1. May, 2005(c) 2005, US Civilian R&D Foundation1 The U.S. Civilian Research and Development Foundation (CRDF) Industry Partner Development Program (PDP) Your Partner for Ventures in Science and Technology Business Case Innovation Business Series

2. May, 2005(c) 2005, US Civilian R&D Foundation2 Business Communication Mistakes Talking first (in meeting) Too much information Addressing the wrong issues Political statements Irrelevant commentary  Personal passionate issues

3. May, 2005(c) 2005, US Civilian R&D Foundation3 Primary Purpose? Inform? Explain? Reference? Demonstrate? Convince? Encourage Action

4. May, 2005(c) 2005, US Civilian R&D Foundation4 What Action & Who? What action?  Schedule a meeting  Convince superior  Review a demo  Explore a business relationship Who should take action?  Decision-maker  Trusted advisor  Financial officer Why?  They need (not want)

5. May, 2005(c) 2005, US Civilian R&D Foundation5 Determine what they NEED? Listen, don’t talk Ask questions:  Primary business goal?  Current situation?  Next steps?  Top Challenges?  Where technology might help?

6. May, 2005(c) 2005, US Civilian R&D Foundation6 Business Goals versus Desires Test business goals:  Ask them to define their success? What measures?  Test their answers: Successful? if ‘a’, but not ‘b’? Determine most important and realistic goals Customize your pitch

7. May, 2005(c) 2005, US Civilian R&D Foundation7 Determine Decision Makers Who makes business decisions? Who takes actions? Who makes financial decisions? Who makes technical recommendations? What is the relationship between the individuals? What is the last decision and how was that made?

8. May, 2005(c) 2005, US Civilian R&D Foundation8 Ready to Start? (Checklist) 1.What they need 2.How you can help 3.Who is the decision-maker (action taker/target) 4.What action you desire 5.What you must convince 6.Your argument

9. May, 2005(c) 2005, US Civilian R&D Foundation9 Business Argument Credibility  Who are you  What are you there to do  Why they should care The issue (confirm?) Solution (summary) Key benefits Competitive position Achievable results What you need

10. May, 2005(c) 2005, US Civilian R&D Foundation10 Forms of Argument Needed Statement (Pitch)  5 to 30 seconds Presentation  5 to 10 slides Proposal  1 to 2 pages  Appendix in RARE cases

11. May, 2005(c) 2005, US Civilian R&D Foundation11 Target’s Language and Mindset Terms  Business advantages  Business costs Goals  Lower costs  Higher profit margin  More sales  Better market position  Lower product returns  Lower customer service costs  Etc.

12. May, 2005(c) 2005, US Civilian R&D Foundation12 Presentation vs. Proposal Presentation (1 slide each) Title slide Business issue Technical issue Technical solution  Summary: key aspects Business benefits Market & competitors ROI (time and money) Next step Proposal Fact box  Contact info, project name, proposition, funding, schedule, return Proposition statement Diagrams, charts, tables Sections:  Proposition  Issue and solution  Market & competition  Sales & distribution  Management plan  Projections  ROI (time and money)

13. May, 2005(c) 2005, US Civilian R&D Foundation13 Length & Style Short and direct as possible Focus on 1 key aspect One good argument is stronger than several good arguments Each section should NOT be equal length Fewer words make a bigger impact Stay away from details and supporting information Use quotes and convincing statistics Use common language

14. May, 2005(c) 2005, US Civilian R&D Foundation14 Examples - Proposition With all competitors meeting standards, the product has become a commodity. Using a new standards- conforming algorithm, already implemented on a common microprocessor, twice as much can be processed on the same hardware. As a result, manufacturers can produce the same product at a net 37% increase in margin or double the performance at the same price. 1.Business issue 2.Technical issue 3.Technical solution 4.Business benefits 5.Market & competitors 6.ROI 7.Next step

15. May, 2005(c) 2005, US Civilian R&D Foundation15 Examples - Market Structure, players, market drivers, dynamic, opportunities, threats: The market for the hardware is dominated by manufacturers and integrators. Manufacturers produce their own cards and Integrators purchase cards from any of the top 9 card suppliers. The market driver is price... 1.Business issue 2.Technical issue 3.Technical solution 4.Business benefits 5.Market & competitors 6.ROI 7.Next step

16. May, 2005(c) 2005, US Civilian R&D Foundation16 Examples - Competition DX Group, SignalCorp, and Motorola are also developing new algorithms. DX Group’s solution requires a more expensive microprocessor. The SignalCorp algorithm has not yet been implemented in real-time. The Motorola solution saves only 39%, short of the 50% required to reduce hardware costs. 1.Business issue 2.Technical issue 3.Technical solution 4.Business benefits 5.Market & competitors 6.ROI 7.Next step Common Mistake: No competitors “Only solution”

17. May, 2005(c) 2005, US Civilian R&D Foundation17 Examples – Return on Investment The total cost of labor and material is $1,500. At the current levels of production, the profit margin increases by $100 per unit for a net increase of $7,500 per year. That’s a 500% return on investment in the first year only. 1.Business issue 2.Technical issue 3.Technical solution 4.Business benefits 5.Market & Competitors 6.ROI 7.Next step ItemNo.AmtSubtotal Labor & materials150$100$1500 Increased profits750$100$7500 Return on Investment500%

18. May, 2005(c) 2005, US Civilian R&D Foundation18 Examples – Next Step Meetings: (Presentation) 1.Engineering Manager – Demonstration 2.Finance Manager – Economic case 3.Business Manager – Project definition Actions: (Proposal) 1.Business issue 2.Technical issue 3.Technical solution 4.Business benefits 5.Market & Competitors 6.ROI 7.Next step

19. May, 2005(c) 2005, US Civilian R&D Foundation19 Examples – Sales & Distribution (Business Plan Only) Direct Sales, Partners We plan to sell directly to manufacturers. There are only 15 sizeable manufacturers and our technology is needed enough to gain the attention of their R&D managers. Integrators do not purchase technology and card vendors are not structured to work with scientists. Our chip partners will help us get meetings with the R&D managers at each Manufacturer. 1.Business issue 2.Technical issue 3.Technical solution 4.Business benefits 5.Market & competitors 6.Sales & distribution 7.Projections 8.Management Plan 9.ROI 10.Next step * Business Plan only

20. May, 2005(c) 2005, US Civilian R&D Foundation20 Examples – Projections (Business Plan Only) Bottom-up Estimates: We plan to close Aldec, Marzed, and Pixel, or similar manufacturers in the first 9 months. Each quarter thereafter, we expect to close deals with one more manufacturer using two sales people… 1.Business issue 2.Technical issue 3.Technical solution 4.Business benefits 5.Market & competitors 6.Sales & distribution 7.Projections 8.Management Plan 9.ROI 10.Next step * Business Plan only

21. May, 2005(c) 2005, US Civilian R&D Foundation21 Examples – Projections (Mistakes) (Business Plan Only) Top Down: (Mistake) The market for the software is $10M and we will sell 5% of the market or $500,000. 1.Business issue 2.Technical issue 3.Technical solution 4.Business benefits 5.Market & competitors 6.Sales & distribution 7.Projections 8.Management Plan 9.ROI 10.Next step * Business Plan only

22. May, 2005(c) 2005, US Civilian R&D Foundation22 Business Statement (Pitch) 1.My organization has developed a better solution for manufacturers. 2.Partnered with Brand Corporation, my team has produced components that reduce the cost by 50%. 3.We plan to direct sell the solution to manufacturers. 4.I am a scientist with the Institute of Semiconductor Physics in Baku, Azerbaijan. 5.We have interested customers and are looking for funding to produce the first 10 units. 6.We can provide a 5 times return in 18 months.

23. May, 2005(c) 2005, US Civilian R&D Foundation23 Q&A: Business Case

24. May, 2005(c) 2005, US Civilian R&D Foundation24 CRDF Contact Information U.S. Civilian Research & Development Foundation (CRDF) 1530 Wilson Boulevard, Suite 300 Arlington, VA 22209 USA Emails info@crdf.orgGeneral CRDF enquiries pdp@crdf.orgPartner Development Program (business questions) tgp@crdf.orgTravel Grant Program fstm@crdf.orgFirst Steps to Market Grants (new partnerships) nstm@crdf.orgNext Steps to Market Grants (commercial partnerships) Website: www.crdf.org Tel: +1 (703) 526-9720