1. Today-2/18 Market readiness checklist and Executive Summary (15’) Finances- expenses, revenues, and summary (35’) Work Session (60’)  Review Market Research Questions  Executive Summary  Review and refine expenses Assignments: Complete expense, revenue & financial summary. Prepare Executive summary for discussion with Bill Newman. BRING A COPY TO BILL NEWMAN MEETING, AND E-MAIL TO INSTRUCTOR. Mon- 2/23 Scheduled meetings with Bill Newman- choose a half hour time slot between 1:00 and 4:30 pm. All group members should plan on attending and participating- 30’ each (325 Bexell) Work Session- Preparation of Commercialization Plan (2:00-3:00) Bill Newman “VC Expectations and Venture Funding” (3:00-4:00) NOTE CHANGE IN LOCATION – 325 Bexell NOT Weatherford What’s Next????

2. Wed-2/25 Source of Financing and Connecting to Milestones (30’) Commercialization Plan Checklist (30’) Work Session (50’)  Refine Revenue and Financing Plan  Outline for commercialization plan Assignment: Begin preparing slides for in-class presentations Mon- 3/2 Scheduled meetings with Paul Gulick (1/2 hour between 11:00 and 2:30) Paul Gulick- “VC Expectations and Venture Funding” (60’) Assignment: Complete slides for in class presentations (Wed) Wed- 3/4  In class presentations- with audience And after that….

3. Market Research Questionnaire This is a list of forty questions about your commercialization plan Divide these up among group members and discuss the answers If you don’t have solid answers, you should do additional research to get them! Include them in your presentation or written report. Even if they are not a part of your plan or presentation, these will be likely questions from Paul, Bill or the judging team…

4. The Executive Summary A concise ~1-2 page summary to provide an overview and get their attention. Should cover… The Company and Product- company concept, product or service form, and position in value chain The Market: Reasons this market is appealing: revenue base, trends, sector growth rates, and typical margins. The Technology: brief description and inventor details, stage of development, collaborations, current interest, or other context The Customer: features, performance and benefits vs competitors, why they will buy, pricing, time to payback for customer Financial: investment and resources to get technology developed, revenue projections, time to break even Future plans: future products or extensions to other markets

5. Review your expenses Yes- you should sweat the small stuff- cash is king for a startup! Some considerations you may have missed…  Employees Is full time needed, or can you subcontract early on? Hire when needed, not before Don’t forget the cost of benefits (30-50% adder to salary)  Marketing, Sales and legal fees This are essential functions for a start-up Costs are often overlooked, but substantial- travel, conferences, customer visits, etc Can you subcontract this?  Licensing costs (expect to negotiate this as a percentage of revenues)  Distribution costs (getting the product to customers)  Facilities for office space, manufacturing and R&D (find out costs for commercial real estate- monthly $/sq ft) The end result should be a year-by-year budget for total expenses for the first 5 years

6. Generating Revenue Estimates Needed information for each product A. Size of total size of potential market (units or customers) B. Acceptance or market penetration rate (% of total market per year) C. Your unit selling price ($/unit) Yearly Revenue= A*B*C  The end result should be a year by year revenue projection for the first 5 years

7. Year 1Year 2Year 3Year 4Year 5 Total Potential Customers 500505510515520 Market Acceptance (%) 0.2%1%2%5%7% Cost per Unit ($)$16K$14K $12K Estimated Revenue ($/yr) $16K$70K$142K$309K$436K Sample Revenue Projections- Biofuels Unit Complete a similar projection for each product or source of revenue

8. Revenue Forecasting- Pitfalls to avoid 1. An overly aggressive acceptance rate  Include considerations such as Overall market growth rate Aggressiveness or conservatism of target customer Competitors Barriers to entry  Be optimistic but realistic- investors will mentally derate your revenue estimates in any case! 2. Aiming for a very small percentage of a huge market  Targeting 0.03% of $100B market after 5 years. What is wrong with this revenue estimate?

9. Financial Summary: Positive Cash Flow and “Break Even” You can use other financial approaches, but the needed end result should be a year-by-year summary of expenses and revenues for the first five years $ Yr 1Yr 2Yr 3Yr 4Yr 5 Revenues Expenses