The assessment of commercial viability

1. The assessment of commercial viability UMIP® The University of Manchester Intellectual Property Ltd

2. Overview • The process we use • Assessment criteria • Trends at Manchester • Benefits for researchers • Case studies

3. A judgemental process • Its not an exact science • Seek quantitative and qualitative data • Relies on experience • UMIP people all have technology background • Many industry background • The process asks key questions

4. Business Manager Commercialisation Executive Timing:Start Screening Decision If ‘Yes’ Shaping (0 to 4 weeks) (+ 4 to 8 weeks) (within 12 weeks) ( + 1 to 3 months from decision)

5. Technology confidence Market inertia Nature of competitors Barriers to competition Liability issues Route to market Unique selling proposition Financial return Overall market size Technology People Market Invention disclosure meeting IP Ownership Stages of assessment Initial assessment Further deeper assessment People Dependence on 3rd party IP Market dynamics

6. General rule • It generally takes much more effort to commercialise a technology that only has a modest set of ingredients than it does for one that has a strong set of ingredients • Risks higher • Fund raising more difficult • Time to market longer • Returns smaller

7. The balance Potential “World” value Perceived risk Likely effort/ timescale

8. HIGH Potential value HIGH Perceived Risk Cost HIGH Value and Risk: the balance

9. Some bad calls

10. ‘We don’t like their sound - groups of guitars are on their way out.’ Decca Records rejecting The Beatles, 1962

11. ‘I think there is a world market for maybe five computers.’ Often attributed to Thomas Watson Sr, in 1943 (later Head of IBM),

12. ‘Who the hell wants to hear actors talk?’ Harry Warner, Warner Bros, 1927

13. Other noteworthy mistakes

14. One from Microsoft…

15. This might be one… Palm Centro - a $99 entry-level smartphone

16. 1 Overall market size • Spin-outs - big markets excite investors • If the overall market is £1Bn then even a niche part of it could have significant commercial potential • Licensing – potentially higher royalty rates to be negotiated

17. 1 Overall market size • Information gathering • What is the full range of applications that the technology could be used for? • Market reports • Data on existing companies e.g. turnover • Market validation • Contact end users, distributors, industry insiders

18. 2 Unique selling proposition (USP) • What are the features of the technology that would make it the technology of choice • Function • Cost • Quality • How novel/attractive would it appear to a user/customer? • Is there a clear unmet need? • Information gathering • A thorough knowledge of the existing and emerging technologies • Dialogue with end users/distributors/industry insiders

19. Unique selling propositions

20. 3 Route to market viability • Is there a credible route to market? • Existing distributor chains/outlets? • If no, does setting up an appropriate route to market seem • Sensible/affordable • Information gathering • Typical margins and overheads in existing distribution systems • Identify key players – assess what would motivate them to work with us • make contact if appropriate

21. A technology that enables electronic components and control switches to be woven into fabrics • A low cost cancer imaging technology that has great value ……but all the existing players want to keep it out of the market What would be the route to market?

22. 4 Confidence in the technology • Do we have clear proof of concept? • Function • Scale up potential • Clear understanding of the technical risks/downsides/limitations • Information gathering • Potential external technical critique, testing or evaluation • A good understanding of the investment required to bring to the technology production.

23. 4 Confidence in technology • How easily will the technology scale up • Reproducibility? – works every time in volume • Cost of manufacture in volume environment • Ability to manufacture with a commercially acceptable level of skill • How confident are we that it can deliver the performance desired by the market

24. Money £ return Time Economic benefit Effort Environmental benefit Society benefit 5 Potential return on investment • What is the ratio of gain to effort? Is it favourable? • If so, is this likely to be achieved within an acceptable timescale (e.g. 5-7 years?)

25. 5 Potential return on investment • Information gathering • Potential business value • Other potential benefits – quantitative/qualitative • Resources/effort required to commercialise

26. 6 People • Commercialisation can be very time consuming and is not for everyone • Key attributes of successful entrepreneurship • Open minded • Flexible style • Focussed • Tenacity • Teamwork

27. 7 Barriers to competition • Does a strong intellectual property position exist currently? • Patents • Know how • Software • If “no”, is there a good likelihood that strong IP will be developed from the work ahead? • If “no” to both of the above • Are there any other measures that could be taken to help the technology/product stay ahead of the competition • Customer benefits • Cost • Information gathering • Prior art searches of existing and potential future IP • Identify Specific skills and expertise that are not replicated elsewhere • Technology road map • Can it be kept secret?

28. 8 Market inertia • Is there either significant… • Customer entrenchment in this market sector? • Significant new infrastructure investment/required to get the technology/product to market • Has this sector already invested heavily in current technology, and will therefore be unlikely to orphan that investment? • Are there obvious opinion leaders or early adopters that could help overcome these barriers? • Information gathering • Canvassing of existing customers/distributors etc • Technology roadmap of industry

29. 8 Market inertia Changing money format has significant barriers both practically and in terms of user habits and attitudes The widescreen format took 10 years to take over

30. 9 Nature of competitors • Do we fully understand the strengths/weaknesses of the competitor technologies? • Are we confident that we could take a significant market share? • Would competitors be able to take measures to undermine our project? E.g. • Undercut on price • Offer additional feature/benefit • Information gathering • Competitor analysis • Contacting existing customers/distributors • Specialist opinions/consultants

31. vs 9 Nature of competitors vs An ambitious competitor may end up winning, even if their product is inferior

32. 10 Market dynamics • Do the dynamics for this market match the timing of the product/technology? • A new mobile phone technology may be very risky if it has a 5 year development plan • What are the market trends/pace/volatilities? • Information gathering • Project timing plan • Legal or regulatory requirements/constraints

33. 11 Dependence on 3rd party IP • Is ownership of the technology clear • People who have been involved • 3rd parties organisations who have been involved • “Freedom to operate” • Information gathering • Thorough questioning • Prior art searches • Search for umbrella patents

34. 12 People skills • Are we sure that the skills available to deliver the technology to market are available? • Management team? • Industry/sector experience? • Technical sales? • Technical/support skills? • Admin/accounting/finance?

35. 13 Liability issues • Product liability • Reputation • Ethical

36. 14 Scale of project • Is the scale of the project within our experience • i.e. a £500M project is too big! • If so, the project is almost certainly limited to the licensing route • Investment criteria comfort zone

37. 15 Other risks? • Health of key individuals? • Possible legislation changes? • Dependence on failure of a competitor technology?

38. 30 active projects 170 - not currently commercially viable 10 – people commitment issues 50 – too early stage 110 – no intellectual property or no market Experience at Manchester – EPS data 200 invention disclosures in 2 years

39. Benefits of commercial activity • Harnesses the commercial world in getting your work out there! • Reputation • Organisation • Personal • Additional income • Department • Personal • The experience!

40. Case studies

41. Case study 1 Biomedica: antimicrobial peptides Strengths • Broad range of applications in “world scale” markets • Market applications of • high potential value • low risk with • near term • low barrier • Longer term, high barrier, high risk applications • Good proof of concept • Patent protected Weaknesses • Collaboration with US University complicated ownership – assignment obtained • Technology needed UMIP Proof of Principal investment to gain licensee traction

42. Case study 2EPS example – toxic contaminant removal Strengths • Worldwide market • Significant running cost advantages compared to existing technologies • Higher performance/more effective than existing technologies • Good proof of concept • Very broad range of applications • Simple technology • Patent protected Weaknesses • Water industry generally very conservative on new technology • High investment cost for customers

43. For further advice or if you have any questions please get in touch with your relevant UMIP Commercialisation Executive www.umip.com