Instructions for Application Template
Please create a concise (no more than 2-pages) application with non-proprietary information that addresses the business elements described in the tables below. Your application should tell a coherent story that tells how the investor will profit by providing you with financing, and how the investment will be protected. As you address each of the business case elements, describe how they contribute to, and strengthen, this story (if possible use the suggested order provided in the Template). The Application Template in Microsoft Word format can be downloaded by clicking here. The instructions for filling out the Application Template are given in the next two charts. You should start by defining your venture’s category (Early Seed, Early Venture or Expansion Capital / Project Finance) depending on its development stage. You will be judged within this category among other companies at a similar stage. The following table broadly provides some distinguishing characteristics that will help you identify the stage that best describes your venture. We understand that some ventures will not have all the outlined characteristics.
Defining Your Venture’s Stage of Development & Category
Early Seed Pre-revenue, negative cash flow, minimal assets Ground breaking technology with great technical promise; in R&D stage (demo / prototype) but no significant performance data available Initial IP position developed; downstream IP development strategy defined Strong / verifiable market arguments (description of the pain in the market, position against the current or likely competition, etc) Sound and credible strategy defined for commercialization Outstanding initial management team qualifications identified; list of initial potential candidates Early Venture Seed investment already obtained and successfully put to work Negative cash flows. Less than 30 months to get product into market Market driven prototype developed and operational; strong market assessment available. The product generally has a pronounced cost curve requiring both R&D and volume to reach target prices Detailed market expansion and commercialization strategy developed including: ways of dealing with competition, strategic partner alliances, etc. A list of target customers identified; supported with letters of intent to purchase Strong IP position already established with plans to expand / make more robust as necessary Outstanding start-up management team and board in place (or currently being rapidly implemented) Expansion Capital / Project Finance Proven technology with significant performance data available; cost curve improvement, if any, comes from volume; no credible threats from market-ready leapfrog technologies expected in 3 to 5 years Market credibility derived from realized sales to key costumers Strong, credible sales channels Rapidly growing assets, revenues and markets. Expansion capital or project finance needed to sustain growth and address / capture verified opportunities Negative to slightly positive cash flows. R&D is now a reduced % of total expenses. Investment will accelerate development of positive cash flows and profitability Supplier and customer relationships well established Sophisticated management team in place and operational; so are key strategic alliances Possible preparation for introduction of new and / or next generation products
Save your application as a Microsoft Word 2003 or earlier file (.doc only, please, no .pdf of .docx files) with the following name: v1.doc. Once your application is complete, upload the file through http://www.cleanenergyforum.com/application/. You will then need to proceed to the Registration and Payment site to complete the process: http://www.regonline.com/Checkin.asp?EventId=616198. Please be aware that your application file will not be processed until your payment has been received.
Instructions for Completing, and Addressing the Business Case Elements, in the Application Template
Business Case Elements Basic company information, such as: Name Technology on which company is based Incubator affiliation Application category End objective The description of your business. Describe how your business makes money and how will it assure great & long term profits for the future? What is the company’s key value proposition (e.g. low cost producer)? When was Co. created? What is 1 the current structure and ownership? Describe the kind of and amount of funding needed (seed, venture, expansion capital, project financing) as well as the relative amounts of debt or equity being requested. Describe the novel aspects of your technology and what it enables. What is the intended product, use or service based on the technology? Investors want to be sure that people will buy your product and they want to know the pressing business and/or other customer need(s) that it solves. What are the key benefits to customer (other than technical)? Where is the product in its evolution (e.g. fully tested prototype; in initial production and markets; etc.). Do you offer a “whole product” solution to the customer needs that you are targeting? What else is needed? Investors want to know their investment is protected. What is your IP position (status, and #’s of patents)? Is the investment protected with patents, or know how? Who/what is the competition and how are you and your industry partners going to deal with them? What strategy gives you an edge over the competition? Is your competitive position sustainable? Is your partners’ competitive position sustainable? Provide an early estimate of cost / margin benefits relative to the competition. Remember that investors often make their biggest bets on people. What can you say about the key members of your management team that will convince investors that your management team will be able to keep their eye on the marketplace and both grow and steer the venture to commercial success? Do they have prior experience for this stage venture and growth (e.g. do they have experience forming and working with strategic partnerships?) What are your plans for further developing your management team as you expand your business rapidly? What is your go-to market strategy (e.g. beach head markets)? What are your current markets and anticipated market segments that will give you a sustainable advantage? As you grow your company, will these markets be available? What are the key market barriers to your success? What is your basic strategy for developing and reaching those markets? How are these market assumptions consistent with financial assumptions? How have you validated (your sources of information) that these markets really exist? Remember that while investors like public sector investors to provide R&D support, and possibly initial markets, they don’t like to see long term markets that are too dependent on government (or even utility) markets. Customers are the key to strong profits. Who are the specific customers that you are pursuing or will pursue? Do you have any letters of intent to purchase? How are you reaching your customers and growing your customer base? Address any supply and or distribution issues that are likely to arise and how will you be addressing them.
Business and Business Model
Technology & Product
Competitive Position
Management Team
Markets
Customers / Suppliers
1
If you represent a division or are a part of a large diversified company, it is important to know how you function in relation to the larger entity. Further, if you are part of a larger organization please answer the remaining questions 1 from the perspective of the division or smaller entity that you represent.
Milestones and Path to Market
Provide a brief description of the key milestones that must be reached (and anticipated schedule) to take the next major step towards deployment with existing and/or new strategic partners, as well as the major strategies that are being used to accomplish them. Describe anticipated funding needed and likelihood of reaching these milestones. Describe the anticipated deployment path for this technology and likely needed strategic partner(s) as well the expected roles of these strategic partners; where are you in the process of securing that strategic partner? Also explain what is being done to position the technology and the current partners for the additional needed down stream partners2. Describe the existing ownership of public and private sector IP for this technology. If private sector partners already exist, describe their level of commitment (and where they are in the process) to go beyond R&D and deploy the technology in the marketplace
Achievements
Describe the growth milestones achieved to date. What are your next major near term planned achievements / goals & what are the barriers to achieving those goals as well as how you are addressing them? What are your current sales? Anticipated for three years out? - What are the key imbedded assumptions? What financials / pro-formas can you share (e.g. you will need to be ready to share a range of information including margins, free cash flow, debt service ratios, etc. in private, if there is interest by investors). What are the key risks that investors will face (e.g. off-take agreements, market for product, distribution, etc.) and how are you addressing them…. Explain why the investor will maximize their return. From the above, lets assume that investors will be convinced that your are rapidly moving towards a viable and very profitable business. How much are you asking for and what’s in it for them? What will they get out of the deal? How do they cash out (exit) - explain how the debt and equity portion of the financing will be repaid. What financing avenues have you been pursing? Let them know how the money will be spent. What else do you want/need from the panel (e.g. advice on strategy, contacts for management team, etc.)?
Sales and Gross Profits
Key Risks
Investor / Partner Needs
2
If as is most likely the case, only part of the needed strategic partner or deployment team exists; then what are the public and private sector partners doing to position the technology and product for deployment and engage these needed partners? For instance, if the key industry partner is a small business, are they aiming to become a low cost producer themselves? Or (one of many options) are they looking to be bought up, or license the technology to a large company? Remember that VC’s won’t, in general, be partners in licensing deals (or in service businesses), but they could play a role in a buy up strategy. To carry this example further, if the small company is to be bought up in the preferred strategy, then what are they doing to make this happen? If they need a strategic industry partner what are they doing to find and engage such a partner?