What’s Next???? Today-2/18

What’s Next????
Market readiness checklist and Executive Summary (15’)
Finances- expenses, revenues, and summary (35’)
Work Session (60’)
Review Market Research Questions
Executive Summary
Review and refine expenses
Assignments: Complete expense, revenue & financial summary.
Prepare Executive summary for discussion with Bill Newman. BRING A COPY TO BILL
Mon- 2/23
Scheduled meetings with Bill Newman- choose a half hour time slot between 1:00 and 4:30 pm. All
group members should plan on attending and participating- 30’ each (325 Bexell)
Work Session- Preparation of Commercialization Plan (2:00-3:00)
Bill Newman “VC Expectations and Venture Funding” (3:00-4:00)
NOTE CHANGE IN LOCATION – 325 Bexell NOT Weatherford
And after that….
Source of Financing and Connecting to Milestones (30’)
Commercialization Plan Checklist (30’)
Work Session (50’)
Refine Revenue and Financing Plan
Outline for commercialization plan
Assignment: Begin preparing slides for in-class presentations
Mon- 3/2
Scheduled meetings with Paul Gulick (1/2 hour between 11:00 and 2:30)
Paul Gulick- “VC Expectations and Venture Funding” (60’)
Assignment: Complete slides for in class presentations (Wed)
Wed- 3/4
In class presentations- with audience
Market Research Questionnaire
This is a list of forty questions about your
commercialization plan
Divide these up among group members and discuss the
If you don’t have solid answers, you should do additional
research to get them!
Include them in your presentation or written report. Even
if they are not a part of your plan or presentation, these
will be likely questions from Paul, Bill or the judging
The Executive Summary
A concise ~1-2 page summary to provide an overview and
get their attention. Should cover…
The Company and Product- company concept, product or service form, and
position in value chain
The Market: Reasons this market is appealing: revenue base, trends, sector
growth rates, and typical margins.
The Technology: brief description and inventor details, stage of
development, collaborations, current interest, or other context
The Customer: features, performance and benefits vs competitors, why they
will buy, pricing, time to payback for customer
Financial: investment and resources to get technology developed, revenue
projections, time to break even
Future plans: future products or extensions to other markets
Review your expenses
Yes- you should sweat the small stuff- cash is king for a startup!
Some considerations you may have missed…
Is full time needed, or can you subcontract early on?
Hire when needed, not before
Don’t forget the cost of benefits (30-50% adder to salary)
Marketing, Sales and legal fees
This are essential functions for a start-up
Costs are often overlooked, but substantial- travel, conferences, customer visits, etc
Can you subcontract this?
Licensing costs (expect to negotiate this as a percentage of revenues)
 Distribution costs (getting the product to customers)
 Facilities for office space, manufacturing and R&D (find out costs for commercial
real estate- monthly $/sq ft)
The end result should be a year-by-year budget for total expenses
for the first 5 years
Generating Revenue Estimates
Needed information for each product
A. Size of total size of potential market (units or
B. Acceptance or market penetration rate (% of total
market per year)
C. Your unit selling price ($/unit)
Yearly Revenue= A*B*C
The end result should be a year by year revenue projection for
the first 5 years
Sample Revenue ProjectionsBiofuels Unit
Year 1
Year 2
Year 3
Year 4
Year 5
Total Potential
Acceptance (%)
Cost per Unit ($)
Revenue ($/yr)
Complete a similar projection for each product or source of revenue
Revenue Forecasting- Pitfalls to avoid
An overly aggressive acceptance rate
Include considerations such as
Overall market growth rate
 Aggressiveness or conservatism of target customer
 Competitors
 Barriers to entry
 Be optimistic but realistic- investors will mentally derate your revenue
estimates in any case!
Aiming for a very small percentage of a huge
Targeting 0.03% of $100B market after 5 years. What is wrong
with this revenue estimate?
Financial Summary: Positive Cash Flow and “Break Even”
You can use other financial approaches, but the needed end result should
be a year-by-year summary of expenses and revenues for the first five years
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5

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