Department of Homeland Security Science & Technology

Why Commercialize

NCET2 Presentation

Frank BarrosSBIR Program AnalystScience and Technology Directorate

May 6, 2014

1

Why did you set up a company?

Transformation of knowledge into commercial products and services

Technology MarketIP

�Innovation and entrepreneurship are foundations upon which a knowledge economy is being built

�Bringing about paradigm changing technology to improve the social condition

�Creates wealth for all concerned

�Brings to sharper focus the results of research funds thus creating more funds

�Provides economic value through creation of highly skilled and highly paid jobs

Why is commercialization important?

An idea without execution is of little benefit

You plant the seed for success or failure on day one.

Regardless of your transition strategy or market a commercialization analysis must still be carried out even if only to validate priorities

and resources

You must take your technology (preferably when it is still only an idea) and look at it from

a business perspective

No company takes a new technology to market without an understanding of that market

IDEA and EXECUTION

�Most new technology-based companieshave spun out of:

�Existing companies (with industrial experience, strong market links)

�Universities/academics/independent inventors (emerging technologies with the potential of many applications but a lack of strategic choices of application)

The Problem

�Research can be said to respond to a number of personal drivers:

�Fundamental research for the pure sake of knowledge (which may or not result in being an enabler for further research leading to eventual commercialization)

�Research responding to a need (technology or market pull) -a great position to be in

�Research not responding to a need (technology push – you must create the demand) – a not so great position to be in but potentially an exciting challenge - but will it be a business

The Technology Dilemma

Three things are required for the Process:

A SWOT Analysis

A Commercialization Plan

A Commercialization Roadmap

You may or may not have to perform every aspect of the above but

regardless of who the ultimate end-user is you still have to defend your

proposed technology to get the requisite resources for development

Strengths, Weaknesses, Opportunities, Threats

�Strengths (Advantages, Capabilities, Unique selling points, Resources, Price, Management, etc)

�Weaknesses (Disadvantages, Gaps in capabilities, lack of competitive strength, Time scale, Effects on core activities, etc)

�Opportunities (New markets, Technology innovation, New partnerships, collaborations, New business etc)

�Threats (Political, Legal, Environmental, etc)

SWOT Analysis

�What are you trying to do

�What is current practice and what are the limitations

�What is new in your approach

�Who cares

�If successful, what difference will it make, and how will that difference be measured

�Risks and payoffs

�How much will it cost

�How long will it take

�What are the milestones along the way and how will they be measured

Heilmeier’s Catechism (Questions)

9

�The Commercialization Plan is a tool whose purpose is to Communicate:

�The business opportunity

�The market

�The competitive environment

�The business model

�The strategy

�The resources

The Commercialization Plan

� What are you going to produce (value proposition)

� What market will it serve and size of market (details)

� Why does the market need this (problem) (push-pull) (specificity)

� Who are the first adopters (not your family and friends)

� Competitors (who are you going to threaten and their anticipated response)

� Manufacturing (how will you produce; where can you get help)

� IP – is there any IP? Protection of that IP? Defense?

� The Right Team

� Resources (do you have them? Do you need to look for them)

� Who are you going to partner with along the way (with the exception of IT, it is rare that a small company can go it alone in today’s world)

� What is your business model for generating revenue/profits

� What are the risks in your plan and how are you going to mitigate them

� What is your exit plan (not too early to think about this)

What information do you need

�Tool which describes how the technology is going to move to the market

�Covers a specific product or technology

�Defines the route to market

�Identifies milestones and risks (when to pull the plug)

�Provides financial information related to the product (cost, price, sales projections, margins)

Commercialization Plan

Plan Implementation

�A ‘roadmap’ is used to track progress through the commercialization process.

�A ‘roadmap’ identifies in a single document the activity outcomes outlined in a detailed model.

Commercialization Roadmap

Depending on your technology product you may have to adapt these generic formats

�Tech Transfer Offices (Universities, national labs)

�State Economic Development Departments

�Small Business Administration Loan Programs

�Specific funding programs such as the US Treasury’s State Small Business Credit Initiative (SSBCI); Virginia’s CIT; Maryland’s TEDCO; Pennsylvania’s Ben Franklin, among others

�Debt and equity financing (Lending Club, Crowdsourcing, Venture debt, Revenue debt, angel and venture capital among others)

�Small Business Innovation Research Program (SBIR/STTR)

Sources to help you get started

�What is it?�Government funds high risk innovative research with

potential of high pay off both government needs and society

�Lets you test your ideas (Phase I Proof of Concept, up to $150K for six months)

�Helps you build a prototype (Phase II, up to $1.5M for two years)

�Helps you develop a real marketable product (Phase III)

Eleven federal agencies with R&D extramural budgets in excess of $100M are mandated to set aside a minimum of 2.8% for the SBIR program. Annually this amounts to $2.2B+

Perhaps the BEST VehicleThe SBIR/STTR Program

�Advantages:�No pay back to the government

�Technology failure is not a ‘black mark’

�Government takes no IP

�Company’s data rights are explicitly protected by the government (four years from the close of your project for the civilian agencies and five years for DOD)

�Potential sole source favored position in government procurement

You owe it to yourself to at least familiarize yourself with theprogram – www.sbir.gov

SBIR/STTR

�Regardless of your perception of success and failure the

analytical process required to develop a plan with its

implementation steps (roadmap) will help focus your thought

process on defining the problem in very concrete terms;

explaining why your proposed solution will be better than

anything currently in use; lays out all the steps needed for

implementation.

Overall Conclusion

�People don’t surrender their mental models easily:

“They may puzzle over contradictory evidence, but usually succeed in pushing it aside, until they come across a piece of evidence too fascinating to ignore, too clear to misperceive, too painful to deny, which makes vivid still other signals they do not want to see, forcing them to alter and surrender the worldview they have so meticulously constructed.”

Diane Vaughan, The Challenger Launch Decision.

A Great Quote

�Frank Barros

SBIR Program Analyst

U.S. Department of Homeland Security

Science and Technology Directorate

francis.barros@hq.dhs.gov

202-254-6966

202-254-5823 (fax)

202-285-6940 (cell)

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