Venture Secrets—Building a Compelling Value Proposition for Your Research

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Venture Secrets: Building a Compelling Value Proposition for Your Research Frank Rimalovski Executive Director, NYU Entrepreneurial Institute Managing Director, NYU Innovation Venture Fund Instructor, NSF Innovation Corps (I-Corps) Mar 25, 2015

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April&8th:&Meet&an&Entrepreneur:&Rachel&Meyer!Co$Founder!Shoots!&!Roots!

Upcoming!Series!@!the!Leslie!eLab!

Mid&May:&Life&Science&VC&1st&Pitch&Invita?on&Only&Preference&for&BioVenture&Speaker&Series&ADendees!

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Agenda

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1.  What makes for a successful startup?

2.  What we used to believe

3.  What we now know: The right way to start (up)

4.  Benefits to this approach

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What makes for a successful startup?

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Commercialization Myth

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Basic & Applied

Research

Scientific Discovery/Invention/ IP Creation

Venture Formation & Growth

@NYUEntrepreneur The “valley of death”

Commercialization Reality

Basic & Applied

Research

Scientific Discovery/ Invention/ IP Creation

Customer Discovery & Prototype

Dev

Business Model &

Team Formation

Venture Formation & Growth

• Customer/market discovery • Engineering/prototypes • Mentors and advisors • Collaborative spaces • Business leadership • Legal counsel • Capital

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Two parts to Translational Medicine 1.  Advancing the science/technology

2.  Finding a repeatable business model

u  Current efforts focus on #1

u  Successful efforts require both

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Answers are Outside Your Lab

u  You may be smartest person in your lab

u  Not smarter than collective intelligence of your potential customers, partners, payers & regulators

u  Can’t learn by reading papers or lectures

u  Experts are overrated

You need to get outside your building

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It’s Bigger Than the Revenue Model

u  Testing hypotheses makes substantive changes to biz model before you do science/design o  Define clinical utility o  Who core & tertiary users/buyers/payers are o  Sales & marketing process required for initial

revenues and downstream commercialization o  Data required for future partnerships/collaborations o  Intellectual property risks o  Regulatory pathways o  Reimbursement strategies o  Roles of partners

u  Affects your biological & clinical hypotheses 9

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Need to do this before finishing the science or building/designing the product

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Evidence-based Entrepreneurship (aka the Lean Startup)

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What We Used to Believe

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Startups are a Smaller Version of a Large Company

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Start with an Operating Plan and Financial Model

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All I Need to Do is Make the Forecast

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What We Now Know

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“Everyone has a plan until they get punched in the face!”

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Planning comes before the plan

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Business Model Canvas

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“More startups fail from a lack

of customers than from a

failure of product

development.”

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So what do we do?

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Customer Development

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A temporary organization designed to search

for a repeatable and scalable business model

A startup is…

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What is a Business Model?

How a company creates value for itself

while delivering products or services for

customers

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What is a Business Model?

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9 Guesses

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Guess

Guess

Guess

Guess

Guess

Guess

Guess

Guess Guess

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Testing Hypotheses

u Apply the scientific method to customer discovery

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Observe phenomena

Formulate hypothesis

Test hypothesis via rigorous experiments

Establish theory based on repeated validation of

results

Modify hypothesis PIVOT!

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Customer Development is how you search for the business model

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First test the problem, then test the solution


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Value Proposition What Problem Are You Solving?

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Value Proposition

describes the benefits customers can expect from a bundle of products and services

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Customer Segment Who Cares?

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Customer Profile

Who are they and why would they buy?

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Problem-Solution Fit

Fit

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So where does my technology come in?

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It’s not about your technology!

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So where does my technology come in?

Customers don’t care about technology They are trying to solve a problem

Customer discovery is about identifying that problem & exploring how you could solve it

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Value Proposition What Problem Are You Solving?

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Key Questions for Value Prop u  Problem Statement: What is the problem?

u  Technology / Market Insight: Why is the problem so hard to solve?

u  Product: How do you solve it today?

u  Competition: Who is delivering that solution?

u  Clinical utility: What level of improvement in efficacy/safety/cost/etc. is needed?

u  Market Size: How big is this problem?

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Customer Segment Who Cares?

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Define Customer Archetype u  Who are they?

o  Position / title / age / sex / role

u  How/where do they buy? o  Discretionary budget (name of

budget and amount)

u  What matters to them? o  What motivates them?

u  Who influences them? o  What do they read/who do they

listen to?

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What is your potential customer trying to get done?

Jobs to be Done

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…they want a quarter-inch hole!"

“People don't want to buy a quarter-inch drill…

SOLUTION (WHAT)

JOB (WHY)

Innosight LLC

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Who has what job to be done?

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“Make me efficient at my work”

FUNCTIONAL

“Convey my professional status”

SOCIAL

“Make me confident that I can get the job

done”

EMOTIONAL

“Help me perform like a professional”

JOB

•  Prestigeà show that I use the latest starting with my equipment

•  Valueà demonstrate my ability to recognize value

•  Confidenceà ensure that I can count on my equipment

•  Versatilityà give me the ability to work in different conditions

•  Accuracy à the ability to only effect targeted tissue

•  Speedà help me complete the task quickly

Innosight LLC

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Customer Profiles

Innosight LLC

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put yourself in the customers’ shoes

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Who’s the Customer in a Company?

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Reimbursement!

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Who’s the Customer in a Company?

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How Do They Interact to Buy?

u  Organization Chart

u  Influence Map

u  Sales Road Map

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Customer

Ecosystem of people you need to understand, satisfy and

appeal to in order to get them to buy your product.

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Technology Lifecycle Adoption Curve

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Your Business Model Will Change…

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Product / Solution Fit

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Case Study: The Smart Needle

Source: Paul Yock, NIH I-Corps 2014

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Great concept: transducer inside needle

…just listen to localize blood vessel


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What’s the need?

A way to localize arteries and veins to improve the speed and accuracy of needle sticks


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A way to localize arteries and veins to improve the speed and accuracy of needle sticks

Need statement:

•  fast

•  accurate

•  needle size no bigger than current

•  maintain sterility

Need criteria:


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What we missed!

The existing approach was cheap!


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A cost-effective way to localize arteries and veins to improve the speed and accuracy of needle sticks

Need statement:

•  (where is there real value in time saved?)

•  Accurate

•  Needle size no bigger than current

•  Maintain sterility

Need criteria:


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For most patients it’s not worth it to add the expense of extra technology to save a little time

The real need is in high-risk patients: trauma, acute MI, neonatal ICU

amico.com

Do

vemed

.com


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A cost-effective way to localize arteries and veins to improve the speed and accuracy of needle sticks in high-risk patients

Need statement:

•  Less than $25 additional per patient

•  Accurate



Need criteria:


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We missed something else!

The technique must be user-friendly and easy to learn


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A cost-effective way to localize arteries and veins to improve the speed and accuracy of needle sticks in high-risk patients

Need statement:

•  Less than $25 additional per patient

•  Require minimal new skill & training

•  Accurate



Need criteria:


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The Bottom Line

Validating your need at the outset is the single most cost-effective strategy for minimizing risk!

It provides the basis for all subsequent technical, clinical and business strategy decisions


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I’ve figured out who I’m selling to and what pain point I’m solving!

I’m ready to start building and

selling… Right?!

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? ✔ ✔?

?

?

? ? ?

Not so fast!

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? ✔ ✔?

?

?

? ? ?

Especially in the Life Sciences…

You can’t have a valid business until you test

both sides of the canvas!

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Key Activities What’s Most Important for the Business?

•  Pre-clinical studies

•  Clinical Trials •  FTO •  Regulatory

Pathway •  CPT Coding

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Key Resources What are your most important assets?

•  Data package

•  Intellectual Property

•  Non-dilutive funding

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Key Partners Who are your Partners and Suppliers?

•  Patent counsel •  Clinical sites •  CROs/

designers •  Contract Mfg •  Foundations •  Patient Adv

Groups How will these relationships work?

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Channels How does your product get to customers?

•  Distributors •  Direct sales •  Business

development

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Customer Relationships How do you Get, Keep and Grow Customers?

•  SAB •  KOLs •  Papers •  Conferences •  PR

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Revenue Streams How do you make money?

•  Reimbursement? •  Capital purchase/lease •  ???

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Cost Structure What are the Costs and Expenses?

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The Minimum Viable Product


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Help start the process of learning as quickly & cheaply as possible

The Minimum Viable Product

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What is this?

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What is this?

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What is this?

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Why create an MVP?

u  Answer questions & generate new ones

u  Validate your assumptions

u  Compare alternatives

u  Fail early & cheaply u  Visualize your ideas & share with others

o  Team o  Customers o  Investors

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Why use this approach?

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1. Find go-to-market strategy…

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…and do it more quickly

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2. Design an MVP

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Start the process of learning as quickly & cheaply as possible

Minimum Viable Product

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3. Build a Team

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“Co-founder skills are the first derivative of the business model canvas”

SteveBlank.com

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4. Raise Funds

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POC Grants

Compe99ons

Seed Funds

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5. Launch a better business

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What’s next?

Leslie eLab • 6,000 sq ft NYU

Startup Hub • Daily workshops

& speakers • Collaborative

workspaces • Prototyping lab • Entrepreneur-in-

residence • 16 Washington Pl

10am-10pm M-F

Innovation Corps (I-Corps) • Prior NSF

(& soon NIH) grantees

• 7-weeks • $50,000 for

NSF I-Corps • Immersive,

experiential startup training

Rolling Applications

5-Day Lean Launchpad

Class • 5-day immersive

class (for credit) • Grad students • Co-taught by

Steve Blank • Applied learning

for your startup • Team-based Offered last week

in Aug (24-28)

Summer Launchpad Accelerator

• 10-week program • For graduating

students • $7,500 & space • Entrepreneur &

investor mentors • Lean Startup

bootcamp Apps due Apr 17

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Questions?

[email protected] @nyuentrepreneur nyu.edu/entrepreneur nyuentrepreneur.com 16 Washington Place

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Helping startups start up

Venture Secrets—Building a Compelling Value Proposition for Your Research

Business

Transcript of Venture Secrets—Building a Compelling Value Proposition for Your Research