For a researcher who has devoted several years to an ambitious research project, the world of entrepreneurship can be a real opportunity to make the most of his or her research work, but it can also be a new journey into the unknown that can sometimes prove frightening.
A key stage in this process is raising funds and, more generally, financing the start-up. This stage is often unavoidable (but fortunately not always) and depends on the time needed to access the market and the corresponding investment.
The transition from academic research to setting up a company is not easy.
Despite this, at TKM we believe that transforming research work into a start-up is above all a unique human and entrepreneurial adventure. And we are keen to share our experience in this area, since TKM itself was created in 2003 from a joint laboratory of the University of Grenoble Alpes and INRA.
So, are you still keen to become an entrepreneur?
Here are a few tips and pointers for successfully raising your first funds.
From research to entrepreneurship
The world of research and the world of business are not governed by the same rules. A scientifically excellent technology may never find its market and attract investors. Both have their 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 minimally viable product on the market as quickly as possible, you will have to learn to give up a certain form of academic perfection and seek out the market as soon as possible.
At the risk of falling into caricature, research aims to find solutions – and generate knowledge – to a problem, whereas setting up a business aims to identify the problem for which you have the solution…
Drawing up a solid and convincing business plan
For researchers wishing to set up their own 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 attract the attention of investors and persuade them of the viability and growth potential of your start-up.
Finding the initial financing
Setting up any kind of business requires a start-up capital outlay. Even more so in the case of innovation, because the investments you need to make before you can generate your first euro of sales can be very high.
Either you’re very rich, and you’re going to be able to make a lot of mistakes…
Or you’re not, and then your project will be a race against time: meeting your market, convincing your first customers and generating positive cash flow… before the little pink piggy that contains all your savings is completely emptied!
Most of the time, you’re going to have to convince investors. To do that, you’ll need to draw up a business plan.
This document will summarise :
- Your vision of the market
- Your value proposition
- The need you are (really) going to satisfy
- Your competitors (direct and indirect)
- The barriers to entry you have (e.g. industrial property)
- Your market access strategy (segmentation)
- Your revenue model: how will you create and capture the value you generate?
- And finally, detailed financial forecasts.
The weaknesses most frequently cited by professional investors in technology start-ups concern identifying the right market, accurate knowledge of the competition in all its forms and the valuation of intangible assets, such as IP (Industrial Property).
Identifying the right market segment
One of the most common mistakes made by entrepreneurial researchers is to overlook the importance of a complete market analysis. A solid market study is a key element in giving your project credibility in the eyes of investors. It must identify customer needs, market trends, opportunities and threats, as well as, as we shall see shortly, the positioning of competitors.
Before you launch, the most important thing is to identify all the problems that your technological offering can solve. These are all markets, or more precisely market segments, that you could choose to address.
For each segment, you will need to understand the real need that you are going to satisfy, and understand the motivations and disincentives by testing your prospects’ reactions.
It is on the basis of the criticality of the need you are going to address 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 the ones you had imagined at the outset. Hence the importance of a robust working method.
All that remains is to identify your first customers… Easy, isn’t it? To find out more – Entrepreneur-researcher: launch your start-up by identifying the right market and your first customers straight away
Identify and know all your competitors
The other common pitfall for researchers is the lack of knowledge of the players in the market and in particular of their competitors, all of them…
It is not uncommon for the answer to the question « Who are your competitors? to be « I don’t have any ».
For an investor, the absence of competitors can be interpreted as the absence of a market. If you hope to obtain financing, you must therefore also learn to map your competitors and position your offer precisely in response to these competing approaches.
Competition is everywhere. Your competitors are not limited to companies that address the same need with the same technological approach as you. So here too you will need to adopt a solid and exhaustive competitive analysis methodology.
Demonstrate the strength of your industrial property
Being first or best in a market is all very well. Maintaining that lead over the long term is even better. But how long will you be able to maintain this competitive advantage?
Technology companies have a major asset at their disposal when they are properly mastered: industrial property.
When you draw up your business plan, providing proof that you have a strong IP portfolio will help convince your investors to follow you. This is because it gives you an extra chance of achieving a profitable business model and strong growth before you are copied, including by the major groups whose market share you will be nibbling away at.
N.B. Finally, this also means that, even at a very early stage, your start-up will need to put in place serious technological and competitive monitoring tools to keep a constant eye on your technological lead and your competitors’ responses.
A convincing pitch
You’ve heard the saying: « What’s clear is clear »!
If your application has passed the initial screening, the pitch is your next test! This concise, hard-hitting presentation requires no improvisation. It’s the tool par excellence for capturing the attention of investors and convincing them to subscribe to your start-up’s capital, which means, don’t forget, taking a risk alongside you.
Here are a few key points to bear in mind:
- A clear and unique value proposition. You are not providing a technology… but you are proposing to solve a clear, obvious and repeatable need among clearly identified future customers.
- Your solution stands out clearly from the competition, with clear, objective benefits that you will deliver to your future customers.
- You create solid barriers to entry for your competitors.
- Your business model is profitable and offers significant growth prospects, particularly through identified rebound markets.
Optimising fundraising with Izinov
Financing opportunities are varied and relatively abundant. But the competition is fierce, and most of the time you don’t have much time. That’s why having the right analysis tools can be a decisive asset for your project.
Izinov is designed to help entrepreneurs consolidate their fund-raising dossier by providing strategic information and precise analyses of your markets, your competitors and the positioning of your industrial property.
A cost-effective solution
Izinov offers a complete range of services including market analysis and industrial property mapping, with results available in 10 days, after just 2 hours of analysis.
Once your business is up and running, Izinov also offers monitoring services on a subscription basis. Depending on the frequency of your choice, monthly or quarterly, you will receive a complete monitoring review of your markets, customers, competitors and technological developments.
Originally designed for SMEs and start-ups, Izinov’s service prices start at €1,300, after deduction of any eligible grants.
Since its creation in 2017, Izinov has attracted more than 250 customers: start-ups, innovative SMEs and major private and public groups.
In addition to the quality and customisation of the service, they have all appreciated the speed with which the service is implemented, the efficiency of the scoping (2 hours of your time) and the short turnaround time for sending the deliverable (8 days).
A concrete example
A start-up developing a range of connected medical devices was preparing to raise funds. Thanks to Izinov, in less than 10 days a market and competition overview was carried out, identifying several application markets and customers following an analysis of 2,500 relevant patents, publications and collaborative projects worldwide. This quickly produced a summary map of the company’s technological and competitive environment, enabling us to characterise the start-up’s promising positioning.
Patent mapping (also available as part of the Izinov offering) also helped to illustrate the key position of the patents registered by the start-up and to provide evidence of the barriers to entry that it could erect. A few months later, it finalised its first round of financing, raising €2 million.
Are you looking to raise your first funds?
Need to deepen your market analysis?
Produce an exhaustive map of your competitors?
Demonstrate the strategic positioning of your patents?
Set up an effective and professional business intelligence system?