TABLE OF CONTENTS
- From research to entrepreneurship
- Building a solid, convincing business plan
- Finding your first funding
- Identifying the right market segment
- Detecting and knowing all your competitors
- Providing proof of the strength of your industrial property
- Having a convincing pitch
- Optimizing your fundraising with Izinov
A key step in this process is raising funds and, more broadly, financing the start-up. This step is often unavoidable (though fortunately not always) and depends on how much time will be needed to reach the market and the corresponding investments.
Moving from academic research to founding a company is not a given.
Despite this, at TKM, we believe that turning research work into a start-up is first and foremost a unique human and entrepreneurial adventure. And we want to share our experience on this subject, since TKM itself was born in 2003 from a joint laboratory of Université Grenoble Alpes and INRA.
So, still up for entrepreneurship?
Here are a few tips and reference points for a successful first fundraise.
FROM RESEARCH TO ENTREPRENEURSHIP
The world of research and the world of business are not governed by the same rules. An excellent technology from a scientific standpoint may never find its market or attract investors. Each has its own logic, and the success of your entrepreneurial project will depend on your ability to move from one to the other.
To develop and launch a minimum viable product on the market as quickly as possible, you will need to learn to let go of a certain form of academic perfectionism and seek out market feedback as soon as possible.
At the risk of oversimplifying, research aims to find solutions – and generate knowledge – for a given problem, whereas founding a company aims to identify the problem to which you hold the solution…
BUILDING A SOLID, CONVINCING BUSINESS PLAN
For a researcher looking to start a business, drawing up a robust business plan is a crucial step. This document reflects the company’s vision, ambitions and strategy. It must be convincing enough to catch investors’ attention and persuade them of your start-up’s viability and growth potential.
FINDING YOUR FIRST FUNDING
Starting any company requires an initial outlay. Even more so in innovation, since the investments needed before earning your first euro of revenue can be very high.
Either you are very wealthy and can afford to make a lot of mistakes…
Or you are not, and then your project comes down to a race against the clock: reaching your market, convincing your first customers and generating positive cash flow… Before the little pink piggy bank holding all your savings is completely empty!
Most often, you will therefore need to convince investors. And to do that, you will need to produce a business plan.
This document will summarize:
- Your vision of the market
- Your value proposition
- The need you are (genuinely) going to meet
- Your competition (direct and indirect)
- The barriers to entry you have (industrial property, for example)
- Your market-access strategy (segmentation)
- Your revenue model: how will you create, then capture, the value you generate?
- And lastly, detailed financial forecasts.
The weaknesses most frequently cited by professional investors about tech start-ups concern identifying the right market, precise knowledge of competition in all its forms, and valuing intangible assets, such as IP (Industrial Property).
IDENTIFYING THE RIGHT MARKET SEGMENT
One of the mistakes commonly made by researcher-entrepreneurs is overlooking the importance of a thorough market analysis. A solid market study is a key element in making the project credible in the eyes of investors. It must identify customer needs, market trends, opportunities and threats, as well as, as we will see next, competitor positioning.
Before you get started, the most important thing is to identify all the problems your technology offering can solve. These represent as many markets, and more specifically market segments, that you could choose to target.
For each segment, you will need to understand the real need you are going to meet, and understand the motivations and obstacles by testing your prospects’ reactions.
It is indeed based on the criticality of the need you are addressing that you will be able to define your future business model and set your prices, then choose your first target markets.
These may turn out to be very different from what you had initially imagined. Hence the importance of a robust working method.
All that will remain is to identify your first customers… Easy, right?
To find out more – Researcher-entrepreneur: launch your start-up by immediately identifying the right market and your first customers
DETECTING AND KNOWING ALL YOUR COMPETITORS
Another common trap for researchers is a lack of knowledge about market players, particularly competitors — all of them…
It is not uncommon, when asked “Who are your competitors?”, to hear the answer “I don’t have any!”
For an investor, the absence of competitors can be interpreted as the absence of a market. To have any hope of securing funding, you must therefore also learn to map your competition and position your offering precisely in response to these competing approaches.
Competition is everywhere. Your competitors are not limited to companies that will address the same need with the same technological approach as you. Here too, you will need to adopt a solid, thorough competitive-analysis methodology.
PROVIDING PROOF OF THE STRENGTH OF YOUR INDUSTRIAL PROPERTY
Being first or best in a market is good. Sustaining that lead over time is better. But for how long will you be able to maintain this competitive advantage?
Technology companies have a major asset for this, when well managed: industrial property.
Providing proof, as early as the business-plan drafting stage, that you hold a strong IP portfolio will help convince your investors to back you. Because it is an extra chance of achieving a profitable business model and strong growth before being copied, including by large groups whose market share you will come to nibble away at.
N.B. Lastly, this also means that, even at a very “early stage,” your start-up will need to put serious technology and competitive intelligence-monitoring tools in place to continuously watch over your technological lead and your competitors’ countermoves.
To find out more: Scientific and Technical Intelligence Monitoring: Definition and Key Principles
HAVING A CONVINCING PITCH
You know the saying: “What is well conceived is clearly stated”!
If your application has made it through the first round, the pitch is your next test! This concise, impactful presentation leaves no room for improvisation. It is the tool par excellence for capturing investors’ attention and convincing them to invest in your start-up’s capital, meaning, don’t forget, to take a risk alongside you.
From experience, here are a few key points to remember:
- A clear, unique value proposition. You are not bringing a technology… but offering to solve a clear, obvious, repeatable need among well-identified future customers.
- Your solution clearly stands out from the competition, with obvious, objective benefits you will provide to your future customers.
- You have solid barriers to entry for your competitors.
- Your business model is profitable and offers significant growth prospects, notably through already-identified adjacent markets.
OPTIMIZING YOUR FUNDRAISING WITH IZINOV
Funding options are very varied and relatively plentiful. But competition is fierce and you usually have little time. This is why having the right analysis tools can prove to be a decisive asset for your project.
IZINOV is designed to help entrepreneurs strengthen their fundraising file by providing strategic information and precise analyses of your markets, your competitors and your industrial-property positioning[1].
An effective, cost-efficient solution
IZINOV is a complete range of services covering market analysis and industrial-property mapping, with results available in 10 days after requiring only 2 hours of your time to scope out the analysis.
Once your business is up and running smoothly, Izinov also offers subscription-based monitoring services. At the pace of your choice, every month or every quarter, you receive a complete monitoring review of your markets, your customers, your competitors and technological developments.
Originally designed for SMEs and start-ups, Izinov offers service prices starting at a cost of 1,300 euros, after deducting available grants.
Since its creation in 2017, IZINOV has won over more than 250 clients: start-ups, innovative SMEs, and large private and public groups.
Besides the quality and customization of the service, all of them appreciated how quickly the service was delivered, the efficiency of the scoping phase (2 hours of your time) and the short turnaround for the deliverable (8 days).
A concrete example
A start-up developing a range of connected medical devices was preparing its fundraising file. Thanks to IZINOV, in less than 10 days a market & competition overview was carried out, identifying several application markets and customers following the analysis of 2,500 relevant patents, publications and collaborative projects, on a global scale. A concise map of its technological and competitive environment was thus drawn up very quickly, making it possible to characterize the start-up’s promising positioning.
The patent mapping (also available as part of the IZINOV offering) also helped illustrate the key position of the patents filed by the start-up and provide evidence regarding the barriers to entry it could erect. A few months later, it closed a first fundraising round of 2 million euros.
[1] Patent Overview & Mapping – Products from the IZINOV service range
Are you looking to complete your first fundraise?
Do you need to deepen your market analysis?
To thoroughly map your competitors?
To demonstrate the strategic positioning of your patents?
Or to set up effective, professional strategic intelligence monitoring?