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September 7, 2009

Assessing Technology and Market Opportunities

How do you determine if opportunity for a technology or innovation is worth pursuing? One method is to analyze the opportunity by looking at both the science behind the technology and the market separately and then together. The following is a quick reference guide that can be used to help make these decisions.

Technology Opportunity Assessments: A technology assessment is a simple decision matrix that can be used for due diligence or to ascertain a reasonable comfort level to pursue development.   For discussion purposes the technology is being evaluated after conception but just prior to the Patent decision.

  • How many times has the lead innovator been published – (scientific substantiation)?
  • # of Patent Disclosures (indicates time and effort).
  • Age of Patent disclosures (the newer the better).
  • US Patent competition (claims may be narrowed by multiple patents).
  • How much grant support has the Innovator obtained?
  • Amount of SBIR/STTR Grants (indicates commercial value). 

Management team assessment

  • Innovators energy and enthusiasm or does he only like to invent and walk
  • Track record
  • Background and credentials
  • Interest in developing a business
  • Business experience
  • Business Savvy   

A point system is used to a value to the questions.  If the Technology index is

  • Very weak – the action is to abandon
  • Weak – out- license quickly (see if someone else would want to develop)
  • Moderate – Build value then out-license or joint venture to develop
  • Strong – License, joint venture, new venture formation 

What is important is to realize that not every innovation can be or should be developed further at any given moment of time. In addition, those innovations that can be developed may not be best served by starting a company but rather their licensing or a joint venture may be a better path to development. The exception of course is the Entrepreneur who recognizes an opportunity for additional applications (applications outside of innovators field)

For details on how to score or develop an assessment correctly, contact the The Entrepreneur’s Advisor™. We would be happy to evaluate your technology for you and provide you with a direction of pursuit. 

Market Opportunity Assessments: More often than not once a technology has been deemed viable there will be multiple markets for commercialization. The key is to find the market that can enhance, improve and ultimately capitalize on the technology under analysis.

A professional assessment will include the following: (all of this info can also be used in the business plan)

  • What is the overall market for the past, present and next 5 years?
  • What is driving the market domestically and internationally?
  • Identify the market segments now and over the next five years.
  • What are the historical (last 3 years) and project sales (next 5 years) in these market segments?
  • What will be the market influences that will impact past and projected sales?

For each Market Segment

  • What is the number of competitors?
  • Is segment dominated by one player or fragmented?
  • What is the market size (sales)?
  • What is the market growth rate?
  • Who is in the market now?
  • Entry barriers (low or high, mature or new market, regulated)?
  • Is market capacity being met or unmet?
  • How much market share is realistically obtainable within 5 years?
  • How much of a marketing budget will you need?
  • Is marketing budget obtainable?
  • What are the technology assessment results? (Build, license, new venture etc….)

Each answer is assigned a numerical value and then scored for each market segment. As with the technology assessment a:

  • Very weak score indicates abandonment or out license quickly
  • Weak = out-license quickly
  • Moderate = build additional value first then license or seek a joint venture
  • Strong = license, joint venture, new venture formation 

Special note: Far too often investors or other interested parties have tunnel vision that limits the scope of their due diligence. When performing assessments is it critical that someone outside the specified industry is part of the review process. The Entrepreneur’s Advisor™ recommends a true experienced generalist that is able to perceive other markets/uses for the technology.   

Do you need help with your Market Assessments? Contact The Entrepreneur’s Advisor™ for more information on how we can assist you.

The Entrepreneur’s Advisor™ is unique in their ability to assist new ventures and help investors perform due diligence. Our understanding of the emotional rollercoaster, the details of starting a business, the experiences of running a business, change management  and a passion for what we do separates us from others because “We have been there and done that”. Our innovative Pay-As-You-Go” program is designed to be a sounding board for start-ups. Talk to us – “We love getting our hands dirty.” 


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