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В В В В В Emily Barlow
Janicia Koh
Arthur SpectorВ Table of Contents
В 1. Executive Summary
2. Company Overview
Mission
Current Status
Market & Products
Objectives
3
5
3. Product Description
6
4. Industry & Market Analysis
Industry Analysis
Competitor Analysis
Market Analysis
Customer Analysis
8
5. Marketing, Sales & Distribution Strategy
Target Market Strategy
Product/Service Strategy
Revenue Model & Pricing Strategy
Distribution Strategy
Advertising and Promotion Strategy
Sales Strategy
Sales Forecast
12
6. Operations
Scope
Ongoing Operations
Operations Strategy
17
7. Development
8. Management
Management Team
Board of Advisors
Board of Directors
19
20
9. Summary of Financials
Financial Assumptions & Expense Estimates
Financial Risks
Harvest Opportunities
22
10. Offering
Investment Requirements
Valuation
Offer
25
11. Works Cited
26
В 2
В В В В 1
Executive Summary
В Clear Solutions provides an innovative opportunity to eliminate current, major obstacles within the
realm of digital viewing: our product, TruView, is a revolutionary anti-glare optical film for use in
liquid crystal display panels, created using a proprietary manufacturing process developed at the
University of Florida. Given our product’s technological superiority and cost-effective production
methods, we will be able to significantly penetrate the market for anti-glare films.
Currently, there are two options for reducing glare on display screens. The first involves applying a
matte texture to the surface of the screen, so that the light reflected off of the screen is then scattered.
The problem with this solution is that the light coming from the display itself is also scattered and
the image quality is reduced. The second method is seen in “glossy” screens. These screens are
covered in a chemical with a refractive index between that of air and glass—reflection occurs due to
the sharp change in refractive index, so these films apply a “graded index” in order to reduce the
effect of glare. Though it allows for an extremely crisp image, this technique is not very successful.
TruView takes a cue from nature and uses a revolutionary nanostructure based on the surface of the
eye of the night moth. Any reflection off of the night moth’s eyes would make it conspicuous to its
predators, so their eyes have evolved over the years to take in as much light as possible without
reflection. Applying this same surface texture to a display screen results in a smudge and scratch
proof display that exhibits less than 0.5% specular reflection and reduced power intake due to the
texture’s enhanced light gathering properties.
With TruView, we are targeting the large original equipment manufacturers of LCD panels, such as
Samsung, LG Electronics, AU Optoelectronics, and Chi Mei Optoelectronics. To this end, we will
offer our first customer, preferably Samsung, given their strong market position and dedication to
innovation, an exclusive two year contract. This agreement allows us to secure one large, loyal
customer as well as create trust in our brand name, but also gives our first customer the chance to
get ahead of competitors with exclusive access to this unique product. At this time, we will still be in
the process of ramping up production capacity and, therefore would be incapable of catering to more
than one large customer.
At Clear Solutions, we leverage our size to create a culture based on strong communication, trust,
and customer service. With this goal in mind, all of our selling and marketing will be done directly
with the customer through a small internal sales force. Our promotion strategies will hinge on a
physical demonstration of our prototype, which is to be completed during year 1. We will also utilize
postings in trade magazines and tech blogs to create buzz about the product and put us on our
customers’ radar even before we approach them directly.
It is important to note that the advantages provided to our customers are two-fold. First, TruView’s
technological superiority will allow our customers to, in turn, charge their customers, the end users,
a premium. Second, since TruView combines the advantages of both current anti-glare solutions, our
3
В В В В customers no longer need to develop separate production lines for two less effective technologies. An
investment in TruView effectively increases the efficiency of their cost structure. With these
advantages in mind, and taking into consideration the price of comparable products, we will price
our films at $5 per square foot, or $3.75 for a standard 15” notebook display, which provides a 58.7%
gross profit in the first year after launch.
Regarding production, TruView’s manufacturing process requires two steps: the films are grown
from reusable molds, which must be created separately. Our operations will focus on manufacturing
these polymer molds from which the actual film is grown, since this is the proprietary element of the
production process. We will then outsource the actual film growth and the final delivery of the
product to a facility in Taiwan, which is the hub of the LCD manufacturing industry. Our first
development goals are to secure a licensing agreement with the group at the University of Florida
and to complete our prototype. Once our prototype is developed, we will begin our initial
conversations with buyers and work towards securing the previously mentioned exclusive agreement.
During year three, after working out all production obstacles on a smaller scale, we will purchase our
own industrial space in Delaware. Starting mid-year three, we will go through a period of
preproduction wherein we prepare for full-scale launch at the beginning of year four.
Another important element of our operations plan is continued research and development. To this
end, we will employ a small team of scientists and lab technicians. We must continually improve our
product, not only in the interest of the customer, but also in the interest of keeping things
proprietary. In order to combat the risk of heightened competition when our patents expire, we will
consistently update the product and secure the necessary protection. Additionally, we will allot
money to fund promising university research to be worked on as joint projects between our scientists
and the university groups. Also conducted in house are customer service, sales, and quality control.
Clear Solutions will require two rounds of funding: $2.2M in year one, primarily to support
prototype development, equipment purchases, and early hiring, and another $3.8M in year three
when we purchase and equip our final manufacturing facility. Estimated returns on these
investments will be on the order of 50% p.a. for series A and 40% p.a. for series B.
Clear Solutions’ founders are students in the Engineering Entrepreneurship program at the
University of Pennsylvania. Emily Barlow and Arthur Spector are serving as the chief executive and
financial officers, respectively, and both have a strong materials science background and a passion
for optical material properties. Janicia Koh has a background in chemical and biomolecular
engineering and work experience in a high tech startup environment and will serve as our chief
operations officer. We will be hiring our chief technology officer and chief marketing officer within
our first year of operation.В В В 4
В В В В 2
Company Overview
В Mission
В To m axim ize enjoym ent in everyday digital viewing: Clear Solutions strives to lead the
world into a new generation of flat panel displays by eliminating glare and enhancing image quality,
revolutionizing the way information is displayed.
В Current Status
В Clear Solutions will be forming at the beginning of 2010 in the Philadelphia region. Headquarters
and our first manufacturing facility will be located in Delaware to take advantage of less stringent tax
laws (International Business Company Formation). Clear Solutions will be organized as a limited
liability company (LLC).i
В Market & Products
В Clear Solutions is a supplier of optical films for flat panel displays. Specifically, our product,
TruView, is the first flat panel-display film that provides stunning image clarity and contrast while
virtually eliminating glare. TruView incorporates the benefits of both anti-glare and anti-reflective
film technologies as well as smudge-resistance, scratch-resistance, and reduced power consumption
like no other manufacturer can.
В Clear Solutions will target display panel manufacturers such as Samsung and LG that supply major
laptop manufacturers such as Apple, HP, Acer, and Dell. These companies have in recent years
created products with rich, vivid displays that attract consumers. However, these displays suffer
from intense glare that can make the product harder to use outdoors and in bright lighting
conditions. TruView can solve this problem for manufacturers and consumers by providing the
same stunning image quality without the glare.
В Objectives
В Clear Solutions strives to take over the market for optical coatings on flat panel displays. We believe
our product offers the most value in the mobile market because these products are designed to
operate in a wide variety of environments in which glare can seriously hinder display readability. For
this reason, we are initially targeting the notebook PC market and potentially expanding into the
handheld mobile market. Our aim is to grow the company to enable larger manufacturing
capabilities and greater market leverage. Ultimately, our investors will receive returns from an
acquisition by either one of our competitors or one of our customers.
В В В 5
В В В В 3
Product Description
В TruView is a revolutionary display screen coating that eliminates the glare problems that plague
today’s display screens. The product itself incorporates a revolutionary nano-structure that mimics
the eye of the night moth and is based on the work done by Dr. Peng Jiang at the University of
Florida (Jiang 2008). Since these moths live in very low-light conditions, their eyes have evolved to
collect the maximum amount of light possible without reflection, which would enable its predators to
locate it (Thomas 2005). A display coating with these properties is ideal for a wide variety of
applications in consumer electronics and has the potential to truly benefit the overall quality of
products in this industry.
В Presently, there are two options for high-quality display: anti-glare screens and anti-reflective screens.
Anti-glare screens minimize glare from external light sources by applying a matte texture to the
surface of the screen. This surface scatters the incident light, but consequently scatters the light
emitted from the device, thereby inherently sacrificing image quality. The alternative, the antireflective screen or “glossy screen,” uses an anti-reflective chemical coating that reduces the intensity
of reflected light. Though this option gives a clear and crisp image, it does not reduce glare as much
as traditional anti-glare techniques (Fujitsu 2005). This inverse relationship between image quality
and glare elimination is one that affects all manufacturers of electronics with display capabilities.
These companies, driven by a need to please their buyers and their end users, will be willing to invest
in cost effective solutions to this issue. Screens of mobile devices, such as laptops and smart phones,
are particularly plagued by this problem because of the variety of environments in which they
operate.
 TruView’s core value proposition lies in two areas: technological superiority and allowance for
production consolidation.ii Due to its revolutionary surface structure, this film is the first to market
that eliminates glare without blurring the image, an extremely useful quality that will improve
readability in consumer electronics. Furthermore, TruView removes our customers’ current need to
simultaneously produce both anti-glare and anti-reflective LCD panels or choose between the two.
LCD screen manufacturers can therefore create one standard model for high-quality, readable
displays. Additionally, TruView is scratch and smudge resistant, making it ideal for the increasing
number of electronic devices incorporating touch screens. The increase in light collection reduces
power consumption needed to produce sufficiently bright displays.iii
В TruView will be priced competitively, though there will be a premium over comparable products in
order to convey its higher quality and create a polished image for the product.iv It should be
emphasized that since it is a superior product, our customers’ end users, the consumers, should be
willing to pay more for its inclusion in their respective electronic device.
В Our revenue model is based on the production and sale of the TruView film. Since we have chosen
to enter an industry that is constantly evolving and upgrading, we can ensure demand for our
product for years to come. New generations of electronics are always in development, and
consumers upgrade every 2-4 years. Thus, there is consistent demand for display screens and,
consequently, TruView.
В 6
    The moth-eye structure is nothing new to science—its earliest studies began in the late 1970’s. What
distinguishes TruView from previous attempts to capitalize on the moth-eye properties is its simple
and cost-effective production process. This method was originally developed and patented by a
research collaboration between the University of Florida and Portland State University. We are
pursuing an exclusive licensing agreement with the intellectual property holders and are prepared to
offer 8% of our sales in exchange for the use of this technology.v Our access to this information sets
up a barrier to entry for other potential startups. Additionally, there are no other extensively
developed technologies that solve this problem and are capable of going to market within the next
few years. vi
В The technology is currently in its final stages of development. There remain some questions
regarding the large-scale manufacturing process, mechanical properties, and packaging. TruView
will be ready for a full-scale launch at the beginning of year 4, after several months of pre-production
starting in year 3. Other pre-launch tasks include creating a prototype, manufacturing facility
planning, and supplier acquisition.
В В В В В В В В В В В В В В В В 7
В В В В 4
Industry & Market Analysis
В Industry Analysis
В Given our position as a manufacturer of flat panel display films for consumer electronics, we have
classified ourselves as an emerging player in the “Semiconductors and Other Electronics
Component” industry with the NAIC code of 334410.
В Current leaders in this industry are 3M, DuPont Displays, who are well-established multi-national
corporations and provide a wide range of products in addition to display screen coatings. Smaller
players include mid-sized companies such as Toray Industries Inc. and VuBest Technology
Corporation. Emerging players such as BrightView Technologies are rapidly gaining market share
with their proprietary and revolutionary optical display film technologies, suitable for various types of
display screens.
В Common display films on the market involve specially designed diffuser and optical film substrates,
which are difficult to produce and integrate with the display screens. These films can be further
categorized into a range of superior light diffusion films and PET films, which require additional
filler materials.
В The demand for display films is closely tied to that of the display panels, themselves. Recently, there
has been an evident increase in the demand for LCDs; however, with more players entering the
marketplace, there has been a price pressure on LCD screens and, consequently, the films to remain
low.vii Fortunately, the cost of raw materials required to produce the films is low. viii
Additionally, the high capital requirements for operation serve as high barrier for new entrants.ix
Substitute products1 place fairly low pressure on incumbents as existing companies continually delve
in technological innovation to remain competitive.x
В There are two types of business models dominant in this industry. Both revolve around the
production and sale of optical films—the difference is in terms of scope and distribution channels.
Large multi-national, vertically integrated corporations, such as 3M and DuPont, develop and
produce everything in-house, while smaller companies frequently outsource parts of their
manufacturing process.xi Companies applying this second business model also have the option of
generating revenue through licensing their film technology.xii Research and development is usually
conducted in-house to ensure high quality control.
В Currently, there is a need for an optical display film that allows for clearly displayed information in
any light condition. This is due to an increased ubiquity and usage of sophisticated electronic
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В 1
В Some substitute products:
• Typical LCD display technology which requires the incorporation of two electrodes and two polarizing
filters.
• LCD backlight films which provide brightness enhancement and built-in diffusion properties.
• Zenithal Bistable Device (ZBD) developed by QinetiQ which retains image without power.
8
В В В В displays outdoors and in office buildings (Clear Solutions Consumer Survey 2009). This need poses
a challenge for display screen manufacturers, who currently have no universal solution.
В We are able to position ourselves as a competitive new entrant in this industry by addressing current
display problems with an innovative surface structure that minimizes glare without reducing image
quality. These benefits, coupled with an increasing demand for mobile electronics, will result in a
growing need for TruView.
В Competitor Analysis
В We have considered companies of all types and sizes and have identified five that are most
comparable to us.xiii Currently, there exists no company which provides our specific technology—all
either offer anti-glare solutions or anti-reflective solutions, but there is no film on the market that
eliminates the detriments to both technologies. Our competitors can be considered in two major
categories: 3M and DuPont are large, multi-national companies that are both horizontally and
vertically integrated, while the other three are smaller and focus on a smaller range of products.
В Company
Toray Advanced Films Co.
VuBest Technology Corporation
BrightView Technologies, Inc.
3M
DuPont
Product
LumiClear
Optical AR/AS/AG Coatings
UNIBRIGHT
Vikuiti Durable Enhanced Specular Reflector
Optilon
        3M and DuPont’s strengths not only lie in their large market share and established brand but only
their large-scale manufacturing capabilities and extensive capital for continued R&D. However, their
size can be a downside: because of the capital already invested in current production, there are very
high switching costs associated with their manufacturing, thereby making it difficult and costly to
implement newer technologies. DuPont, furthermore, is spread across so many different markets
that they are unable to focus their marketing efforts and respond quickly to feedback from
customers.
В The other three companies, Toray Advanced Films Co., BrightView Technologies, and VuBest
Technology Corporation are significantly smaller than 3M and DuPont, though Toray does have the
backing of a very established parent company. Toray and VuBest are both based in Asia, which is a
popular choice for manufacturing facilities given the lower construction and material costs. Though
they do not have the same R&D budget as 3M and DuPont, they are considerably more mobile and
can respond more quickly to changes in the market.
В Considering existing buyer/supplier relationships and distribution channels, 3M and DuPont have
very extensive distribution channels where 3M sells its screen films to the end users through
resellers in addition to supplying to OEMs. DuPont, on the other hand, exclusively sells to the
display screen OEMs. Similarly, Toray, BrightView, and VuBest all sell their films to OEMs, though
the majority of the market for Toray and VuBest’s products is in Asia, given their base location.
9
В В В В BrightView Technologies, on the other hand, is located in the USA and supplies films to big name
laptop OEMs HP and Compaq.
В Besides direct competitors, laptop manufacturers Sony, Toshiba, and Acer have developed their own
proprietary screen films in-house. In some ways, this competition is stronger than that of outside
manufacturers since they can tailor their film technologies to suit their own specific needs and
desires. Additionally, these companies already have established capital-intensive manufacturing
facilities, which will deter them from adopting a new screen manufacturing technique.
В After comparing ourselves with industry players, we have identified VuBest Technology to be our
greatest competitor. This is due to their similar business model and the fact that they have a small
product line. Furthermore, they are located in Taiwan, and their small product line allows them to
react quickly to changes in the market.
В Market Analysis
В The market for TruView consists of flat panel display manufacturers. This industry is characterized
by several large dominating players and few smaller players. Samsung, LG Electronics, Chi Mei
Optoelectronics (CMO), and AU Optronics constitute the market leaders, while Toshiba and Sharp
make up the smaller players. This marketplace is growing at a rate of approximately 9.7% per
annum (Frost & Sullivan 2006).
В This market is segmented in two ways: by type of display panel and by application.xiv The fastestgrowing and currently most prevalent type of display panel is the liquid crystal display (LCD) panel,
which has varying applications in notebook and desktop computers, mobile phones, and televisions
(Frost & Sullivan 2006). Other available display panels are light emitting diode (LEDs), organic LED,
and plasma displays. LED and OLED displays are not yet cost effective and therefore are not widely
commercially available, but are currently under heavy research and slated for a large amount of
growth in the next few years. LCD and plasma display panels make up about 90% of the industry
(Frost & Sullivan 2006). LCD’s are growing at a rate of about 10% per annum, while plasma displays
are becoming less prevalent due to improvements in LCD technology that eliminate the problems
plasmas were created to solve (Industry Insights 2006).
В The flat panel display market can further be segmented by application. Desktop monitor panels
represent the largest constituency of this market, followed by notebook PC panels and televisions.
Applications in mobile phones, PDAs, and portable media players also are present, but considerably
smaller (Frost & Sullivan 2006). Panel size is the major delineating factor for the manufacturers
here.
В The most important trend in this market is that of price deflation. Makers of flat panel displays have
experienced a shift of customer base in recent years—declining prices have increased consumer
buying, after years of serving mostly corporate customers (Frost & Sullivan 2006). Consumer
demand undergoes more fluctuation than corporate demand, and consumers value low cost, ease of
use, and functionality, frequently in that order. This both benefits and restrains our customers: the
consumer market is experiencing strong growth, but consistently declining prices give consumers
10
В В В В reason to wait for them to go down further. Our customers must satisfy their buyers by providing
increasingly cheaper and more effective electronics.
В Customer Analysis
В Our customers are the original equipment manufacturers (OEMs) of LCD panels for mobile devices.
They are participants in a highly competitive industry that experiences large amounts of fluctuating
demand and price erosion (Frost & Sullivan 2006).
В The manufacturers of flat panel display make decisions with two main goals in mind: to gain market
share and to efficiently manage their cost structure. Gain in market share is achieved through
sustained capacity, which is a cause for problems during periods of lower demand. The market
leaders are capable of dropping their prices during such periods, but when lower tier manufacturers
are forced to match these prices, it hinders their expansion. This results in a widening gap between
the major and minor players and very intense incumbent competition within the industry (Frost &
Sullivan 2006). Our customers, therefore, will have high interest in cost effective solutions to give
them a competitive edge, which we provide with TruView.xv This interest is reflected in a recent
increase in investment in fabrication facilities capable of making higher-generation products (Frost &
Sullivan 2007).
В В В В The other main factor driving customer decisions is that of maintaining an efficient cost structure,
partially due to the fact that over 30% of their cost structures is determined by fixed costs (Frost &
Sullivan 2006). To this end, when investing in a new technology, our customers look for
compatibility with the current generation of product, adaptability to future generations, and a quick
return on investment (Frost & Sullivan 2007). At Clear Solutions, we must ensure that our product
fits seamlessly into their already existing manufacturing lines and increases their margins enough to
merit an initial investment.xvi
В В В Currently, the need for a universal flat panel display coating is unmet by existing products on the
market. Our customers are strained by an increasing diversity of buyers and applications, across
which there is little to no standardization. With TruView, we are offering them a cost effective optical
film that eliminates glare and preserves image quality such that it can ultimately be incorporated into
any product for any application. Presently, our customers are forced to simultaneously develop
displays with either anti-glare coatings or anti-reflective coatings, depending on the application and
end user preference. TruView is a first step towards standardization across the flat panel display
manufacturing industry.xvii
В В В В В В В В 11
В В В В Marketing, Sale, and Distribution Strategy
5
В Target Market Strategy
В We will position TruView to target the LCD market segment for applications in notebook computers.
We believe that our product will be most effective for laptops given the variety of light conditions in
which they operate. This external light compromises image quality and readability, and ultimately
decreases the quality of the user's experience.xviii Furthermore, survey responses indicate that glare is
more noticeable in laptops than other mobile devices (Clear Solutions Consumer Survey 2009).
Moreover, this segment can serve as an effective platform for eventual movement into the market for
netbooks and tablets, which are growing in popularity (Market Avenue 2009).
В Our initial target customer is Samsung. We have chosen to target Samsung because of their strong
market position and their consistent dedication to innovation.xix Samsung controls 23.9% of the LCD
market for notebook computers and has been a large force in the move towards LED backlit screens
(LCD Business 2009). In the event that we are unable to work with Samsung, other potential initial
customers are LG Electronics, Chi Mei Optoelectronics, and AU Optronics.
В To secure one of these large LCD manufacturers, we will offer our first customer a two-year exclusive
contract. With exclusive access to our product, our customer will gain an edge in a highly competitive
market and will be able to take advantage of the simplifications in production offered by TruView.
We benefit from this arrangement in that we will have the opportunity to develop a strong
relationship with one of the major players in our target market, allowing us to build trust in our
brand image and gain recognition. Furthermore, since we will still be ramping up production at this
point, we will be incapable of serving more than one large manufacturer.xx This offer fits in with our
vision of working with the customer, not for them, and further shows that our interests are aligned
with theirs.
В Given the state of the LCD industry, we have reason to believe that manufacturers have strong
interest in raising the value of their product in any way possible in order to achieve a competitive
edge.xxi With TruView, we not only provide a solution for the end-users, but offer standardization in
the form of a simple, effective, single-layer film that is appropriate for all applications, thereby
simplifying our customers' manufacturing processes and reducing their material costs.
В Product/Service Strategy
В Positioning Statement
В TruView is the first flat-panel display film that can allow display manufacturers to provide products
with stunning image clarity and contrast and little glare from outside light sources. No other display
film maker has the capability to incorporate the benefits of both anti-reflective and anti-glare
technologies as well as scratch-resistance, smudge-resistance, and reduced power consumption into
their products. This puts TruView a step above the competition in both performance and quality.
12
В В В В Product/Service Attributes
В We will strategically position ourselves as a small optical film manufacturing company with a highlydifferentiated product and the ability to pay careful attention to our large customers. TruView is a
high-quality product that eliminates the current inverse relationship between image quality and glare
reduction in LCD panels: the combination of the benefits of today’s available display solutions is our
product’s strongest feature.
В В The advantages provided to our customers are outlined in the product attribute map in Figure 1.
(Appendix A: Supporting Figures) Unlike our competitors’ products, our product does not suffer
from the previously mentioned inverse relationship: TruView is the only one on the list to exhibit
the greatest possible glare reduction and image quality. Regarding price, it should be noted that more
stars indicates a lower price. The important point here is that Toray and Vubest, our two strongest
competitors use expensive multi-layer films. These films require high-precision manufacturing
processes and specific materials and, therefore, will not be able to compete effectively with the costeffectiveness of our films. Lastly, the only company that competes on the dimension of reduced
power consumption is BrightView, thus further differentiating our product from those of our biggest
competitors.xxii
 Our biggest weakness is that of our customers’ switching costs.xxiii Therefore, in addition to a strong
product, our customers require a service strategy that helps them easily incorporate our product into
their well established manufacturing processes and supply chains. TruView must be easy to apply
and allow for a high inventory turnover rate. To this end, we will work closely with them through a
period of preproduction to ensure that TruView fits seamlessly into their manufacturing lines.
Additionally, we will offer a strong customer service department that will respond quickly to
customer problems and pay close attention to each company’s innovative path. These efforts will set
us apart from our competitors, who cannot emulate this strategy due to their size.
В Revenue Model and Pricing Strategy
TruView will be sold as a pre-cut film that can be directly integrated into an LCD panel. The price is
determined by the price of comparable products and our product’s value-add. First, however, we
considered our target price in the context of the costs of manufacturing an LCD panel, which is
outlined in Figure 2 (Sha 2008). (Appendix A: Supporting Figures) Components make up 79% of
the overall cost of an LCD panel. TruView falls into the sub-category of “Other,” which accounts for
19% of the total cost, or about $12. Furthermore, through conversations with BrightView
Technologies, we have learned that their films are priced according to the cutting costs and total
about $4 per square foot for notebook displays (Adams 2009). This translates to $3 for a film for a
standard 15” display. With this information in mind, we have priced our films at $3.75 per film.xxiv
В It is important to consider that end-users, the consumers, value the properties offered by our product
(Clear Solutions Consumer Survey 2009). This is also part of the value-add for our customers, since
they will be able to charge their customers a premium for a product that includes TruView.xxv
В 13
В В В В Our customers are extremely price sensitive and are constantly aiming for efficient cost structures.xxvi
Given that TruView is the "best of both worlds" regarding current anti-glare solutions, purchasing
our product reduces their costs by consolidating their production lines and increasing the amount of
standardization across their products.
В Because our customers supply to markets with fluctuating demand, we are prepared to vary our
required payment period according to the amount of current demand. We want to build trust with
our customers and show them that we understand the industry and that we are here to work closely
with them.
В Our revenue will be generated from the sale of TruView to LCD manufacturers. We will not charge
for any production integration services because we feel the loss on this service is worth the added
value and reduction in switching costs for our customers. Our recurring revenue model lies in the
fact that we are supplying to an industry that almost completely regenerates itself every few years. By
targeting applications in consumer electronics, we ensure a continued demand for our product and
future versions of it as end-users update their gadgets.
В Distribution Strategy
В We have decided to deliver Truview straight to our customers from our manufacturers in Taiwan,
given that several key players in the LCD industry, such as Samsung, LG Electronics, AU Optronics
Corp., and Chi Mei Optoelectronics, are similarly located in Asia. The LCD OEMs located in Asia are
in Figure 3. (Appendix A: Supporting Figures)
В To facilitate distribution, we will contract a shipping company to deliver the product. By distributing
from the hub of the LCD manufacturing industry, we will be able to take advantage of the proximity
to our customers to achieve reduced shipping costs and a faster response to their needs. Since we
anticipate that we will deliver large quantities of the product frequently, it is necessary to minimize
the distance the end product will travel. Furthermore, when shipping directly to companies also
located in Taiwan, we will not have to deal with import/export regulations.
В Advertising and Promotion Strategy
В We will implement our advertising and promotion strategy in the following phases:
1)
Prototype
2) Press releases/trade conferences
3) Direct selling
4) Customer retention
5) General publicity/Brand recognition
Before any actual customer interaction, we will to create buzz about the technology and product
through postings in tech blogs and trade publications. Since our customers are not our end-users, it
is important to generate interest among the end-users as a selling point with our customers.xxvii This
press exposure will put us on the customers' radar before we approach them directly. Another way to
reach out to potential customers is through trade conferences at which leading electronics
manufacturers will be present.
14
     The nature of our product lends itself best to direct, personal selling—push marketing will be our
main promotion method. The moth-eye technology driving TruView is very complex, and a direct,
personal explanation is required to convey its technological superiority. Additionally, an explicit
demonstration of the product’s qualities will be our strongest promotion method. Furthermore,
TruView is not a one-time purchase, but rather a long-term commitment: once our customers have
made the decision to buy, they will have to change elements of their manufacturing process to
incorporate TruView into their products.xxviii Our direct selling method will enable us to emphasize
issues of importance to them, such as quick return on investment and compatibility with their
current generation of product.
В In the same way our communication with the customer must have an intimate, conversational feel,
so must our literature and website.xxix The design will be clean, and will highlight areas of interest to
the customer, not to us.xxx Having a web presence also fits well with the fact we are ultimately
targeting the notebook computer market. A clean, elegant website and well designed literature would
truly make us “easy on the eyes.” Our emphasis on design will separate us in the eyes of our
customers from standard engineering companies and will position us well in the consumer
electronics industry, which is very focused on sleek, clean aesthetics. We believe that the way we
present ourselves should show that we value our customers’ goals and culture.
В Once we have secured a few customers, we will focus on retaining those customers through excellent
customer service. This service element is especially important in order to increase customers'
confidence and maintain long-term collaboration.xxxi Our buyers must understand that we may not be
perfect right off the bat, but we are dedicated to working with them to address any concerns or
problems they have.
В Sales Strategy
В All of our selling will be done by a small internal sales force. Given the complexity of the product, we
need trained individuals who truly understand and are passionate about the product and its success.
Additionally, by hiring our own sales representatives, we will have full control over the advertising
message conveyed to the customers.
В We aim to attract sales representatives by leveraging our personal contacts and internet job postings.
We will seek individuals with strong interpersonal skills who are passionate about innovation and
knowledgeable about the consumer electronics industry. Their training will consist of a rigorous
explanation of the technology driving TruView and what exactly differentiates it, not only from other
optical films on the market, but also from previous endeavors to market the moth-eye structure.
В Our initial sales force will be very small. This marketing effort will resemble more of a dialogue with
the customer, rather than simply a pitch.xxxii Again, we will emphasize our desire to have a close
relationship with our customers, to work with them rather than for them. Once we have secured our
initial customers, the brand will begin to speak for itself and take some of the responsibility off of our
representatives.xxxiii We will ramp up sales accordingly when we have reached this period.
В 15
В В В В Our sales strategy will strengthen our competitive position by reiterating the image conveyed by our
emphasis on customer service—a focus on intimate business relationships characterized by strong
communication and trust.
В Sales Forecasts
В Our sales forecasts through 2016 are outlined in Figures 1 & 2 of Appendix B: Sales Forecasts. Given
our offer of a two year exclusive contract, our predicted sales numbers are based on the number of
units sold annually by our target customer, Samsung.
В Units refers to the number of LCD panels sold per year that incorporate TruView. To approximate
this number, we started with the total number of LCD panels sold per year, which is estimated to be
439 million in 2009 (Castellano 2009). We then used the forecasted growth rate of 5% p.a. to project
this quantity through 2015 (DisplaySearch 2009). This total amount was then multiplied by the
percentage of LCD panels used for notebook PCs, which is about 34% (Castellano 2009). Following
this calculation, we took into consideration Samsung’s market share of 23.9% for LCD panels for
notebook PCs (Samsung, 2009). We have then considered the rate at which Samsung will ramp up
the manufacturing of products that incorporate TruView. Lastly, we estimated a reasonable adoption
rate for new technologies such as ours; it was determined that Samsung would include TruView in
5% of their notebook panels in year 4, 10% in year 5, 20% in year 6, and 30% in year 7 (Cho 2009).
Multiplying these unit figures by our price of $3.75 per film, we obtain the revenue forecasts outlined
in Figure 2 of Appendix B.xxxiv
В It should be noted that our two year exclusive contract with Samsung ends at the beginning of 2015.
However, we do not anticipate having the capacity to significantly serve any other large LCD
manufacturer and do not believe that customers other than Samsung will have a substantial effect on
our revenue.
В В В В В В В В В В 16
В В В В 6
Operations
В Scope
В As previously mentioned, we are a manufacturer of revolutionary optical films for flat-panel displays.
We will keep all unique elements of our product and business in-house while engaging outside
vendors to cover more generic aspects of our business.
В Our film manufacturing process involves two steps: first, using a proprietary technology to produce a
reusable mold, and secondly, growing the film on the mold (University of Florida 2004).
В We will rely on polymer/chemical vendors for our raw materials and equipment suppliers needed for
mold manufacturing. Production of the reusable moth-eye structured mold will be conducted inhouse, while the final film growth will be outsourced to film manufacturers located in Asia.
В Additionally, marketing and sales will be entirely conducted in-house. We will also have a customer
service unit to provide quick responses to customer problems and our own personal touch.xxxv Also
housed in our company will be a small team of scientists and researchers who will work
independently and with university groups to ensure continuous technological innovation.xxxvi
В Final delivery of the films will be outsourced to shipping and transportation companies located near
our film manufacturers in Asia to exploit the geographical location.xxxvii
В Ongoing Operations
В Our ongoing operations are focused on the proprietary elements of our production process, customer
service, sales, and consistent innovation. The mold for film growth will be produced in-house using
standard manufacturing equipment. Quality checks on the molds, which can be used several times
in the film production process, will be carried out before they are being sent to an optical display film
OEM partner in Asia, particularly Taiwan where these film OEMs can have easy access to high
quality raw materials at lower costs (Information Display 2006). Furthermore, research and
development will be carried out in-house by a team of display experts to ensure constant innovation
in our display technology. Lastly, we will establish our own internal direct sales and marketing team
and employ a team of technology experts to ensure high-quality customer service.
В В Operations Strategy
В We will conduct all proprietary production processes in-house while engaging external contractors
for final growth and delivery of films in order to minimize operations expenses.xxxviii
В Given the focus our in-house operations, our external stakeholders include our suppliers, university
groups, subcontractors and our customers. Outsourcing high-volume film manufacturing and
delivery greatly reduces the start-up expenses required in this capital intensive manufacturing
industry; having our own sales and marketing team differentiates us from existing companies and
aligns us with our company vision to create a personal business.
В 17
В В В В As the quality of our products is highly dependent on the quality of the mold supplied, we will take
full control over purchasing raw materials, inventory management, manufacturing and quality
checking the molds at our US facility.xxxix Simultaneously, we will consistently source and fund
university groups with promising research projects; this will give us access to technical resources that
we may not be able to afford in our initial years of operation. We have chosen to outsource film
production to Taiwan since it is the manufacturing hub for LCD panels (Gartner 2002). Distribution
logistics will also be subcontracted to companies located near our optical display film OEM to exploit
the geographical advantage of operation in Asia.
В Additionally, our business depends greatly on the exclusivity of our licensing agreement with the
inventors of the production process. This helps to create high barriers for new entrants by taking
power out of the hands of our competitors and buyers and mitigating the threat of substitute
products.xl
В There is also a legitimate threat of backwards integration by our buyers that we should not overlook.
We will tailor our operations strategy to mitigate this threat by establishing close relationships with
our customers; effective quality control and customer service will make backwards integration a less
attractive option and will further protect us from competitors. Furthermore, we will be able to lower
switching costs for our customers by ensuring that our product integrates well into the buyers’
production line.В В В В В В В В В В В В В 18
В В В В 7
Development StrategyxliВ В In 2010 our first goal is to complete our product design. This entails resolving two major issues: the
flexibility of the substrate and whether or not it should have a hard cover coating. These
characteristics will determine the effectiveness of our product and the ease of manufacturing and
delivery. Simultaneously we will look for our first round of funding and will work on securing a
licensing agreement with the researchers who have developed the scalable manufacturing process.xlii
The initial funding will be used for developing our prototype, hiring additional management, and
scouting raw materials suppliers. The prototype is a key part of the process as it will be necessary to
entice our initial buyers. Management hires will include a Chief Technology Officer and Chief
Marketing Officer who will be integral when we are persuading buyers. Once we have secured
funding and a licensing agreement, we can also begin designing our production process.
В During 2011 we will begin conversations with initial buyers and secure a delivery contractor. Finding
a substantial initial buyer is extremely important to the success of our company as it is the best way
to demonstrate our product’s effectiveness to the mass market. To entice a major LCD manufacturer
such as Samsung or LG, we will offer a 2-year exclusive contract. This will give the buyer a reason to
choose our product as they will have an exclusive competitive edge.xliii We are not hurting our market
potential with this contract because we will already be strained to meet the demand of such a major
buyer and would not have capacity for other customers.
В Around the beginning of 2012 we expect to need a second round of financing which will be used to
purchase plant space, construct our plant, buy manufacturing equipment, and perform pre production. In finding our land and preparing for construction, we need to make sure we adhere to
any regulations and receive necessary permissions. Our plant should be completed and set up by
mid to late 2012. Completing the plant quickly and efficiently is important as it will give less time for
competitors to react to news of our development. During early to late 2012 we will debug any
problems found during plant testing and our product will undergo market tests. Finally we plan to
have our full-scale production start up and first product shipments in the beginning of 2013.
19
В В В В 9
Summary of Financials
В Financial Assumptions & Expense Estimates
В Cost of Goods Sold
В Our business model revolves around the manufacturing of the nanostructured plastic molds that are
then used for creating the actual film. Each of these molds can be used approximately 20 times
without noticeable damage, and they are created from patterned silicon that can be used up to 65
times (Kapur 1996). Our materials costs per unit, therefore, reflect the fact that we only need to
make one silicon unit for every 65 polymer molds and each polymer mold can make 20 films.
Additionally, other than silicon, our raw materials are extremely generic and inexpensive. These
assumptions result in an estimated raw materials cost of about $0.04 per unit (Sigma Aldrich). Labor
costs were determined based on the salaries of the employees whose work is directly related to
creating the goods. The actual production of the films will be outsourced to a firm in Taiwan. For
these outsourcing fees, we have assumed about $0.30 per unit. Scrap and rework was assumed to be
20 percent of material and labor costs, and shipping and freight was determined via Professor Karl
Ulrich’s cost models spreadsheet (OPIM415-2009).
В Midway through our third year, we will purchase our own manufacturing facility in time for our soft
launch during the second half of the year. This new facility will require new furnishings and
additional equipment to prepare for full scale production in year 4.
В Operating Expenses
В Our starting team will consist of 9 people: the three founder officers, a chief technology officer, a
chief marketing officer, two research scientists, and an administrative assistant. The salaries were
determined by surveys accessed through Payscale.com and are competitive for their field and desired
level of experience. The company will then hire sales reps, additional administrative staff, research
scientists and lab technicians in accordance with production launch and ramp up as well as increased
R&D.
В For travel and entertainment, figures were estimated based on trips we believe would be required
considering the goals for the company at any given time. For example, our management team would
likely be taking trips in the first year to talk with VC’s about funding and in the second year or CMO
and VP of Sales and Marketing would be taking trips to secure our initial buyer. Number of trips
was determined by the importance and urgency of a particular goal and $1000 dollars were allocated
per person per trip.
В Regarding various promotional methods, we will allot more money during the second and third year
when we are courting out first major buyer. We have also allocated money in the first two years for
the attendance of trade conferences while we are still trying to get our product on the radar.
В We have achieved our research and development figures by estimating our raw material and basic lab
equipment needs for the first few years. Starting in the fourth year, we will allocate approximately
22
В В В В $20,000 for the funding of promising university research and will increase this number as sales
ramp up and we shift more focus to R&D. These projects will be worked on jointly between our
small R&D team and more well-equipped university teams.
В We will base our headquarters and manufacturing facility in Delaware where we can take advantage
of the lower taxes. Before we settle into a permanent facility in year 3, we will begin by renting space
in the Industrial Science Park at a rate of $77,400 per year (CityFeet 2009). This space will be
divided into a manufacturing floor, small R&D labs, and offices for our administrative personnel.
Utilities were estimated based on typical business utility costs. Our telephone and fax estimates for
the whole company were achieved based on a typical business package. It is also important to note
that we have allotted more money to legal and accounting during year one because we are acquiring
our licensing agreement during this time.
В Working Capital
В Our percentages for working capital were assumed to be industry averages in later years of
operations. At the beginning, we don’t have any capital in accounts receivable because we haven’t
sold any product yet, and therefore no one owes us money. Similarly, nothing is allotted to inventory
or accounts payable before production begins.
В Capital Requirements
В To keep the company in constant positive cash position we will require a total of approximately $6M
in the first three years operations, before we have launched our product.xlvi Once we launch we turn a
positive cash flow. Funding will be discussed in more detail in the Offering section.
В SFG & SGRxlviiВ В The self-financeable growth rate (SFG) and sustainable growth rate (SGR) were calculated using
ratios and percentages from our financial workbook. The SFG came out to roughly 3000%, or a 30
times growth rate, and the SRG was about 40%. This discrepancy is mainly due to what each figure
represents. The SRG is a measure of return on equity, specifically because our company does not
pay dividends. Since the company has high earnings we also have a fair amount of retained cash,
which is allocated to stockholder’s equity. This keeps equity high and the ROE reasonable. However
the SFG is a measure of how much cash is necessary to earn a dollar of sales and how quickly this
cash is renewed and the sales earned. Because of our company’s low costs and high margins as well
as somewhat of a short operating cash cycle of roughly 100 days, the SFG results in a very high
percentage.
В Financial Risks
В There exist, of course, some fundamental financial risks associated with our venture. First, our
current resources could be exhausted in the event of a significant delay in product launch. The
logistics of the manufacturing process involve intensive research and testing to verify the product’s
scaling capabilities before full implementation. During this time, any technical glitches or changes in
23
В В В В market demands, including the introduction of competing products, will affect the launch of our
product. To mitigate this risk, we will leverage the partnership we have with the inventors of the
process as it is in their best interest to ensure the product is ready to launch quickly.
Furthermore, the LCD manufacturing industry has recently been facing the stress of low pricing, due
to heated competition among brands and the current economic downturn (Marketwatch 2009). As a
result, LCD manufacturers may resist new technologies to keep costs low. Also, if we are not able to
establish a competitive market price, there is no guarantee that the product will achieve commercial
success. To counter this, we will need effective sales and marketing to convince our customers that
TruView can help increase their margins. Additionally, extensive research and price testing can
ensure that TruView achieves market traction.
Another important element of our success is our intellectual property. This is contingent on the
licensor’s upholding of the agreement and the patent’s demonstrated litigious strength.
Furthermore, there is a risk of increased competition when the patents expire. We will diminish this
risk by hiring the necessary legal consulting to ensure quality IP protection as well as continuously
developing or licensing new intellectual property to achieve sustainability.
В Another risk associated with manufacturing includes longevity of suppliers, the stability of their
prices, and regulatory risks associated with international trade. We can mitigate this risk by
establishing contractual purchasing relationships with multiple suppliers to both increase reliability
and foster competitive pricing.
В Harvest Opportunities
Since Clear Solutions has a major focus on one technology and one product, it is in our best interest
to aim for a merger with another display film manufacturer or acquisition by one of our vertically
integrated customers.
В A merger with a competitor can allow TruView to complement their product line and allows us to
offer a wider range of products to our customers. Additionally we can continue our focus on
technological development while leveraging on the other company's resources for sales, marketing,
and R&D.
В An acquisition is very likely too. Acquisition of our company will grant exclusivity to the parent
company to further conduct research and development on the proprietary film technology. Also, our
parent company would be able to more extensively incorporate TruView into its product lines.
Harvest is most likely to occur in year 5 or possibly year 6. By this time our company is selfsustaining and turning substantial profits, giving us significant cash on hand and making us an
attractive purchase or partner.
В В В 24
В В В В 10
OfferingxlviiiВ В Investment Requirements
В For seed financing, the founders will infuse the company with $100K of their own bootstrapped
funds.xlix Per our cash flow analysis for our first seven years of operation, including our soft product
launch in year three, we have determined that Clear Solutions requires two capital infusions: a series
A investment in year one and an additional series B round of funding in year three.
В The series A round involves a $2.2 million cash infusion. This will be used primarily to secure
licensing, devlop a prototype, and secure our initial buyer as well as to pay the first two years of
salaries, rent on our temporary facility, and other operating expenses.
В In year three, we will require an additional cash infusion totaling $3.8 million. This money is
necessary mainly to purchase our facility and additional production equipment. In this final year
before launch we will be setting up our permanent production facility and working out any issues we
may have with it.
В Value of Business
В Through our financial analysis of the first seven years of operation for Clear Solutions, we have
determined that we can expect to earn $4.7M in year five. We use a P/E ratio of 16 which is a
comparable ratio in our industry (Real Pennies 2009, Morningstar 2009). The expected sell price of
our company in year five is $75M.
В Offer
В In exchange for a $2.2M series A investment investors will receive a total share equaling 14.9% of
the company, split evenly between common and preferred stock.l Subsequently, in year three, the
additional $3.8M investment will earn investors another 9.9% of the company, also split evely
between common and preferred stock. In total the two combined investments after dilution, will
give investors a 26.4% share of the company. In year five, when the company is acquired by one of
our vertically integrated customers or merged with a comparable film manufacturer, $19.8M will go
to our investors giving them annualized ROI’s of 50% for series A funding and 40% for series B
funding.
В В В В В В В В В 25
В В В В 11
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В В В В В В В В В В В В В В В В В В В В В В В В В 31
В В В В Appendix A: Supporting Figures
В В В В В В В Glare Reduction
п‚«п‚«В п‚«В п‚«п‚«В п‚«п‚«В п‚«В п‚«п‚«п‚«В Image Quality
п‚«п‚«п‚«В п‚«п‚«п‚«В п‚«п‚«п‚«В п‚«В п‚«п‚«В п‚«п‚«п‚«В Low Price
п‚«В п‚«п‚«В п‚«В п‚«п‚«В п‚«п‚«п‚«В п‚«п‚«В Power reduction
п‚«В п‚«п‚«п‚«В п‚«В п‚«В п‚«В п‚«п‚«п‚«В Figure 1: Product Attribute Map (Fujikawa 2007, BrightView Technologies, Vubest Technology Corporation,
3M Optical Systems Division 2005, DuPont)
В LCD PANEL PRICE
$54-65
Components
79%
Backlight
21%
Color Filter
16%
Circuit Board
10%
Polarizer
7%
Glass
6%
Others
19%
Non-Component
21%
Figure 2: Breakdown of a LCD Panel Cost (Sha 2008)
В В COUNTRY
MANUFACTURER
China
LG Displays Co., Ltd
AU Optronics Corp.
Taiwan
Sony
AU Optronics Corp.
Chi Mei Optoelectronics
Innolux Display Corporation
Hannstar Display Corp.
Chunghwa Picture Tubes, Ltd
South Korea
Samsung
LG Displays Co., Ltd
S-LCD Corp.
Japan
Pioneer Corp.
LG Co., Ltd (Panasonic)
Fujitsu Hitachi Plasma Display Ltd.
Figure 3: LCD Manufacturers by Country (Frost & Sullivan 2008)
В 1
В В В В Appendix B: Sales Forecasts
В 16.00В 15.06В 14.00В 12.00В 9.56В MMВ 10.00В 8.00В 6.00В 4.55В 4.00В 2.17В 2.00В 0.00В YearВ 4В YearВ 5В YearВ 6В YearВ 7В В Figure 1: LCD panels sold per year incorporating TruView
В $45.00В В $39.53В В $40.00В В $35.00В В $28.68В В MMВ $30.00В В $25.00В В $20.00В В $15.37В В $15.00В В $10.00В В $8.13В В $5.00В В $0.00В В YearВ 4В YearВ 5В YearВ 6В YearВ 7В В Figure 2: Revenue in millions through year 7, 2016
В 2
В В В В Appendix C: Business Model Diagram
IN-HOUSE
Mold Manufacturing
Sales & Marketing
Customer Service
Research & Development
В В В CUSTOMERS
В OUT-SOURCED
Film Growth
Delivery
В В 3
В В В В Appendix D: Income Statement
Year 1
Year 2
0
NET REVENUES
Year 3
0
68,571
Year 4
Year 5
Year 6
28,683,252
Industry
375,000
8,130,173
789,929
‐
3,355,395
41.3%
5,820,006
37.9%
9,683,570
33.8%
13,699,023
34.7%
50.0%
(414,929)
‐
4,774,778
58.7%
9,546,021
62.1%
18,999,682
66.2%
25,830,083
65.3%
50.0%
1,641,743
703,470
582,905
2,928,117
10%
1,992,736
801,601
647,192
3,441,529
9%
17.0%
70,000
15,366,028
Year 7
39,529,106
COST OF GOODS SOLD
% of Revenues
‐
‐
GROSS PROFIT
% of Revenues
(68,571)
‐
‐
OPERATING EXPENSES
Sales & Marketing
Research & Development
General and Administration
Total Operating Expenses
% of Revenues
87,070
230,757
366,109
683,936
‐
185,087
287,416
397,074
869,577
‐
534,348
287,392
400,255
1,221,994
‐
587,480
425,158
421,958
1,434,596
18%
1,069,840
485,078
435,664
1,990,583
13%
(752,507)
(939,577)
(1,636,923)
3,340,182
7,555,438
16,071,565
22,388,554
0
0
0
0
0
0
0
(752,507)
(939,577)
(1,636,923)
3,340,182
7,555,438
16,071,565
22,388,554
0
0
0
0
0
0
0
(752,507)
(939,577)
(1,636,923)
3,340,182
7,555,438
16,071,565
22,388,554
0
0
0
(3,173,284)
(6,750,057)
(9,403,193)
(752,507)
‐
(939,577)
‐
(1,636,923)
‐
3,335,488
4,382,154
9,321,508
41.0%
28.5%
32.5%
Percent is high in year 4 due to tax loss carry forward
12,985,362
32.9%
EARNINGS FROM OPERATIONS
EXTRAORDINARY INCOME / (EXPENSE)
EARNINGS BEFORE INTEREST & TAXES
INTEREST INCOME / (EXPENSE)
NET EARNINGS BEFORE TAXES
TAXES
NET EARNINGS
(70,000)
(4,694)
33.0%
Appendix E: Balance Sheet
Begin
ASSETS
CURRENT ASSETS
Cash
Accounts Receivable
Inventories
Other Current Assets
Total Current Assets
NET FIXED ASSETS
TOTAL ASSETS
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short Term Debt
Accounts Payable & Accrued Expen
Other Current Liab
Current portion of long term debt
Total Current Liabilities
LONG TERM DEBT (less current portion)
STOCKHOLDERS' EQUITY
Common Stock
Preferred Stock
Retained Earnings
Total Equity
TOTAL LIABILITIES & EQUITY
Year 1
100,000
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
1,136,064
0
0
0
1,136,064
411,429
256,488
0
0
0
256,488
351,429
255,975
0
0
75,000
330,975
2,660,000
1,860,699
1,219,526
335,540
1,626,035
5,041,800
2,223,571
4,273,831
2,304,904
582,001
3,073,206
10,233,941
2,107,857
10,275,873
4,302,488
968,357
5,736,650
21,283,368
1,797,143
20,867,580
5,929,366
1,369,902
7,905,821
36,072,669
1,286,429
100,000
1,547,493
607,916
2,990,975
7,265,371
12,341,799
23,080,511
37,359,098
0
0
0
0
0
0
0
0
0
0
0
0
197,482
22,500
0
219,982
0
671,079
487,810
0
1,158,889
0
931,201
921,962
0
1,853,163
0
1,549,371
1,720,995
0
3,270,366
0
2,191,844
2,371,746
0
4,563,590
0
0
0
0
0
0
0
0
0
100,000
100,000
1,100,000
1,200,000
(752,507)
1,547,493
1,100,000
1,200,000
(1,692,084)
607,916
3,000,000
3,100,000
(3,329,007)
2,770,993
3,000,000
3,100,000
6,482
6,106,482
3,000,000
3,100,000
4,388,636
10,488,636
3,000,000
3,100,000
13,710,142
19,810,142
3,000,000
3,100,000
26,695,502
32,795,502
100,000
1,547,493
2,990,975
7,265,371
12,341,799
23,080,509
37,359,092
100,000
607,916
Appendix F: Cash Flow Statement
Begin
OPERATING ACTIVITIES
Net Earnings
Depreciation
Working Capital Changes
(Increase)/Decrease Accounts Receivable
(Increase)/Decrease Inventories
(Increase)/Decrease Other Current Assets
Increase/(Decrease) Accts Pay & Accrd Expenses
Increase/(Decrease) Other Current Liab
Net Cash Provided by Operating Activities
INVESTING ACTIVITIES
Plant & Equipment
Other
Net Cash Used in Investing Activities
Year 1
Year 2
Year 3
Year 4
(752,507)
68,571
(939,577)
70,000
(1,636,923)
466,429
0
0
0
0
0
0
0
0
0
0
0
0
(75,000)
197,482
22,500
(683,936)
(869,577)
(480,000)
(480,000)
Year 5
Year 6
Year 7
3,335,488
471,429
4,382,154
530,714
9,321,508
530,714
12,985,362
530,714
(1,219,526)
(335,540)
(1,551,035)
473,597
465,310
(1,085,378)
(246,461)
(1,447,171)
260,122
434,151
(1,997,584)
(386,356)
(2,663,445)
618,170
799,033
(1,626,878)
(401,545)
(2,169,171)
642,473
650,751
(1,025,512)
1,639,724
2,828,132
6,222,041
10,611,705
(10,000)
(2,775,000)
(35,000)
(415,000)
(220,000)
(20,000)
(10,000)
(2,775,000)
(35,000)
(415,000)
(220,000)
(20,000)
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt
Increase/(Decrease) Curr. Portion LTD
Increase/(Decrease) Long Term Debt
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock
Dividends Declared
Net Cash Provided / (Used) by Financing
0
0
0
1,100,000
1,100,000
0
2,200,000
0
0
0
0
0
0
0
0
0
0
1,900,000
1,900,000
0
3,800,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
2
2
INCREASE/(DECREASE) IN CASH
1,036,064
(879,577)
(512)
1,604,724
2,413,132
6,002,042
10,591,707
100,000
1,136,064
1,136,064
256,488
256,488
255,975
255,975
1,860,699
1,860,699
4,273,831
4,273,831
10,275,873
10,275,873
20,867,580
CASH AT BEGINNING OF YEAR
CASH AT END OF YEAR
100,000
Appendix G: Monthly Cash Flow Statement
MONTH
1
OPERATING ACTIVITIES
Net Earnings
Depreciation
Working Capital Changes
(Increase)/Decrease Accounts Receivable
(Increase)/Decrease Inventories
(Increase)/Decrease Other Current Assets
Increase/(Decrease) Accts Pay & Accrd Expenses
Increase/(Decrease) Other Current Liab
Net Cash Provided by Operating Activities
INVESTING ACTIVITIES
Plant & Equipment
Other
Net Cash Used in Investing Activities
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt
Increase/(Decrease) Curr. Portion LTD
Increase/(Decrease) Long Term Debt
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock
Dividends Declared
Net Cash Provided / (Used) by Financing
2
3
4
5
6
7
8
9
10
11
12
Es#mated
YearВ 1
Actual
YearВ 1
(752,507)
68,571
(752,507)
68,571
(79,428)
5,714
(61,580)
5,714
(60,080)
5,714
(60,080)
5,714
(63,180)
5,714
(61,080)
5,714
(60,080)
5,714
(61,080)
5,714
(60,080)
5,714
(64,680)
5,714
(60,080)
5,714
(61,080)
5,714
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(73,714)
(55,866)
(54,366)
(54,366)
(57,466)
(55,366)
(54,366)
(55,366)
(54,366)
(58,966)
(54,366)
(55,366)
(683,936)
(683,936)
0
(480,000)
0
(480,000)
(480,000)
0
(480,000)
(365,000)
(365,000)
(115,000)
0
0
0
0
0
(115,000)
0
0
0
0
0
0
0
0
0
0
0
0
1,100,000
1,100,000
0
2,200,000
(55,366)
(54,366)
(58,966)
(54,366)
(55,366)
1,036,064
1,414,493
1,359,127
1,359,127
1,304,761
1,304,761
1,245,796
1,245,796
1,191,430
1,191,430
1,136,064
1,100,000
1,100,000
2,200,000
0
0
0
0
0
INCREASE/(DECREASE) IN CASH
1,761,286
(55,866)
(54,366)
(54,366)
(57,466)
(55,366)
CASH AT BEGINNING OF MONTH
CASH AT END OF MONTH
100,000
1,861,286
1,861,286
1,805,421
1,805,421
1,751,055
1,751,055
1,696,689
1,696,689
1,639,224
1,639,224
1,583,858
0
(169,366)
1,583,858
1,414,493
0
0
0
0
0
0
0
0
0
0
0
0
0
1,100,000
1,100,000
0
2,200,000
1,036,064
100,000
1,136,064
Appendix H: Ratio Analysis
Year 1
Summary Financials ($)
Revenue
Gross Profit
EBIT
Net Earnings
Net Cash from Operating Activities
Capital Expenditures
Dividends
Cash
Total Equity
Total Debt
0
(68,571)
(752,507)
(752,507)
(683,936)
480,000
0
1,136,064
(752,507)
0
Efficiency
Collection Period (Days)
Payables Period (Days)
Inventory Turnover (Days)
Profitability
Gross Profit %
Operating Expenses %
Net Earnings (After Tax) %
Return on Assets
Return on Equity
Return on Capital (LT Debt + Equity)
Year 3
Year 4
Year 6
‐
74%
‐
‐304%
89%
31%
87%
113%
38%
39%
‐
‐
0.0
‐
‐
0.0
1.5
1.5
0.0
4.4
4.1
0.0
5.5
5.2
0.0
6.5
6.2
0.0
7.9
7.6
0.0
3.8
3.4
0.0
0
0
0
0
0
0
0
91
0
55
73
37
55
58
37
55
58
37
55
58
37
55
73
44
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐154.6%
‐154.6%
‐154.6%
‐54.7%
‐59.1%
‐59.1%
62.1%
13.0%
28.5%
35.5%
41.8%
41.8%
28,683,252
18,999,682
16,071,565
9,321,508
6,222,041
220,000
0
10,275,873
13,710,142
0
Industry
‐
25%
58.7%
17.6%
41.0%
45.9%
54.6%
54.6%
15,366,028
9,546,021
7,555,438
4,382,154
2,828,132
415,000
0
4,273,831
4,388,636
0
Year 7
375,000
(414,929)
(1,636,923)
(1,636,923)
(1,025,512)
2,775,000
0
255,975
(3,329,007)
0
‐48.6%
‐48.6%
‐48.6%
8,130,173
4,774,778
3,340,182
3,335,488
1,639,724
35,000
0
1,860,699
6,482
0
Year 5
0
(70,000)
(939,577)
(939,577)
(869,577)
10,000
0
256,488
(1,692,084)
0
Growth
Revenue Growth Rate - CAGR:
Net Earnings Growth Rate - CAGR:
Ratios
Current Ratio
Quick Ratio
Debt to Capital (LT Debt + Equity)
Year 2
66.2%
10.2%
32.5%
40.4%
47.1%
47.1%
39,529,106
25,830,083
22,388,554
12,985,362
10,611,705
20,000
0
20,867,580
26,695,502
0
65.3%
8.7%
32.9%
34.8%
39.6%
39.6%
50.0%
17.0%
33.0%
36.3%
44.0%
44.0%
В Appendix J: Clear Solutions Consumer Survey (conducted on surveymonkey.com)
1. Please rate the extent to which glare is a problem in the following devices.
Cell phone
Laptop
Desktop PC
TV
Digital Camera
I’ve never
noticed
Somewhat
Problematic
Problematic
Very
Problematic
Rating
Average
Response
Count
41.4% (36)
10.3% (9)
31.0% (27)
23.0% (20)
41.2% (35)
32.2% (28)
46.0% (40)
43.7% (38)
39.1% (34)
31.8% (27)
17.2% (15)
27.6% (24)
24.1% (21)
29.9% (26)
21.2% (18)
9.2% (8)
16.1% (14)
1.1% (1)
8.0% (7)
5.9% (5)
1.94
2.49
1.95
2.23
1.92
87
87
87
87
85
2. Current anti-glare solutions involve a rough texture on the surface of the screen that reduces the
quality of the image. Do you feel that glare elimination without image quality reduction is a valuable
feature?
Response Percent
Response Count
Yes
89.4%
76
No
10.6%
9
3. How much more would you pay for a laptop with such a quality?
Response Percent
I would not pay more for this feature
15.3%
Less than $5
7.1%
$5-9
12.9%
$10-15
22.4%
$15-20
18.8%
More than $20
23.5%
Response Count
13
6
11
19
16
20
4. Where do you usually use your laptop? (Check no more than two)
Response Percent
Classroom/Office
25.5%
Library
14.9%
CafГ©
11.1%
Bedroom
34.6%
Outside
4.8%
Traveling
9.1%
Response Count
53
31
23
72
10
19
В 5
В В В В Appendix K: Development Plan
Activity
January
March
May
2010
July
September
November
January
March
May
2011
July
September
November
January
March
May
2012
July
September
November
2013
January
Resolve product substrate
and flexibility issues
Secure licensing
agreement
Design production process
Seed financing
Develop prototype
Scout raw materials
suppliers
Hire additional
management
Hire additional sales
personnel
Secure initial buyers
Secure land for plant
Secure second round
financing
Plant construction
Order manufacturing
equipment
Secure delivery contract
Install equipment and set
up plant
Debug manufacturing
process
Full scale production startup
First product shipments
MILESTONE
Concept testing
ENGINEERING
MARKETING
MANUFACTURING
OTHER
MILESTONE
First Financing
MILESTONE
Prototype
MILESTONE MILESTONE
Plant testing Full Scale Production
В В В В BOOK OF ACADEMIC END NOTES
Emily Barlow
Janicia Koh
Arthur SpectorВ i.
Clear Solutions will be an LLC to ensure protection from risks as a result of large investments
and to avoid the double taxation that could arise from incorporation (NOLO).
ii.
The value proposition varies for different groups of stakeholders, i.e. different parts of the chain
of buyers, as discussed in “Product Development: A Customer Driven Approach” (Harvard
Business School 1996). Our purchasers, the LCD manufacturing companies, benefit directly
from the increase in manufacturing efficiency, but indirectly from the high quality of the
product. TruView’s quality makes them a more favorable supplier in the eyes of the device
manufacturers, who can then charge a premium to the consumers for inclusion of our film. The
product’s superior glare reduction capabilities are only directly beneficial to the consumers.
iii.
Using the Kano method to analyze TruView, we have determined that the screen readability is a
must-have, while glare reduction is a linear satisfier, and scratch/smudge resistance and
reduced power consumption are delighters (Harvard Business School 1996). Display readability
is the ultimate goal and is already provided to a great extent by the current screen options. Glare
reduction is our product’s improvement over the other options; the end users’ (consumers)
opinion of the product will be determined by its ability to reduce glare. The last features are
perks of the technology, but are neither the focus of the product nor filling the direst need.
iv.
Price is an important element in the product’s perception as demonstrated by the case of PDF
software discussed in the EAS 545 class notes. Raising the price of the product increased sales
because of the higher-perceived quality.
v.
Licensing-in our IP allows us to acquire protection without investing the resources necessary to
invent a product and obtain the patents. This reduces our time to market, which is important in
the consumer electronics industry. Licensing-in effectively lowers our barrier to entry in this
industry (Yoffie 2005).
vi.
Creating barriers to entry is important to reduce the threat of new entrants as discussed in the
class notes as well as in Porter’s Five Forces (Porter 2008). Since there are no other extensively
developed technologies that serve the same purpose as ours, exclusive access to our technology
significantly reduces the prospect of competing startups for the next few years.
vii.
The buyers in our industry are mainly display screen original equipment manufacturers (OEMs)
who purchase anti-reflective screen films and integrate them into their own manufacturing
processes. Given the current state of available technology, these buyers can present a rather high
bargaining power (Porter 2008) as they are rather price sensitive in addition to the fact that
there is not truly differentiated solution. Therefore, it is critical to form exclusive partnerships
with an OEM initially, especially one with a strong dedication to innovation, as referenced from
“Assemble the Invasion Force” by Willie, in order to gain distribution channels and secure
market share. This will be particularly beneficial for us to reach the early majority given the fact
В 2
В В В В В that OEMs such as laptop manufacturers like Samsung, HP, Lenovo, Sony are constantly
competing to provide high quality, appealing products for their customers.
viii.
The suppliers’ bargaining power is relatively low (Porter 2008). This is due to the fact that raw
materials required for manufacturing our optical display films are common chemicals and
plastics which can be easily obtained from different suppliers, and switching costs between
suppliers are low. Such materials include silica colloids, glass substrates, and PET.
ix.
New entrants in this industry generally present a low threat to incumbents (Porter 2008). This
is a result of the high barrier of entry caused by undifferentiated products and the large capital
investments necessary to build manufacturing facilities. The economy of scale is a disadvantage
for any early stage firm, since it is difficult to develop large amounts of demand for an unproven
product. Additionally, big players possess proprietary technology to ensure competitiveness.
x.
Substitute products provide a relatively low level of influence on us (Porter 2008). This is
attributed to the fact that no company in the display film manufacturing industry provides the
benefits of both anti-glare and anti-reflective technologies is a singular optical display film which
leads to a consolidation of production lines. Existing products that serve the same function
include multi-layered light diffusion and PET films which involve complex manufacturing
processes. In addition, companies like ours who have a core technology competency will delve in
research and development to remain technologically competitive, further raising the bars for
new product entry.
xi.
3M, Dupont are likewise recognized as integrators, as illustrated in “Innovating for Cash” read
in EAS-545, who have high capital for manufacturing facilities and in-house development where
their innovations have been proven. In this case, their speed-to-market is not critical and can
afford to cover all business aspects in their operations.
xii.
Analyzing the business models of existing companies with core technology competency and
referencing the article “Innovating for Cash,” the traits common to all these companies are that
there are intense competition, hence the need for constant innovation, strong substitute
products exist and that some of these companies possess technologies that are in the early
stages. Hence, all of the companies, with the exception of a few, are orchestrators in this
industry, characterized by the ability to collaborate with several partners simultaneously and the
ability to move quickly.
xiii.
We used the 13 Dimensions of Competitive Strategy when comparing competitors in our
industry and classified them into groups according to these (Porter 1998). As a result, we are
able to identify direct competitor and thus position ourselves competitively in the marketplace.
Some of the major dimensions taken into consideration include specialization, brand
identification, distribution channel, technological leadership, vertical integration, cost
leadership, ancillary service and relationship to parent.
В 3
В В В В В xiv.
Here we segment the market based on the different needs consumers have (Davidow 1986).
First of all, consumers clearly purchase different products based on what they need. Virtually
no one will buy a monitor when they are looking for a television, even though these items are
not all that different. Segmenting this market by application is therefore important.
Furthermore, each type of panel has different pros and cons so consumers weigh these when
purchasing a product. It is crucial that we have correctly segmented the market so that we can
target the correct customers for which our product will be most effective (Davidow 1986).
xv.
Incumbent competition is intense for several reasons. There are many very large competitors
and their products are not very differentiated. Also the companies compete heavily on price.
(Porter 2008) To lessen the intensity competitors will do what they can to differentiate their
products, especially if it is cost-effective to do so.
xvi.
It is always necessary to offer a complete product. Just a technology will not do (Davidow 1986).
To this end we must make sure that purchasing our technology makes sense for our customers,
and ultimately this means ensuring seamless incorporation into their production lines and
allowing them to cut costs and potentially charge higher profits.
xvii.
By offering a single product that combines the benefits of two technologies into one we achieve
three goals. First, our customers achieve a differentiating benefit for their products, reducing
threat of competition. (Porter 2008) Second, we reinforce the completeness of our product by
ensuring that our competitors can cut costs to increase their margins. (Davidow 1986) Third,
we increase our strength in our industry by offering the new standard of optical display film
which all display manufacturers will want and of which we will be the only supplier. (Porter
2008)
xviii.
The product is designed to create direct value for the end user, rather than for the purchasers.
As shown by the Bloomberg case presented in “Creating New Market Space,” pleasing the end
users is an important determinant in the sustainable success of a product (Kim 1999). Though
there is value for our customers, it does not stem directly from the high quality of the product
and was not highly considered when choosing a target market.
xix.
The company consistently releases reports boasting their focus on innovation. Furthermore, its
history proves this fact: throughout the late 90’s, Samsung developed the world’s first 1GB dRAM, smallest semiconductor package, and first flash memory prototype. More recently, they
have been the first to push LED-backlit displays, which is now becoming an industry standard
(Kercher 2007). With this in mind, we have reason to believe that Samsung makes an
appropriate choice for our first customer, since they lie on the innovator/early adopter side of
the chasm.
В 4
В В В В В xx.
This strategy can be seen when Dell first adopted lithium ion batteries in the early 1990’s and
used all of Sony’s supply for the batteries’ first years of commercial existence (Harvard Business
School 1999). Inclusion in Dell’s successful Latitude line of notebook PCs was a step towards
their becoming standard within the industry. Moreover, Dell’s line had the advantage being the
only one to incorporate these batteries at the time, an important element in the Latitude’s
success.
xxi.
This is due to the high levels of incumbent competition and the large amount of bargaining
power commanded by buyers in the LCD manufacturing industry. LCD buyers (computer
manufacturers) earn low profits, and the cost of LCD units has little effect on their other costs.
Thus, they are a price sensitive group (Porter 2008). This fact, in combination with the relatively
low switching costs between LCD vendors, makes buyers likely to shop around.
xxii.
We have identified the dimensions considered on the product attribute map using the strategies
outlined in “Creating New Market Space.” Glare reduction and image quality are factors that
should both be raised well above the industry standard. Similarly, that of reduced power intake
should also be raised. There are no factors that the industry has never been offered; rather, it is
the combination of these attributes that has been created for the first time (Kim 1999).
xxiii.
Given our buyers’ price sensitivity, the switching costs associated with our product are an
important factor when considering our products advantages and disadvantages and increases
our buyers’ bargaining power (Porter 2008).
xxiv.
We have chosen this price regardless of our costs, based on top-down pricing strategies outlined
in Davidow’s “Price on Value but Charge What the Market will Bear” (Davidow 1986). It is for
this reason we have taken into consideration the overall costs of manufacturing an LCD panel in
addition to BrightView Technology’s comparable product.
xxv.
This strategy is justified by other industry players: HP and Compaq charge their buyers a
premium of $50 for a laptop with a display panel including BrightView’s film.
xxvi.
Our buyers are not the end users and therefore experience price pressure from device
manufacturer and, even further downstream, consumers, which factors into their price
sensitivity (Dolan 1995). Furthermore, there is legitimate threat of backward integration on the
part of our buyers, which adds to their bargaining power, and the need for a reasonable price
(Porter 2008).
xxvii.
We gain considerable bargaining power if we can influence the purchasing decisions of
customers downstream. As discussed in Porter’s Five Forces, DuPont implemented a similar
strategy by advertising its carpet fibers to downstream consumers, resulting in consumer
preference in spite of the fact that DuPont is not a carpet manufacturer (Porter 2008).
В 5
В В В В В xxviii.
The criteria for personal selling, as explained in the course notes, include complex products,
demonstration of features, short direct channel to customer, and major, infrequent purchase
decisions. TruView is technically complex and is also visual in nature. Additionally, the decision
to purchase our product is major, with several strategic and operational implications.
xxix.
One of the key points of Guerilla Marketing is the fact that single-faceted promotion strategies
are ineffective (Levinson 2007). To this end, we must have literature and a web presence to
complement our personal sales methods. These elements must all be in alignment with each
other, otherwise the message is lost and the customer is left confused.
xxx.
Levinson emphasizes that traditional marketing techniques focus on information about the
company itself, whereas it is a more effective strategy to focus on the customer and their needs.
Our web site and literature must be based on “you” marketing rather than “me” marketing
(Levinson 2007).
xxxi.
As discussed in Guerilla Marketing, “68% of all business lost is lost owing to apathy after the
sale” (Levinson 2007). Our focus on continuing customer relations will ensure that they want
to continue to work with us in the future. This is especially important since continued sales to
loyal customers are the basis for our recurring revenue model.
xxxii.
“The Sales Learning Curve” emphasizes the importance of an appropriately sized sales force for
each stage of development (Leslie 2006). The early sales force should be comprised of
individuals who are fast-learners, adaptable, passionate about the technology, and able to bring
customers together with various functional teams within the company. These “renaissance
reps” must have strong communication skills and evolve their marketing effort as contact with
the customer continues.
xxxiii.
Taking a note from the sales learning curve, the goal shifts from solely getting the product sold
to developing a recurring sales model during this transition period. It is during this time that we
will hire “enlightened reps,” who do not need the analytical and communication skills of our
early sales representatives (Leslie 2006).
xxxiv.
Our sales estimation formula was derived using a variation of the forecasting by percentage or
complementary product sales method outlined in “Product Development: A Customer Driven
Approach” (Harvard Business School 1996).
xxxv.
Eliminating as many intermediaries in the value chain as possible helps to speed up the process
of product delivery to the customer. This places a strong influence on customers’ buying
decision, especially so when these customers are thriving in a highly competitive industry where
market leaders are constantly racing to launch innovative product into the market. As illustrated
in the article “The Power of Virtual Integration: An Interview with Dell Computer’s Michael
Dell”, Dell’s direct model not eliminates the time and cost of third-party distribution but also
В 6
В В В В В creates a personal business, leading to an overall higher customer satisfaction. Therefore,
considering the fact that we are targeting an aggressive industry- that of the LCD panel
manufacturing, where major players such as Samsung, LG Electronics which a strong
dedication to innovation to remain competitive, should we be able to get our products to our
customers faster than our competitors, we will be able to maintain a competitive edge over our
them.
xxxvi.
Companies are able to gain significant value from open innovation. This involves nonconfinement of R&D to the company but rather, finding and tapping into the knowledge and
expertise of existing resources outside the company. As talked about in the article “The Era of
Open Innovation” read in EAS 545, principles governing open innovation ultimately serve to
lead both sides to a win-win situation. As such, for an early stage company such as Clear
Solutions which will not be able to support intensive R&D, partnering university groups with
promising research projects allow us to leverage external resources necessary for further
technological innovation.
xxxvii.
One of the 10 cost drivers related to value chain activities that Porter has identified is
“geographic location”. Basically, a company is able to develop a cost advantage by controlling
these drivers better than competitors do especially so when leveraging on low cost markets for
better access to lower cost labor, raw materials and key customers as well as achieving
economies of scale in a shorter period of time. Thinking strategically in terms of geographical
location, Taiwan takes center stage in high-quality, low cost optics manufacturing industry as
well as the LCD manufacturing industry and thus possesses all of the previously mentioned
characteristics.
xxxviii.
As discussed in the article “Innovating across the Business Model” read in EAS 545, it was
emphasized that knowing one’s differentiating factor will allow a company to thrive in a
competitive environment. In the case of a red ocean market such as the optical display film
industry, for companies such as Clear Solutions become differentiable from competing
businesses, it is necessary for such companies to identify a potential opportunity to create value
by departing from industry norms as well as to sieve out a potential blind spot that competitors
could use to undermine or devalue their position. As such, Clear Solutions has been able to
remain competitive by being able to provide high technology at low costs and also leverage on a
proprietary technology that sets an unmatched choice of products in a standardized, mass
market segments.
xxxix.
As mentioned previously in the industry analysis, 2 types of business models dominate the
optical display film manufacturing industry- the Integrator and the Orchestrator. Clear
Solutions, in this manner, displays the characteristics of an orchestrator where we focus on
some steps of the operations and link up with partners to carry out the rest such as the actual
film manufacturing and delivery of the product to our customers. This allows us to launch our
products quickly and reduce investment costs.
В 7
В В В В В xl.
An exclusive licensing agreement with the inventors will grant Clear Solutions sole proprietary
rights to utilize the film technology for our products. This automatically places a barrier for
competitors to replicate the technology (Porter 2008) as that will constitute an infringement of
the intellectual property right laws.
xli.
The general structure of our development plan, specifically major milestones, was based on
“Milestones for Successful Venture Planning” (Block 1999).
xlii.
With exclusive rights, we are able to mitigate the threat of incumbents, who have significantly
higher research budgets and larger capacity. We also mitigate the threat of new entrants as an
exclusive contract with a major customer makes it harder for them to gain traction in the
market, especially without IP (Porter 2008).
xliii.
Exclusive rights to the buyer mitigates their power as they will have no option to switch to other
suppliers and with such a significant partner, incumbent power is diminished as well as it will
be much easier for us to get into the market and defend our position (Porter 2008).
xliv.
Time and again, the importance of people proposition has never been more emphasized. There
has been an adage saying that “A good idea can succeed with great people but a great idea
cannot do with good people.” In other words, the success of a start-up is contingent on the
soundness of the management team and a sound management team is what makes a company
go from “good” to “great”. This is illustrated in Chapter 3 “First Who.. Then What” of the book,
“Good to Great” by Jim Collins, Level 5 where Jim, based on observations of well-established
companies, shared his insights that getting the right people on board first makes all the
difference between a good and a great company. In our case, Clear Solutions understands the
intricacies of a high-tech venture and has taken special consideration to bring people with
complementary skills and expertise on board. In order to steer the company in the correct
direction right from the beginning, roles of the founders were defined based on their strengths.
With our superior management team, we can now figure out the best path to take our company
to greatness.
xlv.
When it comes to hiring people for the team, a wide range of factors from background to
personal are taken into consideration to make sure that the right people are hired for the team,
between their personality and the requirements of the position. The challenge lies in assessing
the candidate’s personality in one sitting which is not obvious solely by looking at his/her
resume. Referencing “Notes on the Hiring and Selection Process”, a candidate can have his/her
personality judged based on a series of behavioral observations and selection is then dependent
on the impression the job candidate creates. In a nutshell, the right mix of people plays a huge
role in influencing the success of a company. Thus, great emphasis and stringency is placed to
making sure the right people are hired for the team.
В 8
В В В В В xlvi.
By calculating our cash flow for our first years of operation we can see to what extent our cash
position becomes negative. The most negative point of cash position represents the total
amount of capital we will need to fund our startup (Stancill 1999).
xlvii.
Formulas for calculating SFG and SGR were taken from class notes.
xlviii.
All calculations for valuation and offered percentages were calculated based on “EAS545 Note:
Venture Capital Method.”
xlix.
Bootstrapping is still the primary way to fund a venture. Even though we will need larger capital
infusions, we will bootstrap the seed round to show our commitment to the company and keep
capital costs down (Bhide 1992).
l.
Venture Capitalist will always lean towards preferred stock because it allows them to extract
their money first, however we would prefer to offer common stock to make the venture less
risky for ourselves (Hoffman 1987). To this end we will pursue a even split between common
and preferred stock for the venture captialist’s investments.
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В В В В В 
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