Bio nano elements of early stage valuation and value growth

1. Elements of Early Stage Valuation
and Value Growth
Gene Scout Talk for NanoBioConvergence
Mary D Napier
3/1/2014
May 17, 2006
mnapier@genescout.com
1

2. What we do
Discovery
Science
Translation
Strategy
Consulting
Project
Mgmt
Business
Development
Portfolio
Management
Gene Scout advises along several aspects of technology
Commercialization pending on the needs of the client.
3/1/2014
mnapier@genescout.com
2

3. Translation
•
IP, literature and clinical trial scan in your company’s scientific
area.
•
Define market positioning and economic value.
•
Market segmentation to understand your company’s major
competition and market niche.
•
Create operating financial and marketing plan for your company.
•
Provide best practice benchmarks for business development:
financial and licensing terms relevant to your valuation.
Translation
3/1/2014
mnapier@genescout.com
3

4. Before getting to the model
Photo Masks
Microscopy
Define who you are.
Define the application.
Research
Tool
Define the market and the product.
Others?
3/1/2014
mnapier@genescout.com
Nano
Lithography
(Template
Fabrication)
SemiConductors
(circuits)
Others?
4

5. ‘Crossing the chasm’: defining your market, obtaining
PoC customer
Market:
1. A set of actual or potential
customers
2. for a given set of products or
services
3. who have a common set of
needs or wants AND
4. who reference each other when
making a buying decision(1).
Proof of concept customer:
Pilot project (s) to validate
technology
(1) Geoffrey Moore, Crossing the Chasm (Collins Business Essentials,
1991). P. 28.
3/1/2014
mnapier@genescout.com
Market Adoption
5

6. Decision Point:
Is it a publication, sponsored research or a new
company?
Not your decision entirely.
• IP estate: yours and the marketplace.
• Market Potential: your market positioning.
• Team.
• Money.
3/1/2014
mnapier@genescout.com
6

7. The step function of building value.
Exit
Beta two
Beta one
40% return
Alpha
3/1/2014
mnapier@genescout.com
7

8. Creating Value:
Thinking simply, cutting through confusion.
Revenues – Costs = Profit
Bid Price on Contract
3/1/2014
Consumables Contract
mnapier@genescout.com
8

9. Types of Valuation Models
•
The emotional model
•
The discounted cash flow model
•
The comparables model
•
Others?
3/1/2014
mnapier@genescout.com
9

10. Negotiation and valuation
Understand your customer’s mindset…understand your
financier’s mindset.
•
The Angel
•
The Venture Capitalist
•
The Strategic Investor
3/1/2014
mnapier@genescout.com
10

11. Early stage valuation: the influence of comparables.
Public comparables.
Private Comparables2
Series A:
Nano Opto Corp: $16M
raise.
IPO valuation down
Pharmaceuticals:
Series B:
Nanotechnologies: $6.4M
raise, $19M post money.
Applied Microstructures:
$8.5M raise.
Raise less than $100 for
A ~$200 valuation IPO
Exit.
NEWCO
Nano Public market
Comparables3:
Series C:
Molecular Imprints: $17-25M
raise. Post money ~$100M
SMMX: $869M
CALP: $176M
ACCL: $175M
Series D (C):
Nanosphere: $59M raise,
Post money~$100-$125M
3/1/2014
Sources Cont’d
2.) OneSource and company websites.
3.) Market caps supplied by Yahoo Finance, May 16th 2006.
mnapier@genescout.com
11

12. Takeaway
Exit
Investor: “Buy Low, Sell High”
Beta two
Entrepreneur:
know thy market, love thine
customer.
Beta one
Alpha
40% return
3/1/2014
mnapier@genescout.com
12