Keys to Commercialization Success

1. Keys to Commercialization Success Presented by: Martin Zeller Date: March 14, 2002 U S C E N G I N E E R I N G T E C H N O L O G Y T R A N S F E R C E N T E R A N A S A R E G I O N A L T E C H N O L O G Y T R A N S F E R C E N T E R h t t p : / / w w w . u s c . e d u / g o / t t c

2. Objectives of the SBIR Program • Stimulate technological innovation • Use small business to meet federal R&D needs • Increase private sector commercialization derived from federal R&D • Encourage the participation by disadvantaged and minority persons in technological innovation Presented by: Martin Zeller

3. Implications of SBIR’s Commercialization Objective • A company whose business plan does not call for commercial sales of a product or service should think twice about seeking funding from SBIR • Planned commercial sales can be to government or non-government customers • Think of SBIR as a seed capital fund to augment the research budget of a small business that is seeking to develop a new product or service that is to be offered for sale in the marketplace • Successful SBIR companies focus on commercial prospects and plans from the start (even before submitting a phase I proposal), not as an afterthought Presented by: Martin Zeller

4. Succeeding in SBIR • Success is not just about getting phase I and phase II funding, though that is part of the picture • To succeed in SBIR requires following through all the way to commercialization (phase III) • A small business must have a “commercialization mindset” going into phase I to succeed ultimately in SBIR Presented by: Martin Zeller

5. Commercialization Mindset • A business philosophy that stresses commercial sales of products and services, using a variety of business models • Some of these products and services will be new and require research and development prior to market introduction • The company will do what it takes to achieve the goal of commercial sales • Acquiring resources for R&D activities (SBIR perhaps) • Acquiring resources to protect, produce, promote, distribute, sell and support the product or service Presented by: Martin Zeller

6. A Healthy Approach to SBIR • Do not abandon your commercialization mindset just because you are participating in an R&D funding program • Remember, you are only using SBIR to fund research activities that will lead to a new product or service • Devote time and attention to non-research business activities that will help you reach a state of commercial readiness Presented by: Martin Zeller

7. SBIR Commercialization Activities • Some Generalizations • No different from non-research business activities that companies of all sizes undertake: advertising, marketing, production, distribution, customer service, accounting, legal, etc. • Most small businesses have limited internal resources and can not accomplish all of these activities on their own • Look outside the small business to acquire necessary resources to fill in the gaps Presented by: Martin Zeller

8. Typical Commercialization Activities • Conduct market research (secondary and primary) • Identify target market niches and prioritize • Prepare a business plan • Pursue sources of financing • Pursue prospective customers • Pursue prospective strategic partners • Secure agreements of third-party funding commitment, in-kind contribution, customer purchase orders, other commercial support • Prepare high quality SBIR proposals that address commercial plans and follow the format specified in the agency solicitation Presented by: Martin Zeller

9. How Can the Far West RTTC Help? • Qualifications: • Involved with SBIR since program inception • Evaluate commercialization sections of phase II NASA SBIR/STTR proposals. • Insider’s familiarity with evaluation criteria for commercialization plans, especially for NASA Presented by: Martin Zeller

10. Far West RTTC Services to SBIR/STTR Companies Presented by: Martin Zeller Company Stage of SBIR Participation

11. Introduction to SBIR/STTR • No out of pocket costs • What Does Far West RTTC Offer? • Primer on basic purpose and philosophy of the program • Explanation of three phases • Agency schedules and key contacts • Referral to agency websites and solicitations • Advice on administrative/procedural issues • Participation in informational workshops and conferences Presented by: Martin Zeller

12. Technical Information Search • Typical out of pocket cost: $400 - $800 • Why is This Important? • Establish innovativeness of proposed effort • Influence Go/No Go proposal preparation decision • Show awareness of prior efforts to address same issue • Place proposed effort in context of previous research work • Demonstrate technical credibility • What Does Far West RTTC Offer? • Access to and expertise in using variety of Sci/Tech databases • Compile bibliographies of relevant research • Provide copies of technical reports of interest (NASA) Presented by: Martin Zeller

13. Building the Technical Team • Typical out of pocket cost: $500 - $1000 • Why is This Important? • Address evaluation issues concerning experience and qualifications of the proposing company • Bolster technical credentials of proposal team • What does Far West RTTC Offer? • Identify qualified prospective expert consultants or nonprofit research institution partners • Emphasis on USC and JPL experts • Others identified via technical information searches • Pre-screen prospects for qualifications and interest • Far West RTTC does not dictate final selections Presented by: Martin Zeller

14. Business/Market Information Search • Typical Cost: $400 - $2000 • CalTIP and budgeted SBIR phase II commercialization funds could pay for some of this • Why is This Important? • Improves understanding of market environment • Creates awareness of competition • Feeds into commercialization plan for proposal • Supports other corporate strategic planning efforts • What Does Far West RTTC Offer? • Access to and expertise in using variety of databases covering economic, business, market, and competitive intelligence • Deliver raw data or compile analytical reports containing relevant business/market information Presented by: Martin Zeller

15. Identify Strategic Partners • Typical cost: $400 - $1200 • CalTIP and budgeted SBIR phase II commercialization funds could pay for some of this • Why is This Important? • Address evaluation criteria concerning ability of company to commercialize proposed product/service • Supplement meager commercialization resources • What Does Far West RTTC Offer? • Use information uncovered in business/market information search to identify prospective strategic partners • Prospects could include investors, manufacturers, licensees, technology co-developers, etc. • Pre-screen prospects for qualifications and interest • Deliver list of qualified candidates • Far West RTTC does not dictate final selections Presented by: Martin Zeller

16. Prepare Commercialization Plan for Proposal • Typical cost: $1200 - $2500 • CalTIP could pay for phase II proposal commercialization plan • Why is This Important? • Not critical in phase I proposals • Significant evaluation factor for phase II proposals • What Does Far West RTTC Offer? • Camera-ready copy for insertion into a phase I or phase II proposal • Plan conforms to format and content specified in agency solicitation • Builds on business/market information search results • Far West RTTC does not prepare technical proposal sections Presented by: Martin Zeller

17. Technology Commercialization Assessment • Typical Cost: $2500 - $5000 • CalTIP and budgeted SBIR phase II commercialization funds could pay for this • Why is This Important? • Provides feedback to company on marketplace acceptance of product/service under development • Input important for strategic planning • May identify prospective strategic partners, including non-SBIR funding sources • What Does Far West RTTC Offer? • Proprietary, primary market research techniques developed under contract to NASA • Final report describes market reaction to product/service and lists potential opportunities for partnering or non-SBIR funding • Examination of IP and regulatory issues, competitive landscape and quantification of market size Presented by: Martin Zeller

18. Mentor Companies Seeking VC Funds • Typical Cost: $2000 - $4000 • CalTIP and budgeted SBIR phase II commercialization funds could pay for this • Why is This Important? • Companies are often short of resources to support business activities that lead to commercial success. • Equally relevant to SBIR and non-SBIR companies • What Does Far West RTTC Offer? • Business plan review • Help in isolating the essence of the business opportunity (strip away the technical mumbo-jumbo) • Guidance on crafting and polishing the “elevator speech” • Compilation of coherent, compelling, 20 minute VC pitch Presented by: Martin Zeller

19. For Further Information . . . • NASA Far West Regional Technology Transfer Center • http://www.usc.edu/go/ttc/NASA/SBIR/index.html • 213-743-2353 • 800-642-2872 • nasa@usc.edu • Participating agency SBIR web • sites • eg. NASA • http://sbir.nasa.gov Presented by: Martin Zeller