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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
WIPO/INV/BEI/02/7.a
Universities and R&D organizations are
potential sources of valuable intellectual
property [IP]
Topic 6 :Topic 6 : Conditions for Successful Economic & Social Use of Inventions & Innovations Conditions for Successful Economic & Social Use of Inventions & Innovations
Seed Capital Investment for Intellectual Property CommercializationSeed Capital Investment for Intellectual Property Commercialization
The challenge is to optimize the opportunities
and outcomes from IP for wealth-creation
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
At 4th October 2001Market Cap
(US$bil)Est.Value IP
(US$bil)%
MarketCap
Coca-Cola Company
112.30 90.66 81
Microsoft 304.90 226.94 74
Abbott Laboratories
80.10 63.53 79
Yahoo 6.12 3.49 57
ResMed 1.66 1.39 84
At 4th October 2001Market Cap
(US$bil)Est.Value IP
(US$bil)%
MarketCap
Coca-Cola Company
Microsoft
Abbott Laboratories
Yahoo
ResMed
IP is a foundation of modern businessIP is a foundation of modern business
(1) Calculated from IP asset = Market Cap. less [Goodwill & Net Tangible Assets]
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
At 4th October 2001
USA
Pat’s : TM’sEst.Value IP
US$(bil) 1Ave. Value
Each IP (mil)
Coca-Cola Company
743 : 894 90.66 55.38
Microsoft 1847 : 959 226.94 80.88
Abbott Laboratories
2422 : 1528 63.53 16.08
Yahoo 4 : 2 3.49 581.63
ResMed 37 : 21 1.39 23.97
Value creation through investment in IPValue creation through investment in IP
(1) Calculated from IP asset = Market Cap. less [Goodwill & Net Tangible Assets]
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
IP Assets are Important to Modern BusinessIP Assets are Important to Modern Business
A lack of funds limits the commercial options …..
.……the kind of funding depends upon the stage of development and risk.
IP development cannot take place without financial support for the physical and human resources needed through each stage
Like businesses, universities and R&D organizations need funds and
expertise to develop IP in order to optimize the opportunities and outcomes
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
Investment risk:Investment risk:NNew ew iideas deas toto the the mmarketplace (a simple model)arketplace (a simple model)
Years
High
Risk
Investment
Low
Risk
Investment
Commercially
Embryonic
$ $
Commercially Mature
Innovation
Value creation
Value creation
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
Stages of Value-creation for IP and a New Venture Stages of Value-creation for IP and a New Venture ……. …….a simple modela simple model
Years
High
Risk
Low
Risk
Investment
Commercially
Embryonic
$ $Commercial
Maturity
R & D Pre-seed Seed…….
…. Start-up…
…..Early growth
Stability….
……Growth...
……..Mezzanine
Increasing value
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
Technology CommercialisationTechnology Commercialisation Value CreationValue Creation && Sources of Funds Sources of Funds
Years
Risk
Commercial Maturity
R & D
Pre-seed
Early growth
Mezzanine
Fu
nd
s
Seed
Start-up
Stability
Growth
Government grants
& personal $
Private Investors
Business Angels
Flinders Tech’s
Fed & State Gov’ts
Technology Corporates
Corporate Investors
Venture Capital etc
$2,500 B
$700 B
$2 B
Financial Institutions
Public Issues
IPO
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
Technology CommercialisationTechnology Commercialisation : : Early StageEarly StageProof of Concept & IP Protection : IPR LicensingProof of Concept & IP Protection : IPR Licensing optionoption
Years
Commercial Maturity
R & D
Pre-seed
Early growth
Tec
hn
olo
gy
dev
elo
pm
ent
& v
alu
e-cr
eati
on
Seed
Start-up
Stability
Market Growth
Exploration
First proof of principle
Initial IP protection
Development of principleprototype
Further IP protection
Product production & sales
Investment ready new venture
IPR licensing
Mezzanine
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
Development and Prototype ProductDevelopment and Prototype Product (Later) Stages (Later) StagesIPR Licensing &/or New Venture OptionsIPR Licensing &/or New Venture Options
Years
Commercial Maturity
R & D
Pre-seed
Early growth
Co
mp
any
gro
wth
&
tech
no
log
y d
evel
op
men
t
Seed
Start-up
Stability
Market Growth
Development of principleprototype
Further IP protection
Product production & sales
Investment ready new venture
Product licensing (bundle of IPRs)
Patents, Trade Marks
Trade Secrets (eg know how)
Copyright, Designs
Mezzanine
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
Making Choices : Making Choices :
Licensing vs New Technology VentureLicensing vs New Technology Venture
Choices for IP commercialization are influenced by
the availability of investment funds for further development
and also by the character of the technology prospects.
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
Technology Candidates for LicensingTechnology Candidates for Licensing
• Technology for a limited range of products Technology for a limited range of products
– will not support business in own rightwill not support business in own right
• Products aligned with existing company’s products : enhance or competeProducts aligned with existing company’s products : enhance or compete
– Preferably sales at least $25 million p.a. sales achievable by year 3Preferably sales at least $25 million p.a. sales achievable by year 3
• Strong intellectual property protection achievable Strong intellectual property protection achievable
• Potential to add value technically & commercially before dealsPotential to add value technically & commercially before deals
• Optimizing returns and minimizing risks from deals is achievableOptimizing returns and minimizing risks from deals is achievable
• Capable R&D/production team to facilitate technology transferCapable R&D/production team to facilitate technology transfer
• Remote markets and expensive to access directlyRemote markets and expensive to access directly
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
• Outstanding management team (business & technological)Outstanding management team (business & technological)
• Platform technology for a wide variety of productsPlatform technology for a wide variety of products
• Strong intellectual property protection achievable Strong intellectual property protection achievable
• Markets for products large, expanding, accessible, differentiated Markets for products large, expanding, accessible, differentiated
– Preferably sales at least $50 million p.a. achievable by year 5Preferably sales at least $50 million p.a. achievable by year 5
• Viable business plan for rapid growth of self-sustaining businessViable business plan for rapid growth of self-sustaining business
– Value propositions created for investments & exits Value propositions created for investments & exits
– Potential to double value each year to acquisition or IPO (within 5 years)Potential to double value each year to acquisition or IPO (within 5 years)
• Capital to sustain asset growth to the next planned funding roundCapital to sustain asset growth to the next planned funding round
Candidates for New Technology VenturesCandidates for New Technology Ventures
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
Project Portfolio Management : Project Portfolio Management : Seed Capital Funds ManagementSeed Capital Funds Management
Investment risk is spread across the portfolio
More projects are dealt with in a shorter time
Likely successes and failures are identified earlier
Successes can be supported with more confidence in later round
funding : failures abandoned quickly
The portfolio manager can apply experience across a range of projects
to the benefit of each project and the portfolio overall
The boom-bust financial cycle is smoothed out
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
The Planned Path to Profit from IPThe Planned Path to Profit from IP
1 Identify and evaluate opportunities for commercialization (deal-flow)
2 Select the best prospects & construct business plans
3 Harmonise technical and commercial strategies
4 Provide incentives & rewards for value-creators
5 Protect potentially valuable intellectual property
6 Invest to reduce risk & create value propositions (with more IP)
7 Create wealth through deals
8 Manage a project portfolio & seed capital funds
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Flinders Technologies Pty Ltd Copyright © 2002 J V Turner
Technology Commercialization : Technology Commercialization : More Frogs than Princes - failure is part of overall success More Frogs than Princes - failure is part of overall success
Good grief… How many more of these before I
find a winner ?
Thanks for
Listening !
