Process
Click the elements of the process model for more information.
Overview
The Technology Commercialization Center (TCC) has developed a model (depicted above) to describe the process that we use to help our client companies achieve a fundable and sustainable business. The process is based on four distinct stages of growth as illustrated in the bottom section of the pyramid diagram. As companies make progress, certain specific milestones are accomplished which are measurable tasks that the company controls. As these milestones are completed, other entities begin to take notice and interact with the company thus forming relationships. These relationships are validations of the company’s business model that begin to reduce the risk in the eyes of the investor. As validations are realized, the company enters its growth phase in the market place and is positioned for a possible exit, thereby providing a return to the investors.
In order to provide a framework to guide the client along the stages of growth, the TCC has developed a series of training seminars that provide fundamental business knowledge. These seminars are coordinated with each stage of development and they provide a foundation for the client to build upon during the coaching/mentoring part of the process.
Finally, access to capital is always a need and the TCC Client Development Process is designed with this in mind. The underlying objective of the whole model is to prepare the client company to attract funding.
The TCC Process Stages of Growth and Milestones
There are four stages of growth in the TCC Development Model. The first stage is called “Pre Revenue”. This period is typically the time when the client is working to develop the technology into a marketable product. Milestones that apply to this stage of development include:
- Development of an R&D plan
- Market Definition and Sizing
- Legal structure of the company
- Barriers to entry – Intellectual property
- Business model
- Capital assessment
- Preparation for the funding process
The second stage of development is Early Revenues. These may come in the form of the first sales or distribution of beta test technology to paying customers. This stage is notable by the fact that the company has a proof of concept with demonstrative features for their product or service. Activities during this period include the following milestones:
- Formal R&D project management process
- Deployment of the business model
- Implementation of the barriers to entry – Patents
- Development of a staffing plan
- Development of a sales and marketing plan
- Financial systems in place
- Plan for partnerships and alliances
- Identification of advisors and possible board of directors
In stage three the company is able to sustain itself with profitability and cash from the operations of its business model as opposed to living off grant funding or equity investments. Thus, the company has begun to get traction in the marketplace. Milestones of this stage include:
- Management Team in place
- Channel Strategy deployed
- The funding strategy has been implemented
- The operation’s infrastructure is in place
- Financial model is complete
Stage Four is Growth and Graduation. At this point, the company is typically fully funded and poised for growth in the marketplace, or they have exercised an exit strategy. This is the point at which the TCC program graduates the company.
Validations
Validations are very important to the TCC Client Development Model. At this point stakeholders enter the picture providing proof or “validation” of the company’s business model. As with milestones, validations may not occur in any particular order. The sequence they occur depends on the length of the development process and the level of innovation of the technology. While there are many possible validations, there are four that we typically look for. Acquiring paying customers typically happens first and represents that the market has found value in the product and chosen to exchange money for that value.
As the company deploys its strategy, it will typically engage partners either to provide a channel to the market or to add value to the client’s technology, making it more attractive in the market. This validation manifests itself in the form of formal partnerships or mergers.
Before a company can attract institutional funding, it will have to form a board of directors, taking care to add members who bring true value to the company. Since being a board member brings with it certain fiduciary commitments, this role involves more than being an advisor. Since the position of Member of the Board involves commitment, this is a key validation for the client company.
The final key validation is funding. Funding may take the form of grant funding or institutional investor funding. Grants tend to validate the technology that has been developed while investment funding validates the business model. In either case, it shows that the client company’s business model has been reviewed by technology experts and investors and has been found to be worthy of an investment.
Investors look for these validations as evidence that the company is on the right track and has mitigated enough of the risk to warrant a capital investment. While it does not guarantee such an investment, the validations gives evidence that the client has built a business model that could be funded and has a value proposition that can be communicated to both the investor and the target market.
Growth and Exit
The company enters the final stage of the model when it achieves its goal of becoming a sustainable business entity. Companies are typically sustainable through one or more of three vehicles: paying customers and a repeatable sales process, funding, or an exit/liquidity event.
Education and Mentoring
A hallmark of the TCC Client Development Model is the integrated training program. The goal is to assist clients in the process of moving through the development model.
Training seminars have been developed to address subject matter critical to accomplishing the milestones of the different stages. A formal series covers topics related to milestones in Stage 1 and includes the following course titles:
- Introduction to Entrepreneurship and TCC Overview
- Defining Your Market
- Determining Customer Value
- Introduction to Funding
- Core Business Model
- Partnerships and Channel Strategy
- Building a Research and Development Plan
- Intellectual Property and Legal Structure
- Staffing the Entrepreneurial Startup
Topics related to Stage 2 are offered concurrently and scheduled based on overall client needs and status in the program. Seminars for Stage 2 include Developing a Marketing Plan, Licensing Technology, SBIR Grants, and Mergers and Acquisitions.
Access to Capital
Few technology companies can be successful bootstrapping their operations. The cost of R&D alone can be staggering. The TCC works with clients to assess their capital needs and to help put together a funding plan that includes different sources of capital. Understanding the timing of the funding needs is a vital part of the process. With a funding plan in place, we then assist the client in the execution of their funding strategy by reviewing grant proposals, helping to prepare executive summaries and funding presentations and looking for opportunities to introduce clients to people involved in the capital markets. There is no guarantee that an investment will be attained but we try to make sure the client is in a position to secure capital with a fundable business model.
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