Success Factors for Startups in Today’s Evolving Innovation Ecosystem

1. Success Factors for Startups in Today’s Evolving Innovation Ecosystem

2. How to Define Success? Short Version of Open Innovation Essentials for Small and Medium Enterprises Success in commercialization of technology in any country is the monetization of some form of intellectual property. Within this general definition there are a range of traditional possible successful outcomes: • Formation of major new company. • Scaling up a startup for sale to a large company. • Creation of a stable and reasonably profitable small company. • Licensing technology and receipt of royalties. • New research grants or private funding to continue research. • Spinup as possible alternative.

3. Unicorns Are Extremely Rare “Dreams Die Last” – popular Russian Saying Expecting to be the Next Google or Facebook? A 2013 study by venture capitalist found that in the previous decade only 1 in every 1,538 startups or 0.7% became Unicorns. How Long Does It Take? Average time to either IPO or acquisition for a Unicorn was 7 years. Assuming You Have Good Technology, Do You Have The Time And Money? Is Traditional Licensing Your Only Alternative?

4. Technology Readiness Level How to Raise, Who will Pay & How Long Will it take? • Critical element of attractiveness of technology is its technology readiness level (TRL). The lower the level, the less attractive. • Key task for evaluating commercialization is how to raise the TRL, who will pay for it and how long it will take? • A spinup company is started with the limited objective of economically raising the TRL for sale, licensing or acquisition by larger company as soon as possible.

5. Technology Readiness Level How to Raise, Who will Pay & How Long Will it take?

6. Plow Horses in the Age of Open Innovation What is a “SpinUP” and can Spinup Companies move Technology Up the Value Chain? Elements of Success: Technology - Lots available. Team – Diverse commercial and technical skills. Market Intelligence – Objective view of potential user and customer. Funding – Believable business plan and budget. Disciplined Exit Strategy – Do not push farther than time or funding allows. Fight your greed.

7. Technology Choice of Sector matters • Regulated industries like pharmaceuticals and medical equipment can take many years to reach maturity. • Other technology sectors may take substantially less time, but find out and make a reasonable estimate. • Without the ability to identify a source of funds for this development period, there is a risk of failure in what is called the “valley of death” for technologies. • Spinup should focus of relatively short time frame sectors.

8. Team Balance Tech Skills with Business Expertise Investors prefer great team with average technology over mediocre team with great technology. Scientific researchers rarely make good entrepreneurs. Marketing and business skills to interact with potential users and customers at the earliest possible time are one key to success. Existing industry experience and sector contacts bring great value to a spinup company strategy.

9. Market Intelligence Market Niche, Size of Niche & Your Competitive Advantage Identify where your technology fits in the supply chain or its particular market niche. Determine the actual size of market demand for your specific technology. For example, if you have a gasket for an engine, your market size is not total engine sales. It is sales of gaskets for engines. Be conservative and specific in market size estimates. • For any technology there is always competition. Think through how the problem or task addressed by your technology is being solved already? • What advantage does your new technology have compared to existing solutions? • Is the existing technology “good enough” or is there compelling unmet need, significant price advantage or significant speed to market from adopting your new technology?

10. Funding Investigate the full landscape of potential Funding Government innovation support funds. Private early-stage support through biz plan competitions, accelerators, tech parks, etc. Corporate investment funds. Angel Investors. Venture Capital. Crowd funding.

11. Disciplined Exit – Key to Spinup Model Exit Through License or sale of rights at earliest possible stage Keep true to goal of monetizing through raising TRL level in minimum possible time. Resist commercial greed and tendency to delay to make “the big money.” As TRL level raises, the requirements of time and team skills also raise, leading to possible failure in next stage. Take the money and move on.

12. Foresight Case Study Organic Pest Control – Fire Ants University chemical compound for organic control, but no proof of concept. Collaboration of Foresight PI, University & US Gov lab for development into technology. Funding from SBIR Phase I for next stage TRL & POC. Application for SBIR Phase II funding for commercial application. Licensing to organic pest control company.

13. Foresight Science & Technology, Inc. Here to help, with more than 36 years experience providing technology commercialization services to universities, development agencies and private companies. Offices in the innovation centers of Boston, San Francisco, Singapore and Oxford, UK. Daniel M. Satinsky, Esq. VP. Business Development 401.354.1346 Daniel.satinsky@foresightst.com www.foresightst.com