The assessment of commercial viability

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The assessment of commercial viability

• UMIP
• The University of Manchester Intellectual
  Property Ltd

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Overview

• The process we use
• Assessment criteria
• Trends at Manchester
• Benefits for researchers
• Case studies

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A judgemental process

• Its not an exact science
• Seek quantitative and qualitative data
• Relies on experience
• UMIP people all have technology background
• Many industry background
• The process asks key questions

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Activities Phase One Meet Academic(s) Information Gathering on - Technology or Idea - Possible Applications - Stage of Development - Industry Links - IP Position - Research Funding Academic Background Publications Phase Two Search for Prior Art Assess Strength of IP Arrange Independent Technical Assessment Identify Products or Services Identify Customer(s) Validate Market Applications Conduct Market Analysis Define Benefit/Added Value Research Competitors Test Academic Commitment Phase Three Review Outcomes EITHER Reject, then Inform Academic(s) Signpost Elsewhere OR Accept, then Allocate resource Phase Four Protect IP Define Commercial Plan Seek Funding (if required) Confirm IP Assignment Formalise Arrangements with Academic(s) Determine Milestones
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Stages of assessment
Initial assessment
Further deeper assessment
People
Dependence on 3rd party IP
Market dynamics
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General rule

• It generally takes much more effort to
  commercialise a technology that only has a modest
  set of ingredients than it does for one that has
  a strong set of ingredients
• Risks higher
• Fund raising more difficult
• Time to market longer
• Returns smaller

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The balance
Potential World value
Perceived risk
Likely effort/ timescale
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Value and Risk the balance
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Some bad calls
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We dont like their sound - groups of guitars
are on their way out. Decca Records
rejecting The Beatles, 1962
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I think there is a world market for maybe five
computers. Often attributed to Thomas Watson
Sr, in 1943 (later Head of IBM),
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Who the hell wants to hear actors talk?
Harry Warner, Warner Bros, 1927
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Other noteworthy mistakes
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One from Microsoft
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This might be one
Palm Centro - a 99 entry-level smartphone
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1 Overall market size

• Spin-outs - big markets excite investors
• If the overall market is 1Bn then even a niche
  part of it could have significant commercial
  potential
• Licensing potentially higher royalty rates to
  be negotiated

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1 Overall market size

• Information gathering
• What is the full range of applications that the
  technology could be used for?
• Market reports
• Data on existing companies e.g. turnover
• Market validation
• Contact end users, distributors, industry
  insiders

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2 Unique selling proposition (USP)

• What are the features of the technology that
  would make it the technology of choice
• Function
• Cost
• Quality
• How novel/attractive would it appear to a
  user/customer?
• Is there a clear unmet need?
• Information gathering
• A thorough knowledge of the existing and emerging
  technologies
• Dialogue with end users/distributors/industry
  insiders

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Unique selling propositions
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3 Route to market viability

• Is there a credible route to market?
• Existing distributor chains/outlets?
• If no, does setting up an appropriate route to
  market seem
• Sensible/affordable
• Information gathering
• Typical margins and overheads in existing
  distribution systems
• Identify key players assess what would motivate
  them to work with us
• make contact if appropriate

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What would be the route to market?
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4 Confidence in the technology

• Do we have clear proof of concept?
• Function
• Scale up potential
• Clear understanding of the technical
  risks/downsides/limitations
• Information gathering
• Potential external technical critique, testing or
  evaluation
• A good understanding of the investment required
  to bring to the technology production.

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4 Confidence in technology

• How easily will the technology scale up
• Reproducibility? works every time in volume
• Cost of manufacture in volume environment
• Ability to manufacture with a commercially
  acceptable level of skill

• How confident are we that it can deliver the
  performance desired by the market

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5 Potential return on investment

• What is the ratio of gain to effort? Is it
  favourable?
• If so, is this likely to be achieved within an
  acceptable timescale (e.g. 5-7 years?)

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5 Potential return on investment

• Information gathering
• Potential business value
• Other potential benefits quantitative/qualitativ
  e
• Resources/effort required to commercialise

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6 People

• Commercialisation can be very time consuming and
  is not for everyone
• Key attributes of successful entrepreneurship
• Open minded
• Flexible style
• Focussed
• Tenacity
• Teamwork

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7 Barriers to competition

• Does a strong intellectual property position
  exist currently?
• Patents
• Know how
• Software
• If no, is there a good likelihood that strong
  IP will be developed from the work ahead?
• If no to both of the above
• Are there any other measures that could be taken
  to help the technology/product stay ahead of the
  competition
• Customer benefits
• Cost
• Information gathering
• Prior art searches of existing and potential
  future IP
• Identify Specific skills and expertise that are
  not replicated elsewhere
• Technology road map
• Can it be kept secret?

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8 Market inertia

• Is there either significant
• Customer entrenchment in this market sector?
• Significant new infrastructure investment/required
  to get the technology/product to market
• Has this sector already invested heavily in
  current technology, and will therefore be
  unlikely to orphan that investment?
• Are there obvious opinion leaders or early
  adopters that could help overcome these barriers?
• Information gathering
• Canvassing of existing customers/distributors etc
• Technology roadmap of industry

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8 Market inertia
Changing money format has significant barriers
both practically and in terms of user habits and
attitudes
The widescreen format took 10 years to take over
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9 Nature of competitors

• Do we fully understand the strengths/weaknesses
  of the competitor technologies?
• Are we confident that we could take a significant
  market share?
• Would competitors be able to take measures to
  undermine our project? E.g.
• Undercut on price
• Offer additional feature/benefit
• Information gathering
• Competitor analysis
• Contacting existing customers/distributors
• Specialist opinions/consultants

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9 Nature of competitors
vs
An ambitious competitor may end up winning, even
if their product is inferior
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10 Market dynamics

• Do the dynamics for this market match the timing
  of the product/technology?
• A new mobile phone technology may be very risky
  if it has a 5 year development plan
• What are the market trends/pace/volatilities?
• Information gathering
• Project timing plan
• Legal or regulatory requirements/constraints

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11 Dependence on 3rd party IP

• Is ownership of the technology clear
• People who have been involved
• 3rd parties organisations who have been involved
• Freedom to operate
• Information gathering
• Thorough questioning
• Prior art searches
• Search for umbrella patents

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12 People skills

• Are we sure that the skills available to deliver
  the technology to market are available?
• Management team?
• Industry/sector experience?
• Technical sales?
• Technical/support skills?
• Admin/accounting/finance?

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13 Liability issues

• Product liability
• Reputation
• Ethical

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14 Scale of project

• Is the scale of the project within our experience
• i.e. a 500M project is too big!
• If so, the project is almost certainly limited to
  the licensing route
• Investment criteria comfort zone

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15 Other risks?

• Health of key individuals?
• Possible legislation changes?
• Dependence on failure of a competitor technology?

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Experience at Manchester EPS data
200 invention disclosures in 2 years
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Benefits of commercial activity

• Harnesses the commercial world in getting your
  work out there!
• Reputation
• Organisation
• Personal
• Additional income
• Department
• Personal
• The experience!

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Case studies
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Case study 1 Biomedica antimicrobial peptides

• Strengths
• Broad range of applications in world scale
  markets
• Market applications of
• high potential value
• low risk with
• near term
• low barrier
• Longer term, high barrier, high risk applications
• Good proof of concept
• Patent protected
• Weaknesses
• Collaboration with US University complicated
  ownership assignment obtained
• Technology needed UMIP Proof of Principal
  investment to gain licensee traction

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Case study 2EPS example toxic contaminant
removal

• Strengths
• Worldwide market
• Significant running cost advantages compared to
  existing technologies
• Higher performance/more effective than existing
  technologies
• Good proof of concept
• Very broad range of applications
• Simple technology
• Patent protected
• Weaknesses
• Water industry generally very conservative on new
  technology
• High investment cost for customers

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For further advice or if you have any questions
please get in touch with your relevant UMIP
Commercialisation Executive

• www.umip.com