foresight software–lower rate of false positives, improved
maps based on crowdsourced data, improved tagging, etc.
Seek opportunities to integrate within the party’s current
OEM customer base
1.
2.
3.
14. 14
PRIORITIZING T1 PARTNERS TO NETWORK WITH
2016 SICC CASE COMPETITION
TIER 1 SUPPLIER SOFTWARE PARTNER
+
+ in-house
PRIORITY
in-house
high
high
medium
medium
medium
15. 152016 SICC CASE COMPETITION
Trend: OEMs and Tier 1s are
looking for & investing in start-ups
Action: Connect by getting involved
with accelerators and incubators they
participate in (e.g., speak at events)
Clean Tech Open Sponsor list
“Israel itself is a hotbed for innovation,
Buczkowski said. Ford has scouts there on
the lookout for new technologies”
“Buczkowski cited Mobileye”
CONNECTING WITH OEMs & TIER 1s
16. 16
PRIORITIZING T2 PARTNERS TO WORK WITH
2016 SICC CASE COMPETITION
TIER 2 SUPPLIER DESCRIPTION PRIORITY
high
high
high
medium
Strong and well established OEM
relationships; lacks stereo vision
Strong mobile presence; reference design
expertise; looking for differentiation
Strong expertise in facial recognition and
real-time feedback
Preference for open source
17. 172016 SICC CASE COMPETITION
Trend: Chipset vendors are looking
for differentiation and value-add
Action: For example, talk
with Qualcomms Advanced
Optional Software Group
CONNECTING WITH TIER 2s
18. 18
MARKETING PLAN
2016 SICC CASE COMPETITION
NURTURE
MARKET
IDENTIFICATION
CREATE SALES
OPPORTUNITIESPOSITION
Highlight uniqueness:
• No false positives
• Depth perception
• Hardware agnostic
• Military heritage
• All-weather
Capture
opportunities in
ADAS and partial
autonomous
technology
Develop solutions
for autonomous
technology
Get involved
with
accelerators
and incubators
Sustain key long-
term relationships
through
exceeding
expectations and
expanding
product offering
Attend
conferences
and
tradeshows
19. 19
RISK ANALYSIS
2016 SICC CASE COMPETITION
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGICAL
ENVIRONMENTAL
LEGAL
Low risk:
governments
interested in
furthering
transportation
safety
High risk:
intense
competition can
erode industry
opportunities and
profits
Medium risk:
consumer
reactions are
difficult to
predict, and
trust is easily
lost
Low risk:
hardware agnostic
with superior R&D
and intellectual
capital
Low risk:
climate change
concerns could
lower car use,
but effect is likely
small
Medium risk:
Errors could
significantly harm
users and lead to
litigation –
probability
uncertain
FOCUS ON COMPETING AGRESSIVELY TO MITIGATE LARGEST RISK
21. 212016 SICC CASE COMPETITION
FINANCIAL RESOURCES REQUIRED
Year
R&D
(Mil)
SG&A
(Mil)
Data Source
2016 3.5$ 0.9$ Burn rate of $4.4 M/yr
2017 10.6$ 2.6$ Burn rate of $13.2 M/yr (tripled from 2016)
2018 31.7$ 7.9$ Burn rate of $39.6 M/yr (tripled from 2017)
2019 28.6$ 27.2$
2020 59.9$ 59.9$
2021 127.5$ 127.5$
2022 174.0$ 174.0$
2023 216.1$ 216.1$
% of expense based on 2013 Mobileye
financial statement
22. 222016 SICC CASE COMPETITION
RECOMMENDATION & MILESTONES
Establish a partnership with Mobileye to leverage
expertise, market power, and OEM contacts
Seek strategic alignment with OEMs and other
Tier 1 & 2 vendors
Continue to innovate on stereo vision expertise
while monitoring evolving market trends
OPPORTUNITY FOR FURTHER GROWTH
1.
2.
3.
+ approx.
$1.3 Billion
Begin talks with
potential partners
Establish
POC
Secure first
partnership
Y1 – PRODUCT & MARKET FIT
Expand offerings
(e.g., AEB)
Y2-5 – SCALE
Secure additional
partnerships
Become a top 3
market leader
ANNUAL REVENUE
WITHIN 5 YEARS OF REACHING
PROFITABILITY
24. 242016 SICC CASE COMPETITION
DETAILED FINANCIALS
2015 2016 2017 2018 2019 2020 2021 2022 2023
Total WTP for ADAS features 1,210$ 1,210$ 1,210$ 1,210$ 1,210$ 1,210$ 1,210$ 1,210$ 1,210$
Global base of cars with ADAS (Mil) 25$ 28$ 32$ 37$ 43$ 49$ 57$ 65$ 75$
Total ADAS Revenue (Mil) 29,734$ 34,165$ 39,256$ 45,105$ 51,825$ 59,547$ 68,420$ 78,614$ 90,328$
ADAS Revenue for Camera solutions 6,839$ 7,858$ 9,029$ 10,374$ 11,920$ 13,696$ 15,737$ 18,081$ 20,775$
% of Camera solutions that are Stereo 1% 2% 5% 10% 20% 25% 30% 35% 40%
ADAS Revenue for Stereo solutions (Mil) 68$ 157$ 451$ 1,037$ 2,384$ 3,424$ 4,721$ 6,328$ 8,310$
ADAS Market share for Foresight 0.00% 0.00% 0.25% 0.50% 3.00% 5.00% 9.00% 11.00% 13.00%
Foresight Revenue (Mil) 0 0 0 0 71.5$ 171.2$ 424.9$ 696.1$ 1,080.3$
% of Revenue spent on R & D 0 0 0% 40% 35% 30% 25% 20%
R & D Expenses (Mil) 4$ 11$ 32$ 29$ 60$ 127$ 174$ 216$
% of Revenue spent on S,G & A 0 0 0 38% 35% 30% 25% 20%
S,G&A Expenses (Mil) 1$ 3$ 8$ 27$ 60$ 127$ 174$ 216$
Total expenses (Mil) 4$ 13$ 40$ 56$ 120$ 255$ 348$ 432$
EBITDA (Mil) -$ (4.40)$ (13.20)$ (39.60)$ 15.73$ 51.36$ 169.95$ 348.06$ 648.19$
25. 25
ADAS VALUE CHAIN
THREE ROUTES TO THE OEM
2016 SICC CASE COMPETITION
software
vendor
OEM1.
2. software
vendor
software
vendor
3.
tier 1 supplier OEM
SoC vender tier 1 supplier OEM
Editor's Notes
EU and US are mandating that all vehicles be equipped with autonomous emergency-braking systems and forward-collision warning systems by 2020.
Recent McKinsey survey also suggests that car buyers are becoming even more interested in ADAS applications that promote comfort and economy, such as those that assist with parking or monitoring blind spots.
R&D & superior technology: Years of research and development led to a unique and superior solution. Software integrates data from two cameras to deliver superior depth perception, works in all weather, and has by far the lowest rate of false positives, which is KEY in establishing consumer trust. This technology is military grade, not easily replicable and is protected by patents.
Hardware agnostic: Flexible, customizable, can work with anyone.
Ability to raise money: Stable – will , able to fund continued R&D.
So after looking at the industry, we spent a good bit of time examining Foresight as a company, and we identified a couple key core competencies.
R&D – gained from Magna BSP
Super Technology – stereo vision systems are more capable and having the thermal component is a big advantage
Being hardware agnostic lends a lot of flexibility
Finally, the company has a proven model for raising money and can
Five forces
So for supplier power, Foresight already has access to human capital and IP, so we see that as low.
There isn’t really a threat of new entry, the market is already saturated with entrants, and it would several years to catch up with the current players.
We also viewed substitute threats as lower, mostly as we move towards automated cars, it is most likely the technology will require a stereo solution
Now the buyers are different. Our buyers are Tier 1 and 2 players, and they command a lot of market power, but we think Foresight has a unique solution, so this can mitigate these threats.
Lastly, the most significant threat is that the industry is fragmented, and honestly, difficult to segment and understand. There are a lot of players, and a lot of people
already have established relationships.
Our take-away is that a priority needs to be establishing these relationships. Much like business school, a lot of this industry is about who you know.
Growth opps: All three offer significant growth opportunities – Foresight is relatively small, and getting into OEMs via Mobileye, who’s a partner with nearly all OEMs, would allow for significant growth. Tying up with OEMs themselves or a Tier 1/2 player that’s tied up with OEMs already would also allow for growth, but is a slightly less promising avenue since you’d need to effectively start from scratch. Entering the smart phone market would also mean a potential for high growth because smart phone ownership is nearly universal.
Competitive risks: Main competitive risks are the threat of competing solutions and buyer power. Partnering with a large player like Mobileye would help Foresight gain power in the market relative to competitors. Building relationships with other Tier 1/2s would too, but chances are that this route would generate less power than going through Mobileye. Being in the smart phone business would make Foresight more valuable in the competitive landscape but they’d still be a small player competing with a large pool.
Aligns with competencies and values: Partnering with Mobileye or other OEMs/Tier 1/2s would allow Foresight to stay within their core competencies – the use case of their software is the same there, whereas it’s more of a stretch to make software for the smart phone use case. Smart phone hardware isn’t yet at a place where Foresight’s solution would be effective (cameras are limited, e.g.).
Long-term stability and exit opps: Partnering with Mobileye and networking with other OEMs/Tier 1/2s would be a stable strategy in the long run. The pace of change in the auto industry is slow relative to smart phones, so a working solution in these markets would last longer and be easier to keep up with in the long run.
Guarantee of high financial returns: With Mobileye, would get access to much of the market. High returns so long as the negotiated licensing revenue or purchasing amount is reasonable. With other players, returns are more uncertain, but also high if you tie up with a few key players. With smart phones, unclear what the financial returns would be due to high uncertainty since the hardware isn’t near ready in any phones.
So we’ve already identified several of these pieces, but we wanted to present a unified marketing plan that is mostly made up of 4 pieces.
Foresight should position as the most capable technological solution
They should continue to drive the trend towards autonomous vehicles and capture unique market opportunities as they present themselves
Create sales opportunities by attending externally hosted events where possible, as Cody mentioned and finally
Continue to nurture the relationships. Remember, these relationships are the key to mitigating some of the most serious market risks.
When we’re discussing risk, we identified a couple of different areas, but really only 2 significant categories.
The first is legal, as we move towards autonomous vehicles, there is a fair bit of uncertainty when it comes to who will be liable for crashes in the future, so this is kind of an unknown for the time being.
The other is just as we’ve said many times up to know, this is economics in it’s purest form, high competition erodes industry profits, so Foresight has to innovate, differentiate and compete to maintain their market share.