We Know How These
Games Are Played!
Central Texas Entrepreneur
Funding Symposium
April 18, 2008
Finding the Appropriate
Form of Investment
Fred Patterson, President
The Commercialization Funding Coach, Inc.
www.CFCoach.com
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
1
We Know How These
Games Are Played!
What’s Facing Today’s
Entrepreneur?
• It’s tough to get funding
– Investors are skeptical
– There’s lots of competition for the money
• Investors will evaluate more than what’s
in your PowerPoint or Business Plan
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
2
We Know How These
Games Are Played!
Each Funding Source is Unique
• Many funding sources
– Federal: SBA, SBIR, BAAs, etc.
– State: Texas ETF, Universities
– Private Sector: Bankers, Angels, VCs,
“Primes” and other Companies
• The key: choose the right source
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
3
We Know How These
Games Are Played!
Investors Will Evaluate
Your Suitability for Funding
Two Critical Dimensions:
1. The developmental state of the
company’s technology
2. The company’s maturity and ability
to conduct business
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
4
We Know How These
Games Are Played!
Evaluating Developmental Status
The Technology Readiness Level (TRL)
• Ranges between 1 and 9
– TRL 1: Conceptual articulation
– TRL 9: Full production mode
• A funding source will assess your
technology’s market readiness
• Your IP Position is critical!
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
5
The TRL Scale
We Know How These
Games Are Played!
Level
Technology Readiness Level (TRL)
1
Conceptual articulation
2
Technology and Applications described
3
Laboratory studies and analysis
4
Limited capability prototype validation in laboratory (pre-alpha)
5
Full capability prototype validation in laboratory (alpha)
6
Prototype validation in relevant environment (pre-beta)
7
Actual system validation in a relevant environment (beta)
8
Initial production and rollout
9
Full production mode
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
6
We Know How These
Games Are Played!
Evaluating Business Maturity
The Business Readiness Level (BRL)
• Ranges between 1 and 9
– BRL 1: A team with a dream
– BRL 9: Fully articulated business
• A funding source will assess your
ability to execute the plan
• Your exit strategy is critical!
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
7
The BRL Scale
We Know How These
Games Are Played!
Level
Business Readiness Level (BRL)
1
Inventor (or team) with a dream
2
Paper studies and analysis produced
3
Capability for conducting laboratory experimentation
4
Capability to work limited-scope R&D programs with project teams
5
Capability to support project engineering development and design
6
Capability to support development and design with a market-driven
business team
7
Capability to support limited production; full business team
8
Capability to transition to full production and distribution
9
Fully articulated business with appropriate infrastructure/staffing
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
8
We Know How These
Games Are Played!
The Investor’s Evaluation Process
Some Combination of TRL & BRL
• Every Investor will rate your technology and
business maturity on some relative scale
• Knowing their preferences allows you to
focus on the right source for success
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
9
We Know How These
Games Are Played!
Let’s Make a Deal !
(The Art of Dealsmanship )
TM
• Understanding the deal and the deal process
• Negotiating favorable terms and conditions
You MUST negotiate a funding arrangement
that protects YOUR best interests!
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
10
We Know How These
Games Are Played!
A Strategy For Success
Raise your Funding Readiness Level (FRL)®
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
11
We Know How These
Games Are Played!
Let’s Put on a Show !!
• Demonstrate the reality of your technology’s
capabilities and potential
• A good show keeps the Investor talking
• A poor show is an indication of a lack of
business maturity
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
12
We Know How These
Games Are Played!
Summary
• Don’t put yourself in front of a
funding source until you’re ready
• Your IP position and exit strategies
are more important than you think
• Be sure you understand the “deal”
• Put on a good show!
© 2006-2008, The Commercialization Funding Coach, Inc. (www.CFCoach.com) All rights reserved.
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