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Venture Roadmaps

Venture Roadmaps. Innovation, Entrepreneurship & Design Toolbox. Charting a roadmap. A roadmap is a representation of how you expect your venture to develop over time. Its main components are: Technology plan Sales plan Operational plan

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Venture Roadmaps

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  1. Venture Roadmaps Innovation, Entrepreneurship & Design Toolbox

  2. Charting a roadmap A roadmap is a representation of how you expect your venture to develop over time. Its main components are: Technology plan Sales plan Operational plan The plan allows you to set milestones by which a set of goals will be achieved. What? - Why? – How? – Example - Conclusion

  3. Business Strategy & Roadmaps What? - Why? – How? – Example - Conclusion Customers Market Competition “Know Why “ Market Strategy “Know What (not) “ Product Strategy Today Present Mode of Operation Business Strategy Vision Future Mode of Operation Link with Technology Roadmap Technology Business Model Resources “Know How “ Time & Planning

  4. Why make a roadmap? Because of the time value of money, the milestones in your roadmap will affect your financial plan and your valuation. Investors will also insert the milestones into a term sheet (investment contract) as conditions to trigger the release of each tranche of funding. What? -Why? – How? – Example - Conclusion

  5. 1. Technology Roadmaps Goal: To assist in the development of a strategic direction to exploit a specific technology or to develop a leading business position To identify key areas of activity in R&D To alignbusiness goals with technologycapabilities and knowledge ...mapping opportunities enabled by technology to meet business needs What? - Why? –How? – Example - Conclusion

  6. What is a Technology Roadmap ? Technology Roadmaps represent: How business goals can be achievedby use of technology capabilities and knowledge; How different technologies need to be combinedand packaged to reach the goals; Show different routes to reach the same business goalusing different technologies; How (sometimes non technological) roadblocks can hinder innovation paths and how these can be removed . What? - Why? –How? – Example - Conclusion

  7. Example Lucent 3G phone Planned technology changes, and when they will be introduced into products Prioritize technology investments Research and development plans Planned technology trends, grouped by drivers Importance, competitive position, source and funding status What? - Why? –How? – Example - Conclusion ( Source: material provided by BiiP : ) What is missing here ?

  8. Roadmap elaboration workshop Confirmthe scope of the roadmap, vision and strategic goals. Identify the technology barriersand challenges. Identify the technology alternatives for specific technology areas based on the critical product or service characteristics that are required to meet the anticipated market needs. Prioritisethe technology alternatives according to their ability to overcome the barriers and meet the strategic goals and place them into short, medium and long term timeframes. Synthesise the technology roadmap What? - Why? –How? – Example - Conclusion

  9. Roadmap Process What? - Why? –How? – Example - Conclusion Needs & Benefits of the Roadmap Content of the Roadmap Road mapping Process Elaborate Roadmap Maintain Roadmap Implement & Use Roadmap

  10. Lucent 3G phone again Market: Real-Time video Interdependecies: Video coding Digital Rights Management Billing Integration across the value network Content production Content distribution Operator support & channel lag Customer adoption What? - Why? – How? –Example- Conclusion

  11. 2. Sales plan The assumptions for your sales forecast should be based on your Entrepreneurial Market Research and any subsequent Market Testing. (IE&D Toolbox) It may be based on a direct sales model or on a distribution partnership, depending on your strategy. What? - Why? –How? – Example - Conclusion

  12. How to build a bottom up sales calculation in theIED Sales Plan Template What? - Why? –How? – Example - Conclusion • Find out the answers to the following questions, or make reasonable assumptions • How many units are sold on average in one deal or contract? • E.g. 1 contract is typically for 5 test kits or 1 contract is for 1 year of service or 1 contract is for … • How long does an average customer sales cycle take from first approach to closing the sale? – see info collected during your ‘discovery based market research’ • E.g. 1 week to 1 month for a simple sales process, or 6 months to 1 year for complex sales (several stakeholders or decision makers, purchase needs to officially in the budget, no urgent need, … ) • How many calls/sales visits are necessary during the sales cycle? • E.g. 1 visit or phone call from a sales person for a simple sales process, to several visits with several people for complex sales processes (oa. Team selling where you would need technical people to spend time in sales as well) • How many sales leads will be successful or in other words, how many calls or visits will be made in vain?

  13. What? - Why? –How? – Example - Conclusion • B. Build the model • Indicate your sales target per quarter (column 1) • Insert a formula in (column 2) to indicate how many contracts or deals this means per quarter • If the target in Quarter 1 is £10.000 and the average value of one contract is £ 2000, then the value in column 2 for Quarter 1 = 5 • Insert a formula in (column 3) to indicate how many sales calls/visits you need to reach the predicted amount of contracts presuming all calls/visits are successful • E.g. For 1 contract of £2000, I need on average 2 visits • In case your sales cycle is longer than 1 quarter, sales efforts will have to start in the quarter before the first quarter in which you indicate revenue! • Also in that case you need to spread the calls of 2 or more Quarters, e.g. 1 in quarter 0 and 1 in quarter 1.

  14. What? - Why? –How? – Example - Conclusion • Insert a formula in (column 4) to indicate the % of visits likely to be made in vain • E.g. 50% of sales calls will be made without result • Insert a formula in (column 5) to summarize the total amount of sales visits per quarter (sum of sales visits in columns 3 and 4). • Then insert (in column 6) the number of presumed visits any sales person is reasonably able to make per quarter • E.g. If a sales person is likely to be able make 6 local visits per week, he is likely to make 6 * 12 visits per quarter on average • ! Be realistic ! Don’t forget the sales person needs time to contact leads as well. • In an international context the number of visits per week will be much less! • Then insert in (column 7) a formula to see the final amount of sales people needed per quarter, by dividing the total amount of sales visits in column 5 by the average amount of visits per quarter in column 6.

  15. Sales forecast: Remarks What? - Why? –How? – Example - Conclusion • If back-office preparation by phone is important as well, you may also indicate how many phone calls the sales person or sales assistant has to make to reach sales targets, and insert this into your model. In this way you will also be able to calculate the amount of back-office sales personnel needed. • You may find out that your cost of sales is too high and that you have to look for an alternative sales method • The model may become more complex whenever you need to spread your sales efforts over several quarters or whenever you need to split up sales effort over several sales profiles: sales executive, sales assistant, technical pre-sales, … • Remember: this calculation is to give you a general order of magnitude, don’t lose yourself in too much detail.

  16. IED Sales Plan Template -Example What? - Why? – How? –Example- Conclusion

  17. 3. Operational plan Your operational plan should answer the following questions: When will you start operations? When will sales start? When will you upscale? What functions will you do in-house, and what will you outsource? HR: When and who will you hire? How much will you pay people? Sales, technical support, operations, finance Facilities/infrastructure: what will you use and when will you move to new facilities? e.g. Home > incubator > serviced office > own building Production/manufacturing equipment – in-house/outsource What will it all cost? What? - Why? –How? – Example - Conclusion

  18. Conclusion Set achievable milestones – if you fail to reach them your financing could be dropped, or you may have to accept a lower valuation and give a larger chunk of equity to your investors. Find and use comparable industry information to make your estimates. Information from your roadmap plan will be fed into your Financial Plan and Valuation. (IE&D Toolbox) What? - Why? – How? – Example -Conclusion

  19. Further Reading Chapter 12 in Clarysse & Kiefer, The Smart Entrepreneur. London, Elliot & Thompson, 2011.

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