How to create high-tech startups with 100% success rate?
Steven F. Tan MSc MBA RTTP
19-10-2018
Introduction • Nascent Ventures is a Seed Fund focused on Advanced Instrumentation (incl. Nanotech)
Founding
Funding
Managing
• Team:
Hans Brouwer serial entrepreneur in high-tech
Steven Tan technology transfer and investment professional
• We focus on platform technologies originating from physics research in The Netherlands.
• We Partner with TTOs of Dutch universities and research institutes.
• We work closely with the researcher(s) and see the startup as complementary to their science career. We do not expect a large time involvement or career change.
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Academic Startups
• Linear innovation model
• Innovation funnel
• Design thinking
• Lean startup
• BMC
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“Orthodoxy of Innovation”
All models are based on an idea of an endpoint
But what if you have no idea about an endpoint?
Platform technologies typically have no obvious endpoint
• Platform technologies have:
Unique functionality
“MOOM” effect
Many conceivable applications (known opportunities)
Many inconceivable applications (unknown opportunities)
Potential to disrupt and/or create new applications and new markets
How to find and endpoint? Methodology is lacking.
N.B. This dilemma also applies for most Nanotechnologies
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Dilemma of Platform Technology
• An “approach” to identify and validate new applications and new markets
• Pioneered by Hans Brouwer and Steven Tan
• Tested and validated in 4 cases with 100% success rate (so far)
• Steps:
1. Initial focus on research market, only
2. Develop “MVP”
3. Sell MVP to many researchers for any application
4. Generate early revenue
5. Harvest use-cases and ideas
6. Select launching application for the research market (preferably new appl.)
7. Develop product
8. Develop and execute b-plan (=regular innovation)
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“Market Exploration”
Platform
technology
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First Explore, then Innovate
Validated use-
case
Application
Application
Application
Application
Application
Application
Exploration Innovation
• Semi-unstructured
• Non-linear
• Co-creative
• Requires sharp observation
• Why initial focus on researchers?
Are eager to try something new (publication drive)
High tolerance to products with teething problems
High level self-reliance
Easy to approach
Willing to share information and ideas
Smart and creative people > new ideas for application
Access to knowledgeable employees (PhDs and PostDocs)
• Why focus research market?
Large dynamic market
Often not taken seriously by VCs
Excellent step stone to develop industrial market
Willing to buy first release products
Willing to pay in advance (up to 50% > cash flow)
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Research Market
The benefits of early revenue Early revenue is critical for a high-tech startup because:
1. Revenue is the best source of funding
2. Early customers provide valuable feedback for product development and improvements
3. Early customers (and their colleagues) provide valuable ideas for new application of the technology
4. Focus on revenue and customer is build into the DNA of the startup right from the start
5. Actual customers and revenue is highly appreciated by investors
Revenue makes you a real company
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Founding
Startup Seed funding
Market
Exploration VC Round
Marketable product Validated application & market Go-to-market strategy Management team
1 2 3 4
Building startup ready for VC funding
Investment proposition
9 100% success rate (so far…)
Thank you
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Author: Prof. Davide Iannuzzi
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Investment Criteria 1. Unique functionality:
A. MOOM principle (Multiple Order of Magnitude better)
And/or
B. New functionality
2. Ability to generate early revenues Explicit early interest from fellow researchers or R&D departments
3. Platform technology with broad application space Many conceivable applications
“Gut feeling”
4. Explicit intention to buy from fellow researchers
5. Within the comfort zone of HB & ST Good understanding of product development process
Excellent fit to network of (co-)developers and suppliers
6. Quality and depth of the Technology & IP
7. Quality, size and reputation of the research group
8. Fundability of the exploration phase
MOOM Principle
Early Revenue Potential
Broad Application
space
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Added Value to Startup 1. Hands-on expertise in relevant domains
Hardware development
Optics
High precision engineering
Electronics
Semiconductor development and integration
(Embedded) software
Design for manufacturing
2. Startup expertise Direct involvement in launch of 20+ startups
Dealing with university and academics
IP & licensing
Collaboration agreements with universities
Fiscal and legal issues
Application of grants and subsidies
Access to Informals and VCs
Building the company from scratch
Prepare startup for VC funding
Prepare startup for scale-up
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Some of the startups that Steven and/or Hans launched in the physics domain:
• Optics11 B.V. (fiber optical sensors)
• Lumicks B.V. (single-molecule analysis instrumentation)
• OPNT B.V. (precision timing solutions)
• Innoseis B.V. (MEMS based geo-exploration systems)
• Omniradar B.V. (radar on a chip)
• Tritos Diagnostics B.V. (3rd harmonics imaging)
Portfolio of Nascent Ventures (operational since Q4 2017):
• Amsterdam Scientific Instruments B.V. (hybrid pixel detectors)
• Onnes Labs B.V. (nano-positioner for milliK conditions)
• Several new startups lined up
Relevant startups
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