Introduction to the Innovatiopn SPACE Technology Commercialisation Model STEP 3 Venture Assessment

1. “Will your product or venture
opportunity make a profit?”
Innovation SPACE© Technology Commercialization Model
Phase 1 : CONCEPT
Stage 1 : DISCOVERY
Step 3 : VENTURE ASSESSMENT

2. The Technology Commercialisation Model
SCIENCE & TECHNOLOGY MARKET ENTERPRISE / BUSINESS
CONCEPT PHASE
STAGE 1 : DISCOVERY Step 1
Technology Analysis
Step 2
Market Needs Analysis
Step 3
Venture Assessment
CREATION PHASE
STAGE 2 : DO-ABILITY Step 4
Technical Feasibility
Step 5
Market Study
Step 6
Economic Feasibility
STAGE 3 : DESIGN Step 7
Engineering Prototype /
Pilot Plant
Step 8
Strategic Marketing Plan
Step 9
Strategic Business Plan
STAGE 4 : DEPLOYMENT Step 10
Pre-production Prototype
Step 11
Market Validation
Step 12
Business Start-Up
COMMERCIAL PHASE
STAGE 5 : DELIVERY Step 13
Production
Step 14
Sales & Distribution
Step 15
Business Growth
STAGE 6 : DOMINATION Step 16
Production Support
Step 17
Market Diversification
Step 18
Business Maturity

3. Step 3: Venture Assessment
Will this product or venture opportunity make a profit?
• When market research is complete and the
entrepreneur is convinced the product can be
made and there is sufficient market demand to
justify production, the final step of the
investigation stage is the Venture Assessment.
This step initially involves answering a series of
questions in logical sequence: Does it make
more sense to license this product opportunity
to a company that can take it to market, or does
the entrepreneur have the resources and ability
to pursue a commercial venture? If the answer is
“yes” to licensing, the next questions are: who
are the potential licensees, how much additional
development work is required to secure a
license, and what are the standard license fees
and royalty rates in the industry? If, on the other
hand, the entrepreneur decides to pursue a
venture, the next questions are: what experts
are needed, how much and what kind of capital
will be required, and what role will the founder
play in the venture? The ultimate question,
however, is: will this venture opportunity
generate sufficient return on investment to
justify the risk?
• Definition: The process of determining whether the business opportunity
demonstrates profit potential.
• Objective: The objective of the venture assessment is to determine if the
concept offers sufficient profit potential to pursue additional investment of
time and money for additional research.
• Product: The product of this step is a brief description of the business model.
• Business Activities: The research activities common to this step are those
necessary to demonstrate that the concept will generate a profit and that
the organization is capable of taking the product to market.
• During the conceptual phase at least the following activities must be
completed:
• • Identify financial, physical, and human resources required for
commercialization;
• Identify the status of intellectual property requirements;
• Establish a positive profit potential
• Milestones: Preliminary cost and revenue estimate
• Funding Sources: Personal finance, Friends and family
• Business Information: Completion of the conceptual business step will
usually result in an estimate of the revenues and costs of product sales,
identification of source and use of capital for the development phase.
• Key Questions :
• Do you have experience in launching a business enterprise?
Does this venture appear to have profit potential?
Are you the right person to commercialize the product?
Is your enterprise the right one to commercialize the product?
Have you estimated the resources (capital and service providers) required to
launch your venture?
Have you researched the intellectual property considerations?

4. KEY QUESTIONS
1. Do you have experience in launching a business enterprise?
2. Does this venture appear to have profit potential?
3. Are you the right person to commercialize the product?
4. Is your enterprise the right one to commercialize the product?
5. Have you estimated the resources (capital and service providers)
required to launch your venture?
6. Have you researched the intellectual property considerations?

5. Do it yourself (DIY) or LICENSE IT?
5
Automatic hierarchical categorization of music by metadata
Patent number: 6928433
Filing date: Jan 5, 2001
Issue date: Aug 9, 2005
Application number: 9/755,723
A method, performed by software executing on the processor of a portable music playback device,
that automatically files tracks according to hierarchical structure of categories to organize tracks in a
logical order. A user interface is utilized to change the hierarchy, view track names, and...
Inventors: Ron Goodman, Howard N. Egan
Assignee: Creative Technology LTD
Source: bbc.co.uk 30th August 2005

6. SPOT the DIFFERENCE

7. Patent Litigation
7Source: bbc.co.uk 30th August 2005
Creative wins MP3 player patent
One of Apple's main rivals, Creative Technology, has
been awarded a patent in the US for the interface
used on many digital music players.
"The first portable media player based upon the user interface covered in our Zen
Patent was our Nomad Jukebox MP3 player," said Creative CEO Sim Wong Hoo.
"The Apple iPod was only announced in October 2001, 13 months after we had
been shipping the Nomad Jukebox based upon the user interface covered by our
Zen Patent."
In its press release, Creative said Apple had filed for a patent for a user interface in
a multimedia player in late 2002, but its application had been recently rejected.
On 24 August 2006, Apple and Creative announced a broad settlement to end their
legal disputes. Apple will pay Creative US$100 million for a paid-up license, to use
Creative's awarded patent in all Apple products. As part of the agreement, Apple will
recoup part of its payment, if Creative is successful in licensing the patent.

8. MAKING the FIRST MILLION
Financial Modeling your Business

9. BREAK EVEN ANALYSIS (Net Profit = $0)
($500,000.00)
$0.00
$500,000.00
$1,000,000.00
$1,500,000.00
$2,000,000.00
$2,500,000.00
$3,000,000.00
0 20,478 40,955 61,433 81,910 102,388 122,865 143,343 163,820 184,298 204,776
DOLLARS
SALES VOLUME (UNITS)
Breakeven Analysis Chart
FIXED COSTS PER PERIOD TOTAL COSTS TOTAL SALES NET PROFIT (LOSS)
($6,000.00)
($4,000.00)
($2,000.00)
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
0 69 139 208 278 347 416 486 555 624 694
DOLLARS
SALES VOLUME (UNITS)
Breakeven Analysis Chart
FIXED COSTS PER PERIOD TOTAL COSTS TOTAL SALES NET PROFIT (LOSS)
($6,000.00)
($4,000.00)
($2,000.00)
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
0 69 139 208 278 347 416 486 555 624 694
DOLLARS
SALES VOLUME (UNITS)
Breakeven Analysis Chart
FIXED COSTS PER PERIOD TOTAL COSTS TOTAL SALES NET PROFIT (LOSS)

10. ($500,000.00)
$0.00
$500,000.00
$1,000,000.00
$1,500,000.00
$2,000,000.00
$2,500,000.00
$3,000,000.00
0 20,478 40,955 61,433 81,910 102,388 122,865 143,343 163,820 184,298 204,776
DOLLARS
SALES VOLUME (UNITS)
Breakeven Analysis Chart
FIXED COSTS PER PERIOD TOTAL COSTS TOTAL SALES NET PROFIT (LOSS)
BREAK EVEN ANALYSIS (Net Profit = $1m)

11. SALES MODEL (3-month Target over 3 years)
SALES VOLUME PER PERIOD (UNITS) 0 20,478 40,955 61,433 81,910 102,388 122,865 143,343 163,820 184,298 204,776
SALES PRICE PER UNIT $12.50 $12.50 $12.50 $12.50 $12.50 $12.50 $12.50 $12.50 $12.50 $12.50 $12.50
FIXED COSTS PER PERIOD $3,400.00 $3,400.00 $3,400.00 $3,400.00 $3,400.00 $3,400.00 $3,400.00 $3,400.00 $3,400.00 $3,400.00 $3,400.00
VARIABLE COSTS $0.00 $155,629.39 $311,258.78 $466,888.16 $622,517.55 $778,146.94 $933,776.33 $1,089,405.71 $1,245,035.10 $1,400,664.49 $1,556,293.88
TOTAL COSTS $3,400.00 $159,029.39 $314,658.78 $470,288.16 $625,917.55 $781,546.94 $937,176.33 $1,092,805.71 $1,248,435.10 $1,404,064.49 $1,559,693.88
TOTAL SALES $0.00 $255,969.39 $511,938.78 $767,908.16 $1,023,877.55 $1,279,846.94 $1,535,816.33 $1,791,785.71 $2,047,755.10 $2,303,724.49 $2,559,693.88
NET PROFIT (LOSS) ($3,400.00) $96,940.00 $197,280.00 $297,620.00 $397,960.00 $498,300.00 $598,640.00 $698,980.00 $799,320.00 $899,660.00 $1,000,000.00
TOTAL COSTS $8,597,016.33 Conservative ROI 0.6 X
Less ACCUM ULATED PROFIT $5,481,300.00
CAPITAL REQUIRED $3,115,716.33 Optimistic ROI 1.8 X

12. HOW MUCH STARTUP CAPITAL?
 STRUGGLING CASE
(PESSIMISTIC)
ROI Multiple Less than 1.0 X
SURVIVOR CASE (OPTIMISTIC)
ROI Multiple Greater than 1.0 X
INVESTOR CASE (CALCULATED
RISK)
ROI Multiple Greater than 10.0 X
TOTALCOSTS $8,597,016.33
LessACCUMULATEDPROFIT$5,481,300.00
CAPITALREQUIRED$3,115,716.33

13. THE FINAL ASSESSMENT
Ask me about my 1mdb
(One Million Dollar Business)

14. SIX HATS ASSESSMENT of
VENTURE ACCESS TO THE INDUSTRY
1. GOVERNMENT (POLITICS, REGULATIONS, LEGAL) - WHITE
2. FUNDERS (BANKERS, INVESTORS) - BLACK
3. SUPPLIERS – YELLOW
4. BUYERS (DISTRIBUTORS) - BLUE
5. CONSUMERS (COMMUNITIES, ENVIRONMENT, SOCIAL, CULTURAL,
ETHICS) - RED
6. COMPETITORS (DIRECT, SUBSTITUTES, COMPLEMENTORS) - GREEN

15. LET’S
ROLE
PLAY

16. Summary of Industry Competitiveness

17. “No Competition Please…”

18. X-Factor Test for
Venture Capital Investor
1. Quality of Management
Team
2. Size of market
3. Product qualities (uniqueness,
brands, patents)
4. Intensity of competition
5. Market growth rate
6. Barriers to entry
7. Company’s stage of
development
8. Industry where company is