What is best practice for an SME Instrument proposal in the eyes of an evaluator?

Transcription

1 What is best practice for an SME Instrument proposal in the eyes of an evaluator? Katharina Krell 10 May Brussels

2 InvestorNet - Gate2Growth Partner in Greeonvat-Europe Gate2Growth is supported by the European Commission Some slides are borrowed from Greenovate! Europe member InvestorNet Gate2Growth Uffe Bundgaard-Jørgensen. InvestorNet-Gate2Growth SCION-DTU - Bygning 381 Diplomvej 381 Kgs Lyngby Denmark page : 2

3 Overview 1. Formal aspects 2. The innovation project itself 3. How to fill the application form 4. Some observations

4 1. Formal aspects The looks do matter

5 Respect your evaluator Respect font size and margin minima Leave space between paragraphs Less is more: it s hard to read too sense text Proper English use a proof-reader if needed Use headings & sub-headings to structure the text A good narrative is a definite plus

6 Don t anger your evaluators

7 2. The innovation project itself Can I convince an investor to put his money into my project? The evaluator should think as a fund manager on behalf of the owners of the capital (the EC)

8 Deal Funnel Investor screening process 500 new deals/year Screening process 2 min/deal Investor questions: Do I like the business concept and - model? 250 selected deals 150 selected deals 10 min/deal 20 min/deal If I believe in the business plan and the budgets can I make money? Can I trust the business plan and the budgets? 75 analysed deals 4 Hours/deal If it is realistic, can this management deliver the promised results? 50 negotiation 10 Days/deal Ok, would you like to meet us and discuss? 490 rejected deals 5-10 investments 1-3 month/ investment Let us move into the serious negotiations.

9 InvestorNet Part of the Gate2Growth Group Gate2Growth is supported by the European Commission To build a good business case conduct the reality checks! Customers shall know about the product the business model shall be right, and it should be easy to deliver There has to be a market...and the customers shall be willing to pay Only a competent management team can deliver Solve a relevant problem & easy to use for the customer and easy to produce and deliver for the firm If funding is required, the offering needs to meet funders requiremenrs The technical solution possible and better than alternatives InvestorNet - gate2growth.com page : 9...therefore competitor knowledge is essential

10 Scope Phase 1: A feasibility study Feasibility encompasses various aspects: Technical (but only >TRL 6) Commercial (market and financial) Regulatory & IP Organisational The outcome can be to stop the project The aim is to de-risk the future investments into the project if it continues (time, money, resources)

11 3. How to fill the application form What I would expect to see in sections 1 and 2 and where I often see weaknesses

12 Impact / user and customer Understand which problem is solved for the user and the customer. Identification of the actual customer who may not be the user! The customer is the one making the purchase decision The user is the one who uses the product / service Identification of sales channels and relevant first markets Direct sales, sales via agents or partners

13 Impact / market & competition Identify the size of the realistic market The market should be broken down into the relevant sub-segments

14 World market Home care services 2 %

15 Real EU market for Home care services Scandinavia Germany France Poland Rest of EU Public supported patients Private patients Hospitals Private doctors Insurance companies

16 Impact / market & competition Identify the size of the realistic market The market should be broken down into the relevant sub-segments Competing solutions AND actual competitors should be described (real companies, not just generic descriptions) What is the price/sales strategy: Does it cover all cost? Is it still competitive? Formulation of marketing strategy: USP, choice of business model and foresee competitor reaction.

17 Impact / growth & profitability Growing from 2 to 4 is a 100% increase, but Few estimate profitability in terms of IRR, NPV Almost everybody forgets the cost of capital in their financial forecasts and this can break a business case looking good at first sight Few have a plan on how to finance further development apart from grants Most under-estimate time-to-sales grossly

18 Impact / IPR & regulations IP protection, including patenting Who really owns the IP? What is the protection strategy: patenting, secrecy? Is the protection credible? Freedom to operate analysis (FTO) It s a term largely misunderstood by applicants AND evaluators The purpose of an FTO search is to identify in-force patents or published patent applications with claims that cover the technology, process, or product you are targeting. The patent landscape is dynamic and always changing = FTO needed throughout the innovation project as continuous monitoring

19 Innovation / excellence A local bio soap start-up is maybe innovative in the regional but not at EU level Good practice is to describe the functionalities of the innovation and compare it to those of SOA / competing solutions A good risk analysis is realistic and addresses all aspects of the feasibility study (commercial, technical, regulatory & IP, management)

20 4. Internal observations Food for thought

21 Quality of proposals increased Observations - general Thereby chances to get funded for good proposal decreases Need to stand out 21

22 Observations theme environment / resource efficiency Still too much technology-push Poor business cases due to inability to put a price-tag to environmentally-friendly business Many web-platform proposals with nonresearched, non-proven business models 22

23 ESR content is not useful to applicant

24 Katharina Krell Managing Director