2. 2 Cleantech Open Confidential Information – All Rights Reserved
Welcome to the National Webinar Series
• With the Cleantech Open since 2007
• Mentor Chair 2007 - 2008
• Executive Director 2008 - present
MC:
Rex Northen,
Executive Director, Cleantech Open
3. 3 Cleantech Open Confidential Information – All Rights Reserved
Global Partner
4. 4 Cleantech Open Confidential Information – All Rights Reserved
National Sponsors
5. 5 Cleantech Open Confidential Information – All Rights Reserved
Thank You To All Our Sponsors!
6. 6 Cleantech Open Confidential Information – All Rights Reserved
The Summer Program – July – September 2013
Date Time
(PDT)
Session I – Worksheets Time
(PDT)
Special Topic Sessions
7/9
1:30 to
2:30pm
Business Model Canvas (Review)
2:45 to
4:00pm
LaunchPad Central (Review)
7/16
1:30 to
2:30pm
Product/Market Fit
2:45 to
4:00pm
Systems Review, PR 101
7/23
1:30 to
2:30pm
Markets and Getting to Them
2:45 to
4:00pm
Term Sheets
7/30
1:30 to
2:30pm
Product/Technology Validation
2:45 to
4:00pm
Alternative Sources of Funding - Grant
Writing / Crowd Sourcing
8/6
1:30 to
2:30pm
Financials Analysis & Planning
2:45 to
4:00pm
IP Licensing from 3rd Parties
8/13
1:30 to
2:30pm
Legal Environment, Issues and Risks
2:45 to
4:00pm
Cap Tables
8/20
1:30 to
2:30pm
Management Team
2:45 to
4:00pm
Working with the Utilities
8/27
1:30 to
2:30pm
Sustainability
2:45 to
4:00pm
Tell Your Story, Sell Your Story
(Communicating value to stake holders)
(9/11)
1:30 to
2:30pm
Investor Presentation
Mentor Assessment
2:45 to
4:00pm
Mock Judging, Regional Awards, Global
Forum
7. 7 Cleantech Open Confidential Information – All Rights Reserved
Session 1: Markets and Getting to Them
1:30pm – 2:30pm, PDT
• 30 year technology industry veteran, having run global
businesses based in USA and Asia
• With University of Phoenix for 30 years
• Currently a practitioner Lead Faculty for Strategy in the School of
Business
Speaker:
Niraj Kohli
President, CSC
10. This webinar is a 60-minute meeting
presented as part of the Cleantech Open,
which focuses specifically on the Markets
and Getting to Them
Cleantech Open Webinar
by University of Phoenix
11. Agenda
o Value Creation from Factory to Field through AKA
15 minutes
o Mapping Customer Buying Process
10 minutes
o Market Size and Growth Rate – Near and Long Term along with Market Infrastructure Discovery
15 minutes
o Pilot Customer Development and Repeatable Sales Model
10 minutes
o Questions
10 minutes
Cleantech Open
Webinar 3 – Markets and Getting to Them
12. Cleantech Open
Webinar 3 – Markets and Getting to Them
Markets and Getting to Them Worksheet and Judging Criteria
Worksheets
• Customer Buying Process
o Current Solutions?
o Purchase Decision Process?
o Partners? Channels? Influencers?
• Market Size and Growth Rate – Near and Long Term
• Market Infrastructure Discovery
o Competitors, Alternative Solutions
o Forces, Trends Affecting Growth
• Pilot Customer Development
• Repeatable Sales Model
Judging Criteria
• Is the sequence of target markets and the path to them clear and defensible, and is the potential market large enough
for a successful startup to have a major environmental and economic impact?
• Does the cumulative size of the target markets represent an attractive opportunity appropriate to the funding strategy?
13. Value Creation through Markets and Getting to Them
Focus on Factory to Field and Awareness, Knowledge and Action (AKA)
What is 50/30/20 rule?
Cleantech Open
Webinar 3 – Markets and Getting to Them
21. Cleantech Open Webinar
by University of Phoenix
Markets and Getting to Them
Market Size and Growth Rate – Near and Long Term
Market Infrastructure Discovery
22. Cleantech Open
Webinar 3: Markets and Getting to Them
KEY
TRENDS
MARKET
FORCES
INDUSTRY
FORCES
MACRO-
ECONOMIC
FORCES
http://www.businessmodelgeneration.com/
23. Cleantech Open
Webinar 3: Markets and Getting to Them
Market Forces
MARKET SEGMENTS
NEEDS AND DEMANDS
MARKET ISSUES
SWITCHING COSTS
REVENUE ATTRACTIVENESS
MARKET
FORCES
- Market Analysis -
http://www.businessmodelgeneration.com/
24. Cleantech Open
Webinar 3: Markets and Getting to Them
Economic Infrastructure
Describes the economic infrastructure of the market in which your business operates
25. Cleantech Open
Webinar 3: Markets and Getting to Them
Global Market Conditions
Example:
The Recovery Act
• The Recovery Act provides appropriations for projects and activities that are related to transitioning the economy to
clean energy with a total investment of over $90 billion.
26. Cleantech Open
Webinar 3: Markets and Getting to Them
Industry Forces
SUPPLIERS AND OTHER VALUE
CHAIN ACTORS
STAKEHOLDERS
COMPETITORS
(INCUMBENTS)
NEW ENTRANTS
(INSURGENTS)
SUBSTITUE PRODUCTS
AND SERVICES
INDUSTRY
FORCES
- Competitive Analysis -
http://www.businessmodelgeneration.com/
27. Cleantech Open
Webinar 3: Markets and Getting to Them
Competitors (Incumbents)
Identifies incumbent competitors and their relative strengths
28. Cleantech Open
Webinar 3: Markets and Getting to Them
Competitors (Incumbents)
Questions to ask:
• Who are our competitors?
• Who are the dominant players in our particular sector?
• What are their competitive advantages or disadvantages?
• What are their main offers?
• Which customer segments are they focusing on?
• What is their cost structure?
• How much influence do they exert on our customer segments, revenue streams, and margins?
29. Cleantech Open
Webinar 3: Markets and Getting to Them
Competitors (New Entrants)
Identifies new, insurgent players and determines whether they compete with a business model different
from yours
30. Cleantech Open
Webinar 3: Markets and Getting to Them
Substitute Products and Services
Describes potential substitutes for your offers, including those from other markets and industries
31. Cleantech Open
Webinar 3: Markets and Getting to Them
Substitute Products and Services
Questions to ask:
• Which products or services could replace ours?
• How much do they cost compared to ours?
• How easy is it for customers to switch to these substitutes?
• What business model tradition do these substitute products stem from (e.g., high-speed trains versus
airplanes, mobile phones versus cameras, or Skype versus long-distance telephone companies)?
32. Cleantech Open
Webinar 3: Markets and Getting to Them
Suppliers and Other Value Chain Actors
Describes the key Supply and value chain incumbents (Physical and Electronic) in your market and
spots new emerging players
34. Cleantech Open Webinar
by University of Phoenix
Markets and Getting to Them
Pilot Customer Development and Repeatable
Sales Model
35. Cleantech Open
Webinar 3: Markets and Getting to Them
Pilot Customer Development
o Start with a Lead Customer in terms of Development
o Who are you targeting?
o What is the Segment?
o How do you plan to get there?
36. Cleantech Open
Webinar 3: Markets and Getting to Them
Repeatable Sales Model
o Direct – ecommerce, Personal Selling
o Indirect - Retail - Online (Amazon)
- Offline (Apps)
o Indirect – Distributors (Ownership of Product)
- Reps (Commission basis) though removed from the customer
o Component of bigger System - Private Labeling and let someone else sell
37. Cleantech Open
Webinar 3: Markets and Getting to Them
Repeatable Sales Model
o Key Factors that should guide your Go to Market Strategy
Deal Size / Product Margin
Percentage of Whole Product
Solution Complexity
Credibility and Brand
Local Knowledge
Time to Market
No of Target Customers
38. Cleantech Open
Webinar 3: Markets and Getting to Them
Markets and Getting to them
What is your plan?
42. 43 Cleantech Open Confidential Information – All Rights Reserved
Worksheet Work – Week 7/23 - 7/30
• Business Model Canvas and Value Chain Diagram – continue
working on this
– Competitors / Competitive Advantage / Why You?
• Product/Market Fit – Continue Customer Interviews
– Pre-revenue and post initial revenues
• Getting to Market
– Define, characterize and size your Market
– Identify first $1m Market
– Validate your customer
• Product & Technology Validation or Path to Same – start
validating through your customer discovery process
43. 44 Cleantech Open Confidential Information – All Rights Reserved
TEAM FOCUS FOR WEEK OF AUGUST 1
Prepare for Business Clinics
Address Product/Technology Validation Worksheet (Wiki)
Complete Product/Market Fit Worksheet (Wiki)
Complete Business Model Canvas and Worksheet (Wiki)
Complete Markets and Getting to Them Worksheet (Wiki)
Begin (or continue) to develop Financials Worksheet (Wiki)
Contact Your Mentor or Regional Mentor Chair With All Questions
44. Session 2 will start at 2:45pm PDT
3:45pm MDT, 4:45pm CDT, 5:45pm EDT
45. 46 Cleantech Open Confidential Information – All Rights Reserved
Session 2: Term Sheets
2:45pm – 4:00pm, PDT
Speaker:
Julio E. Vega
Partner, Bingham
Speaker:
William S. Perkins
Partner, Bingham
46. Term Sheet
Fundamentals:
William S. Perkins, Partner
Julio E. Vega, Partner
CleanTech Open
National Academy
July 23, 2013
A Play in Three Acts
47. CAST & SETTING
Entrepreneur..................................................................Will Perkins
Will, an engineer by training, spent many years in the labs of a large technology company. He is now
leading a group of his former work colleagues into a new clean-tech venture. Having spotted the
growing interest in electric cars, Will and his team have developed a product that sits between the
power source (i.e., home wall plug) and car charging port that speeds charge times by 30%-50% in
early lab tests. SpeedyCharge needs $500,000 -- 750,000 to develop a prototype and place it with a
local electric car club who have agreed to beta test it.
Angel Investor.................................................................Julio Vega
Julio, a lawyer by training, now spends his time investing in early-stage growth companies as an
angel and with his group of old friends functions almost as an angel fund.
Setting
Having been introduced by a mutual connection, Julio and Will are meeting for the first time at a local craft
beer hall to review terms for an angel investment round led by Julio. Prior to this meeting, Julio and Will had
a long “meeting” (WebEx) where Will walked Julio through his slide deck and business model for
SpeedyCharge. Julio indicated a willingness to invest, but Julio wanted to meet will in person to negotiate
out terms.
48. ACT I
The Meeting
Will and Julio meet at The Beer Garden and jump right into their negotiation. Things quickly turn to
valuation...
Key Terms*
• LLC [__]
• Corporation [__]
• Founders [__]
• Valuation [__]
• Cap Table [__]
• Pre-money [__]
• Post-Money [__]
• Convertible Notes [__]
• Preferred Stock [__]
*Engineered for Term Bingo! Play along...
49. ACT II
The Meeting
With valuation and the structure/type of security set, Will and Julio turn to other terms and topics...
Key Terms
• Option Pool [__]
• Participating [__]
• Dividends [__]
• Anti-dilution [__]
• Pre-emptive rights [__]
• Blocking rights [__]
• Protective provisions [__]
• Vesting [__]
50. ACT III
The Meeting
Things are wrapping up...
Key Terms
• Board seat [__]
• Observer [__]
• Information [__]
• Drafting [__]
• Counsel [__]
• ROFR [__]
• Co-sale [__]
• Drag [__]
• Expenses [__]
51. Term Sheet Fundamentals:
What to worry about tomorrow
• Dividends (and when they matter)
• Conversion
• Anti-Dilution Protection
• Redemption
• Protective Provisions
• Investor Rights/Covenants
• Founder Stock
• Exclusivity
• Binding
52. Other Resources
• The National Venture Capital Association‟s “„template‟ set of model
legal documents for venture capital investments” are available at:
http://www.nvca.org/index.php?option=com_conten
t&view=article&id=108&Itemid=136
• The model documents, while instructive and prepared with helpful
annotations, are no substitute for a thorough discussion/translation
by your own counsel
54. What People are Saying about Us...
Recognized by Chambers
USA as having a “„stellar‟
corporate team” that
produces “work of an
„extremely high quality‟” as
well as noted for having
“broad geographical client
reach”
-Chambers USA
“Bingham McCutchen
has long housed some
impressive project
finance experts, and the
firm itself is now
achieving more
recognition, especially
for its work in renewable
and alternative energy.”
-Chambers USA
“Noted as one of the
largest environmental
groups in the
country, “clients‟
would recommend
them without a
doubt.”‟
-Legal 500
2008 Deal of the Year by
Project Finance Magazine
2010 Best Renewables Deal
by Power Finance & Risk
2008 Americas
Renewables Deal of the
Year by Project Finance
International
Nominated for Deal of the
Decade by Infrastructure
Journal
Noted as a Top Ten United States
Cleantech Law Firm of 2011 by
CleanTechies.com
56. Will Perkins
Will Perkins concentrates his practice on general corporate matters and licensing matters, with an
emphasis on strategic investments, mergers and acquisitions, structuring and financing new
ventures, and public and private offerings of securities, including representation of both financial and
strategic buyers. He represents both public and private companies, as well as private equity funds, in
a wide range of transactions including venture capital financings; in-licensing and out-licensing
transactions; product manufacturing and distribution arrangements and initial public offerings and
follow-on public offerings of equity and debt securities.
Julio Vega
Julio Vega concentrates on corporate and securities law, with an emphasis on venture capital
transactions, mergers and acquisitions, public offerings such as IPOs, joint ventures, strategic
alliances, and licensing transactions. He represents emerging growth companies and established
businesses in all areas of technology, including advanced materials, biotechnology, e-
commerce, nanotechnology, networking, software and telecommunications. Julio regularly counsels
startups on equity-based compensation matters, equity finance strategy, executive employment
arrangements, general business strategy and other general corporate issues. He has also
represented venture capital firms in connection with portfolio company investments.
60. 61 Cleantech Open Confidential Information – All Rights Reserved
Reminders
• Work on your worksheets – keep up each week, it will make it
easier
• Complete webinar survey you will automatically receive from
Webex – we want your feedback
• Next webinar is Tuesday, July 30th
– Check your Accelerator wiki http://wiki.cleantechopen.com/accelerator-
wiki/2013-webinars/ for updates on webinars
– Session 1: Product & Technology Validation - 1:30pm to 2:30pm, PDT
• Speaker: Niraj Kohli, President, CSC
• Be sure to send in your top 3 expectations you have for the next
worksheet webinar. Link is in the July 30th Session 1 webinar
– Session 2: Alternative Sources of Funding: Grants - 2:45pm-4:00pm, PDT
Editor's Notes
The result of many years’ worth of work, the 10-Step Curriculum is the key process, initially introduced at the Academy, which helps a company de-risk their technology.Progressive de-risking of company from concept to a venture that will achieve investment and/or sustainable revenueTraining materials, activities & workshops are integrated with these 10 steps Product-Market Fit helps each company ensure that they have identified the correct market for their product(s)/service(s) and are ready to make appropriate adjustments. 2) Technology Validation ensures that their product(s)/service(s) will credibly meet the requirements of investors and customers. 3) Business Model covers all key aspects of who and how and where money will be made, and how the product will be delivered. 4) Markets and Getting to Them covers the key, crucial steps needed to get a new product into the market (an enhanced version of ‘Go To Market Strategy’). 5) Finances & Funding focuses on producing credible financial projections. 6) Legal provides an introduction to intellectual property protection and the corporate structure required to minimize risk and provide the legal underpinnings for success (important steps often overlooked by entrepreneurs). 7) Execution and Team to Execute introduces the importance of building a strong, relevant team with the specific skills needed to hit the major milestones needed as the startup grows. 8) Sustainability introduces the importance of business practices that will improve the company’s profitability while reducing its environmental impact. 9) Presentation works on the content and skills for excellent investor/customer presentations. 10) Assessment & Review guides each entrepreneur through the importance of careful review, and provides the platform for review and refinement of the programs themselves.Physical and virtual business clinics are one-on-one sessions for each participating startup with experts from sectors such as law, marketing, design, manufacturing and finance.
Welcome to the Cleantech Open Customer Discovery and Product / Market Fit Webinar.
Graphic of the business model environment found on p. 201 of Business Model Generation.
Introductory slide and webinar description
Our agenda for today’s topics in this webinar focus on the following:- Value Creation from Factory to Field through AKA for Cleantech Enterprises- Mapping Customer Buying Process for enterprises Market Size and Growth Rate – Near and Long Term (TAM, SAM) including Market Infrastructure Discovery Pilot Customer Development and Repeatable Sales Model We will take questions in the middle and at the end of our meeting today.At the conclusion of the webinar, you should have a more solid understanding of how Markets and Getting to them fit onto Osterwalder and Pigneur’s (2010) Business Model Canvas.
We move on to Webinar no 3 from where we left off last week on Customer Discovery, Product / Market Fit. You shared with us what you liked about the Webinars and how we can make them more helpful. Today’s Webinar is on Front and Back Stage i.e. Customer View and Operational View with focus on Value Creation, Business Model Canvas, Customer Discovery –Product Market Fit and now trying to understand the opportunity and monetizing it. The goal is to link the Webinar content as much as possible to the Worksheets that you are required to complete and Judging Criteria given that is your shorter term interest.
Remember the Credit Rule of 50/30/20 of Public Markets and how it impacts you as a start up!50% is Macro Environment - Economic, Regulatory, Political and Legal etc (Capital Markets and Regulatory Policies and its impact on Cleantech)30% is Industry and Country - What Industry Segment and Locations of Supply and Value Chains (Water, Energy, US, China, India etc) 20% is given Business Impact – Growth, Profits and Impact (Sales Opportunity, Gross Margins, Cash Flows) Focus on Factory to Field and Awareness, Knowledge and Action (AKA) 4C’s (Customer, Cost, Competition, Channels) Segment, Sub- Segment and Application, Intellectual Property Supply and Value Chain – Be clear on the choke points Ability to monetize with Impact Business is not about what you deserve but what you are able to Negotiate!- Innovation - Spin off, Evolutionary and Revolutionary Products / Markets.- Drive versus Driven in Markets – Thinking of Markets Differently- Create New versus Existing Industry – Products and ValueInnovation – Practices, Processes and Products to form Spinoff, Evolutionary and Revolutionary. Example….Optoelectronic and Diodes market, Existing Chips / New Packages or Vice Versa and New Platforms and Devices. Example….SMPS Market and HP Printer Market2)Drive versus Driven in Markets – First Mover Advantage versus competing solely on price and delivery. Example…….At Motorola Semiconductor, drove the conversion of existing diodes in ESD and Transient Voltage Supression Business which lead from competing on commodity parts to high margin and high growth markets. Example…….Rise of Wafer Foundaries and Subcontractor Back End Manufacturing companies in a highly capitalized industry such as semiconductor industry.3) Create New versus Existing Industry – Sell Solutions versus Devices – Example - Optoelectronics devices (LED’s) that sell for pennies to create a Smart Lighting Solutions that sell for dollars. Sell discrete LED’s and Detectors devices or sub assemblies to Automotive Industry / Industrial / Commercial Mood Lighting Market Example….Color Kinetics focusing on Smart Lighting and development Intellectual Property that lead them to sell out to Phillips Lighting.
In Markets and Getting to them one needs to be focused on all three stages of Business Model Canvas though most of the action is on Front and Back Stage with actions impacting you on Business Performance Stage.The Canvas consists of nine building blocks, which are described from Right to Left (Front Stage and Back Stage) and then at the bottom Front Stage……..On the Right are four building blocks that form what can be called a customer view. These blocks include Customer Segments (CS), Value Propositions (VP), Customer Relationships (CR), and Channels (CH).On the Left are three building blocks that form what can be called the operations view. These blocks are Key Activities (KA), Key Resources (KR), and Key Partnerships (KP). At the bottom of the Canvas are two blocks that make up the economics view: Cost Structure (C$) and Revenue Streams (R$).The Canvas should be seen as a visual representation of the flow from suppliers to customers supported by economic elements. The organization of the elements is set up to be developed from right to left and then interpreted left to right. Like a painting it may not make sense until all elements are in place and the whole of the picture is seen through the interaction of the parts. In the following discussion we will look at each in more detail.Companies with Successful Business Models – Apple, Intel, Google and Power Assure (Smart Power Management - Dashboard)
Key Takeaways: 1) Many Cleantech Markets are existing and established- Your potential customers are already using a product that yours must replace or augment and you must test your product against existing alternative products.- You already have competitors servicing those customers and you must understand those competitors and their product features, their established sales channels and their demand creation strategy.2) Identifying target customer segments thru research, mapping supply and value chains, Observation and Yes, interviews are key.3) Customer Dollar Spends, Observations, interviews and line tours aare key to crafting a winning Value Proposition which must specifically describe the problems you solve better, more efficiently and effectively etc. than Companies X, Y and ZHere, we see Osterwalder and Pigneur’s Business Model Canvas (2010) showing the two segments we will discuss for the next 90 minutes: value propositions and customer segments.Customer Segments – Unique groups differentiated by:Industry Segment Sub Segment Application Functionality Size OtherTest Hypotheses with interviews in several segments:Product Value Proposition Hypothesis Customer Hypothesis Demand Creation Hypothesis Market Type Hypothesis Competition Hypothesis
Photoxhopannabell
Graphic of the business model environment found on p. 201 of Business Model Generation100k Foot Analysis – Macro Economic Issues. Regulatory. Political, Legal – Megatrends50k Foot Analysis – Industry and Country Analysis – Niche’s but highly profitable Segements 10k Foot Analysis – Operational Analysis - Supply and Value Chains of Existing Markets
Graphic of the Market Forces domain of the external environment from p. 202 of Business Model GenerationFocus on TAM, SAM and sources to collect such info - Example …..ARIIndustry Reports Analyst ReportsS1 filings of companies that go public- Research Firms such as Gartners, Gigaom and Investment Banks investing and promoting Cleantech Companies
Graphic of the Industry Forces domain of the external environment from p. 204 of Business Model GenerationEnergy Conservation versus Efficiency in Industrial Applications – Example Atmosphere Recovery Inc (ARI).