Technology–to–Market: Activities Beyond the … Sue...Technology–to–Market: Activities...

ARPA-E Internal Use OnlyARPA-E Internal Use Only

Technology–to–Market: Activities Beyond the Purely Technical.

Inspiring you with logic

Sue BabinecSenior Commercialization Adviser

Washington D.C. August 18, 2017

ARPA-E Internal Use OnlyARPA-E Internal Use Only 1


KEY POINTS

If technically successful, our approach “efficiently” leads your project to smart/timely partnerships & follow-on-funding;

If not technically successful, minimal time is wasted

Our T2M elements are those of most large tech companies & VC:essentially a common format/language

Active tech & commercial management drives to an endpoint, but the development of intense understanding is also critical:

use your experienced APRA-E resources!

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ARPA-E ROLE IN GOVERNMENT RESEARCH ECOSYSTEM

TRANSFORMATIONAL“High Risk – High Reward”

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Metrics Set for Impact & Mass Adoption: technology & economic

a spirited agency debate between agency PDs, commercial & Sr. management

“TRANSFORMATIONAL” = New Learning Curve

Changing what’s possible

Program Creation ~ 9-12 month process

Changing what’s possible is all about the metrics


If It Works – Will It Matter? Realizing ARPA-E aspirations means promising technologies

must move out of the lab and towards the market.

T2M ROLE IN ARPA-EThis is Difficult in General – Especially Difficult for Disruptive Energy Technologies

T2M Activities Broadly Prepare You for this Difficult Journey

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If technically successful, our approach “efficiently” leads your project to smart/timely partnerships & follow-on-funding;

If not technically successful, minimal time is wasted

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GREAT IDEASGREAT TEAM

HANDS-ON COACHING

PROOF-OF-CONCEPTECONOMICS & IP

1ST MINI-PILOT DEMOFIRST PARTNER

SMART FUNDING

INCUBATION GROWTH

bridgingthe gap(T2M)


ARPA-E/T2M APPROACH HAS BEEN SUCCESSFUL

Tricky to Project Far to “Future Success” with Nascent TechnologiesSeveral metrics are used to link technical investments & commercial success

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ARPA-E Internal Use Only 9

TechnologyAwards

Sum

# of projects

(TOTAL)

# spin-off companies

Private Investments

STORAGE projects >$230M 103 13 >$600M

ALL ARPA-e projects >$1.6B >580 56 >$1.8B

Measures of Success: follow-on funding & spin-outs(energy storage has done well)

ARPA-E Internal Use Only

Measures of Success: Impact Assessments for Global CO2, (GDP, Jobs )

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Direct Employment:Product in question.

Indirect Employment: Upstream or downstream on supply chain.

Induced Employment: Doctors, grocery store clerks,etc.

2. GDP & Job Growth - Forced Implementation Scenario

Lucas Spangher: ARPA-E Fellow -Statistics


Success: Innovation Benefits Across the Ecosystem

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DOE SOCIETY

SCIENTISTINNOVATOR

INVESTORTECH MANUFACTURER

Reduce Imports Scientific Distinction Help me Grow

Reduce Emissions Financial Gain Increase my profitability

Secure Technical Superiority Professional Growth Reduce my risk

DOE / SOCIETY

INVESTORMANUFACTURERSCIENTIST


‘ECOSYSTEM”

T2M

PD

TEAM

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‘ECOSYSTEM”

T2M

PD

TEAM

“ECOSYSTEM”

T2M

PD

TEAM

Shape the path: asking critical economic, manufacturing & IP questions earlySet decision points: commercial milestones based on tech milestone

Transition prep: advance preparation of complete story for next stage partnership

ARPA-E T2MBringing Commercial Discipline to Government Funded Research

Our T2M elements are those of most large tech companies & VC:essentially a common format/language


T2M Elements for Effective Follow-on Resources

Follow-onresourcing

TEA

Techno-economicassessment

Manufacturing

IP:

Patent Protection

T2M Plan:Manufacture/Scale-up?

1st/Final Market

Team

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ARPA-E Internal Use Only 14

You are high risk

Start early – relationships take timeUnderstand the future partner – speak their language - frankly

Know where you are going, why & what it will take

A nickel ain’t worth a dime anymore: Yogi Berra


Funding: Strategic vs. Financial InvestorATTRIBUTE FINANCIAL VC CORPORATE (STRATEGIC) VC

STRUCTURE Partnership - shareddecisions

Bureaucracy - committee or autocratic decisions!- can be very slow

PRIME DIRECTIVE Return on capital toPartners, Limited

Keep the enterprise going! Do no harm!!- New Internal Business

RISK Rationally manage risk!- shared risk/ reward! syndications

Take no risk!- no shared rewards

CAPITALDefined pool from Limited Partners!- General partners participate!- defined limits on each investment

Investment on case-by case basis!- consent/capital fromoperating businesses

EXPECTED OUTCOME

Return on capital!- financial business !- divest at highest value!

New or additive business development!- acquire at lowest value!- little interest in financial returns

BOARD ROLE Specified in term sheet!- preferences, control

Specified in term sheet!- controlled, limited

FOLLOW-ON Yes if sensible Capricious! - changes with corporation authority

VALUE ADDED

Business, company development!- financial network!- executive talent!- capital raises

- technology possibly (should be understood before investment)!- market access

*Nick Darby: Darby Associates15


Team: Typically PI + 1-3 partners needed to meet project goals

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You can observe a lot just by watching: Yogi Berra

Team

• ADVICE:• Clarify roles, leverage all skills• Communicate Often• Report progress vs. Milestones

(not progress vs team member)


T2M Plan: Consider first products, markets & manufacturing early

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T2M Plan:Manufacture?

1st/Final Market

If you don’t know where you are going, you might end up someplace else– Yogi Berra


TECHNO-ECONOMIC ANALYSISUNDERSTANDING THE RELATIONSHIP BETWEEN DESIGN – PERFORMANCE – COST

(AND TECHNICAL CONSTRAINTS)

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TEAPROTOTYPE

DESIGN

MANUFACTURING ENTREPRENEUR

TEA FUNDING

Financially Informed Technical Decisions The language of commercial relationships


TEA at its core = estimating value, clarifying options

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Technology Cost/Economics

Technical Performance

Competing Solutions: Multiple Scenarios

Choices Based on Economics


BASIC TENET: INTEGRATE CHEMISTRY, MATERIALS & PROCESS RESEARCH

ManufacturingScale-up

INNOVATIONS OCCUR THROUGHOUT

DEVELOPMENT CYCLE

In theory there is no difference between theory and practice. In practice, there is: Yogi Berra


Intellectual Property: required to control & monetize your innovations

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Burden? Expense? ………….

Resource Risk?

Opportunity?

IP:Patent Protection

I wish I had an answer to that because I am tired of answering that question - Yogi Berra

IP is needed wherever you make, sell, use “your technical product”


It can actually look like this: A Patent Thicket - a Perfect Storm

22Dan Abraham


Patent Protection: critical business asset

‣ IP knowlidge & position increaseduring the ARPA-E project

– Identify gaps– Propose solutions

‣ IP as a business tool: – Neutralize/manage competition– Leverage it in negotiating contract terms and deal structures– Charge royalties.

‣ Non-owners ultimately become service providers

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Worst Case Scenario: You lose the right to

practice your invention

Start early!


LICENSING: Kicking the can down the road? Or Smart Option

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To sell a product - - - - -At some point someone assumes the risk in order to make something

labor? capital? When?IT’S COMPLICATED!!

?

?

??

??

Time

Cost/Performance Labor Cost

When to invest capital?


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$10M

$100M

Research

PrototypeDemonstration

Inve

stm

ent

TimeConcept

$1M

ARPA-E

Other Investors

STRUCTURE & OBJECTIVES:Significant Technology Risk Reduction & Manufacturing Pilots for 1st Markets

ARPA-E Typical Project: 3 years/$2-5million (NSF: 12-18 mo/~$500K)

NSF

3 year runway to work through majority

proof of concept, initial manufacturing

& economic issues


ADVICE AS YOU ASCEND THE ARPA-E HILL

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1. Time is the best killer! Resources deplete, SOA changes1. Impose boundary conditions early - avoid a dead end

2. You are not the PD’s only team1. Communicate clearly – state your conclusions!2. Be proactive

3. Partners/Future funding aligns with risk reduction –think in those terms – conceptualize in risk units

4. Cheap, scalable manufacturing is a requirement, not an aspiration.

5. Your ARPA-E team is highly experienced, listen to their advice

Active tech & commercial management drives to an endpoint, but the development of intense understanding is also critical:

use your experienced APRA-E resources!


1900: Where’s the First Car?* 1913: Where’s the Last Horse?

Thank You!

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