Published on March 1, 2014
Elements of Early Stage Valuation and Value Growth Gene Scout Talk for NanoBioConvergence Mary D Napier 3/1/2014 May 17, 2006 firstname.lastname@example.org 1
What we do Discovery Science Translation Strategy Consulting Project Mgmt Business Development Portfolio Management Gene Scout advises along several aspects of technology Commercialization pending on the needs of the client. 3/1/2014 email@example.com 2
Translation • IP, literature and clinical trial scan in your company’s scientific area. • Define market positioning and economic value. • Market segmentation to understand your company’s major competition and market niche. • Create operating financial and marketing plan for your company. • Provide best practice benchmarks for business development: financial and licensing terms relevant to your valuation. Translation 3/1/2014 firstname.lastname@example.org 3
Before getting to the model Photo Masks Microscopy Define who you are. Define the application. Research Tool Define the market and the product. Others? 3/1/2014 email@example.com Nano Lithography (Template Fabrication) SemiConductors (circuits) Others? 4
‘Crossing the chasm’: defining your market, obtaining PoC customer Market: 1. A set of actual or potential customers 2. for a given set of products or services 3. who have a common set of needs or wants AND 4. who reference each other when making a buying decision(1). Proof of concept customer: Pilot project (s) to validate technology (1) Geoffrey Moore, Crossing the Chasm (Collins Business Essentials, 1991). P. 28. 3/1/2014 firstname.lastname@example.org Market Adoption 5
Decision Point: Is it a publication, sponsored research or a new company? Not your decision entirely. • IP estate: yours and the marketplace. • Market Potential: your market positioning. • Team. • Money. 3/1/2014 email@example.com 6
The step function of building value. Exit Beta two Beta one 40% return Alpha 3/1/2014 firstname.lastname@example.org 7
Creating Value: Thinking simply, cutting through confusion. Revenues – Costs = Profit Bid Price on Contract 3/1/2014 Consumables Contract email@example.com 8
Types of Valuation Models • The emotional model • The discounted cash flow model • The comparables model • Others? 3/1/2014 firstname.lastname@example.org 9
Negotiation and valuation Understand your customer’s mindset…understand your financier’s mindset. • The Angel • The Venture Capitalist • The Strategic Investor 3/1/2014 email@example.com 10
Early stage valuation: the influence of comparables. Public comparables. Private Comparables2 Series A: Nano Opto Corp: $16M raise. IPO valuation down Pharmaceuticals: Series B: Nanotechnologies: $6.4M raise, $19M post money. Applied Microstructures: $8.5M raise. Raise less than $100 for A ~$200 valuation IPO Exit. NEWCO Nano Public market Comparables3: Series C: Molecular Imprints: $17-25M raise. Post money ~$100M SMMX: $869M CALP: $176M ACCL: $175M Series D (C): Nanosphere: $59M raise, Post money~$100-$125M 3/1/2014 Sources Cont’d 2.) OneSource and company websites. 3.) Market caps supplied by Yahoo Finance, May 16th 2006. firstname.lastname@example.org 11
Takeaway Exit Investor: “Buy Low, Sell High” Beta two Entrepreneur: know thy market, love thine customer. Beta one Alpha 40% return 3/1/2014 email@example.com 12
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