2014.05.08 MC2 Open Innovation in High-Tech and Low-Tech SMEs part 2
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Transcript of 2014.05.08 MC2 Open Innovation in High-Tech and Low-Tech SMEs part 2
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Part 2
03/02/13 © Wim Vanhaverbeke 21
Joint value creation between ACE & Sanus § Result: negotiate to get a maximal win-win situation
§ Both firms can offer each other a lot § The large firm: § business and market intelligence § application technology § marketing know-how § large scale manufacturing § credibility among large potential clients § patent writing skills § … § Start-up: § new technology, business model, etc.. § entrepreneurial risk taking and decision making § …
© Wim Vanhaverbeke 22 03/02/13
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Tensions and debates: The following conflicting interests
• High upfront technology investment
• Opportunity to work with other parties
• Time to develop products/markets
• No risk for Sanus • Limited, more focused approach
on other applications • Access to ACE resources
• No upfront dtechnology investment
• Exclusivity
• Quick results
• No risk for ACE • Technology to be used in
strategic areas of ACE • Full access to IP of Sanus
Sanus ACE Food Specialties
© Wim Vanhaverbeke 23 03/02/13
How to organize for OI? External Venturing at ACE Five reasons not to start a power play with
external ventures: 1. Bad reputation: when the large, investing firm is looking
for interesting start-ups as a recurrent practice 2. Pushing too hard for a particular application (based on
the business model and application markets of the large investing firm)
u Market potential of start-up technologies is still very uncertain because of the early stage technology. Keep options open for unintended but interesting applications. Every start-up struggles with focus vs keeping options open issue
u Could limit exit possibilities and exit value for other shareholders (by lock-in to/dependency on corporate). Limits business potential of start-up (and thereby shareholders value)
…. © Wim Vanhaverbeke 24 03/02/13
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How to organize for OI? External Venturing at ACE Five reasons not to start a power play with
external ventures: 3. Might kill the spirit of good cooperation. 4. Kill entrepreneurial spirit by creating another "corporate
puppet on a string" 5. Could result in litigation if perceived as abuse of
economic power
© Wim Vanhaverbeke 25 03/02/13
Some assumptions for the financial and strategic investments
ACE Venturing: Assumptions for the CV investment n Investment : 5-10 million euro n 10% participation of ACE n Multiple after 5 years = x 5
ACE FS: Assumptions for the strategic investment n Sales: 50 million / year 5 years after launch - lasting till 10th year n Sales : Linearly increasing in first 5 years after launch n Expected (average for new businesses) profitability : EBIT 20% n Launch expected after 2 years
© Wim Vanhaverbeke 26 03/02/13
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Strategic investment Sanus
© Wim Vanhaverbeke 27
0
10
20
30
40
50
60
1 2 3 4 5 6 7 8 9 10 11 12
Mill
ion
euro
Year Sales EBIT (in mill euro)
1 0 0 2 0 0 3 10 2 4 20 4 5 30 6 6 40 8 7 50 10 8 50 10 9 50 10 10 50 10 11 50 10 12 50 10
NPV (r = 8%)
03/02/13
Comparison financial and strategic investment
Financial return (in mill euro) n Investment 5 10 n 10% particpation 0,5 1 n Multiple after 5 years (x 5) 2,5 5 n Gain 2 4 n NPV 1,36 2,72
Strategic investment (in mill euro) n Total sales 400 n Total EBIT 80 n NPV EBIT 42,78
© Wim Vanhaverbeke 28 03/02/13
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Investment Management Process (post-closing)
Kick off Exit
Explore mutual interests
Execute coopera-tion
Formalize coopera-tion
Prepare for exit
Follow on financing
Monitor and add value
Venturing role/responsibility
SBU role/responsibility
Financial return Investment Manager
Strategic return Strategic Venture Champion
03/02/13 29 © Wim Vanhaverbeke
03/02/13 37 © Wim Vanhaverbeke – UH – Vlerick - ESADE
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03/02/13 38 © Wim Vanhaverbeke – UH – Vlerick - ESADE
Fabuless™ n Fabuless™ as a food ingredient
Fabuless™ can be incorporated into many food categories: Yoghurt Milk drinks Soups Nutritional Beverages Meal replacement products Ready prepared meals
n Fabuless™ as dietary supplement The Fabuless™ Mini-shot concept offers Fabuless™ in single-dose containers (7.5 ml) for use as a dietary supplement.
n Fabuless™ has been launched in several markets including US, France,
Spain, Portugal, Italy, United Kingdom and Sweden.
03/02/13 39 © Wim Vanhaverbeke
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03/02/13 40 © Wim Vanhaverbeke – UH – Vlerick - ESADE
LTP (Lipid Technologies Provider AB ) and DSM n Swedish company with a technology platform based on formulated
lipids n DSM Venturing:
u invested in LTP in September 2003 u mid 2005, LTP entered into a global Marketing & Sales agreement
with DSM Food Specialties t the exclusive right to market Olibra® (Fabuless™) in the dairy
food n LTP has introduced Olibra® in the food supplements category
(individual cups to be consumed as a single dose or by adding to a meal) in USA, France, Spain and Scandinavia, etc…
n LTP AB has been acquired by DSM - 28th September 2006. n How to manage a spin-in successfully?
03/02/13 41 © Wim Vanhaverbeke
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LTP (Lipid Technologies Provider AB ) and DSM n Swedish company with a technology platform based on formulated
lipids n DSM Venturing:
u invested in LTP in September 2003 u mid 2005, LTP entered into a global Marketing & Sales agreement
with DSM Food Specialties t the exclusive right to market Olibra® (Fabuless™) in the dairy
food n LTP has introduced Olibra® in the food supplements category
(individual cups to be consumed as a single dose or by adding to a meal) in USA, France, Spain and Scandinavia, etc…
n LTP AB has been acquired by DSM - 28th September 2006. n How to manage a spin-in successfully?
03/02/13 42 © Wim Vanhaverbeke