A thoughtful business case must be developed to understand the market potential, competition, and funding needs. This should include a plan for developing the technology and attaining sufficient revenue to sustain and grow the company. This plan will be useful when meeting with investors and pursuing funding.
Develop A Business Case
• Technology innovation and patent/IP position – Is broad patent coverage possible? Are there background patents owned by others? Will the company have freedom-to-operate to develop the product?
• Development risk – How far along is the technology? How much time and money is required to bring a product to market?
• Development costs versus investment return – Can investors obtain their required rates of return (e.g. 10X initial investment in 5 years)?
• Product strategy – Does the technology lend itself to opportunities for multiple products/platforms?
• Market size, dynamics and potential – Is the market big enough? Is it controlled by a few players? Is there a healthy growth trend?
• Financial potential – What market share can be obtained? Is it worth the effort?
A business plan should be clear and concise. It will be easier to “sell” the vision to investors and attract management talent with a formal business plan. Investors are interested in investing in startups with high growth potential. The business plan should address what investors want to know: the compelling concept, competitive advantage (including patent/IP position), market and financial potential, and proven management team. The business plan is generally a confidential document and should be carefully distributed.
• Company name
• Mission statement – A guiding vision for the company.
• Current market situation – How big is the market? What are its critical problems and shortcomings? How is the landscape changing? Who is the competition? Is it a consolidated or fragmented industry?
• The company’s solutions – Which products or methods will be developed? How long will it take? What are its applications? What are the company’s unique advantages and are those advantages sustainable? How will the current market change due to the company’s products, methods, etc.?
• Patent/IP landscape
• Marketing and sales strategy – Pricing, Product, Placement. How will the target market know about the product? Which sales distribution channels will be used?
• 5-10 year strategic/financial plan:
• Financial projections – When will the company break even?
• Key milestones required to meet financial projections.
• Key metrics to be measured and tracked.
• Key assumptions and how they change based on a competitor’s response.
• Funding requirements.
• Management team – Members with resumes/CV and roles.
• Timeline and key milestones
• Risk factors and mitigation measures
The Resource Guide of this booklet contains a list of references that provide additional information about writing business plans.