Role of a modern university, like KBTU in PPAP (Public Private Academic
Partnership) Programs, in the Economy and in Socie...
12.04 University-industry
collaboration in R&D
...............................111
4.01 Business impact of malaria
...........
Specialization of Regional Economies
Select U.S. Geographic Areas
Boston
Analytical Instruments
Education and Knowledge Cr...
SIMS:
School of
Info. Mgt. &
Sys.
Haas School
of Business
Berkeley
Engineering
SIMS:SIMS:
School ofSchool of
Info. Mgt. &Info. Mgt. &
Sys.Sys.
HaasHaas SchoolSchool
of Businessof Business
BerkeleyBerke...
• Avalanche rescue beacons, e.g., the Ortovox X1 (www.ortovox.com), and Tracker
DTS, have become standard equipment for ma...
Evaluating the Concept and its Commercialization potential
Digital Life Preserver: Avalanche beacons help save lives by
al...
Technology
Board
Management
Board
PPAP Pr. Management
PPAP Program
(Board of Trustees)
Step I: Submit
Projects,
Proposals,...
Cash
Flow
+ve
-ve
Market-Driven
• Market Segmentation, Market Opportunity Validation
• Market Size & Trends (Dynamics: Mar...
Technology
Board
Management
Board
PPAP Pro. Management
PPAP Program
(Board of Trustees)
Step I: Submit
Projects,
Proposals...
Technology
Board
Management
Board
PPAP Pro. Management
PPAP Program
(Board of Trustees)
Step I: Submit
Projects,
Proposals...
Pro’s & Con’s of Scanning from the Air
 Larger Swept Areas, Quicker Sweeps & Faster
Zooming into Promising Areas (15-20 m...
FINANCIAL PROJECTIONS (Stocks & Flows)
Current Sales
Time
Bass-Model with
Lanchester Market-
Share Dynamics
Distribution C...
Source: OECD (2010). Measuring Innovation: A New Perspecti8ve, based on Scopus Custom Data, Elsevier, July 2009; OECD, Pat...
Sustainability themes –
Alternative energy,
Environmental
technologies, Biotechnology
Sustainable
Leadership
Integrating C...
What PPAP Programs
can do for
sustainability and
corporate
performance…
Environment
Economy Industry
Society
CSR  ESG:
…P...
Dana
Banking & Other
Financial Institutions
Government
agencies,
Ministries,
etc.
Firm
Kanat
Development
Finance
Instituti...
Emission reduction
of CO2
Decrease by
substitution
Decrease by
reduction of energy
consumption
of fossil fuels
of clinker
...
Making the Cement Industry “Greener” and more Sustainable
Based on Toward a Sustainable Cement Industry, an independent st...
Potential
Impacts of
PPAP
Contributions
Total Shareholder
Return
Revenue Growth
Margin
Improvement
Value Creation Levers
P...
The PPAP Program would help KKM and other would be entrepreneurs to put
together a business plan, which would show potenti...
Base Station
Alternative Suggestion from PPAP
Program Technology Board
Members: Mount Scanner on a small
Aerial Device
PPAP Partners’ Role in Kazakhstani Society
• What role should the PPAP Partners e.g.,
universities, play in the economy, i...
Universities
& other Academic Institutions
Schools &
Departments
(Faculty Members, Researchers
Students & Alumni)
National...
The 10-I Roadmap for Translating Knowledge into Commercially Viable
Products and Services: Individuals + Ideas + Informati...
Needs Analysis and Gap Analysis
(for each of the Four Phases) using
the 7P-5W-2H Mapping Approach
• Programs (Support & Ne...
Programs
How
Much?
How?
Why?
Where?
When?
Who?
What?
ProcurementPeopleProcess“Physical
Plant”
PartnersParticipants
The Inn...
Based partly on Figure 5.5, The Development of global innovation networks and the transfer of knowledge, by Dirk Pilat, Ko...
Incubator Tenants
for year n
Incubator Tenants
for year n-1
Graduation AttritionFresh
Intakes
Payment of Rent, etc., in (E...
Operating
Revenues
Bank
Credit
Other
Credit
(e.g., from
IT Park’s
Partners)
Equity
New
Capital
Issues
Long Term
Debt
Repay...
Bottom Line: Complex
Financial model but
simple takeaways
• Shift from Cash only Rental
Model to Cash + Equity
Incubator m...
Ramesh kini kbtu_eng
Ramesh kini kbtu_eng
Ramesh kini kbtu_eng
Ramesh kini kbtu_eng
Ramesh kini kbtu_eng
Upcoming SlideShare
Loading in …5
×

Ramesh kini kbtu_eng

823 views

Published on

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
823
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Ramesh kini kbtu_eng

  1. 1. Role of a modern university, like KBTU in PPAP (Public Private Academic Partnership) Programs, in the Economy and in Society By Ramesh G. Kini, KBTU Presented at Digital Communications Event 2010 September 22nd, 2010 Almaty
  2. 2. 12.04 University-industry collaboration in R&D ...............................111 4.01 Business impact of malaria .......................................................1 4.02 Malaria incidence* .......................................................1
  3. 3. Specialization of Regional Economies Select U.S. Geographic Areas Boston Analytical Instruments Education and Knowledge Creation Communications Equipment Los Angeles Area Apparel Building Fixtures, Equipment and Services Entertainment Chicago Communications Equipment Processed Food Heavy Machinery Denver, CO Leather and Sporting Goods Oil and Gas Aerospace Vehicles and Defense San Diego Leather and Sporting Goods Power Generation Education and Knowledge Creation San Francisco- Oakland-San Jose Bay Area Communications Equipment Agricultural Products Information Technology Seattle-Bellevue-Everett, WA Aerospace Vehicles and Defense Fishing and Fishing Products Analytical Instruments Houston Heavy Construction Services Oil and Gas Aerospace Vehicles and Defense Pittsburgh, PA Construction Materials Metal Manufacturing Education and Knowledge Creation Atlanta, GA Construction Materials Transportation and Logistics Business Services Raleigh-Durham, NC Communications Equipment Information Technology Education and Knowledge Creation Wichita, KS Aerospace Vehicles and Defense Heavy Machinery Oil and Gas Note: Clusters listed are the three highest ranking clusters in terms of share of national employment Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School
  4. 4. SIMS: School of Info. Mgt. & Sys. Haas School of Business Berkeley Engineering
  5. 5. SIMS:SIMS: School ofSchool of Info. Mgt. &Info. Mgt. & Sys.Sys. HaasHaas SchoolSchool of Businessof Business BerkeleyBerkeley EngineeringEngineering U.C. Berkeley Stanford
  6. 6. • Avalanche rescue beacons, e.g., the Ortovox X1 (www.ortovox.com), and Tracker DTS, have become standard equipment for many skiers and snowmobilers – these small radio transmitters, strapped to the body, use audio signals to aid rescuers in locating someone buried under several feet of snow. • Suppose Kairat, Kanat & Maxat (KKM), who are studying at KBTU, were to submit a proposal for a new type of beacon detector (Digital Life Preserver) • The proposed KKM model is like the Tracker DTS (for Digital Transceiving System, patented by John Hereford), in that it shows the direction and distance from the victim, and also has digital displays to interpret data, and flashing lights to augment the audio feedback signals. • What process would we use to take the KKM proposal from Concept to Commercialization to Cash Positive (C2C2C)?
  7. 7. Evaluating the Concept and its Commercialization potential Digital Life Preserver: Avalanche beacons help save lives by allowing rescuers to find victims buried in snow. The beacons are worn by a skier or snowmobiler and continuously transmit a radio signal. When a victim is buried, people nearby can use their beacons as receivers to search based on signal strength. Newer digital beacons use microprocessors to more precisely guide searchers to the victim.
  8. 8. Technology Board Management Board PPAP Pr. Management PPAP Program (Board of Trustees) Step I: Submit Projects, Proposals, Plans KBTU Faculty Members Students Affiliates KazCosmos Stage I: Affiliation Criteria: Time, Context, Scope Resources, Sustainability, Value Step II: Analysis, Review Feedback, Support Step IA: Revise & Rework Projects, Proposals, Plans •What is your target market? •How big is it? •Who will buy your product? •Why do they need it? •Who will pay for it? •Who will use it? •How do the users fix the problem you're addressing today? •How important is the problem to them? •How much are they willing to pay? •Why would they buy from you? •Are there any substitute products? Who are the rivals?
  9. 9. Cash Flow +ve -ve Market-Driven • Market Segmentation, Market Opportunity Validation • Market Size & Trends (Dynamics: Market Expansion/Contraction, Market Penetration/Saturation, Market Share) Technology-Driven • Technology/Product: Design, Development, Demonstration, Deployment, Deliverables Go - No Go Hurdles/Milestones Execution, Execution, Execution … Concept Commercialization Cash-PositiveBusiness Model/Strategy/Plan Value Proposition, Value Creation Value Extraction, Value Capture Value Apportionment Conventional Funding 3F: Friends, Family & Fools Seed (Public Sector, etc.) Angels Venture Capitalists Exit: Buyout/IPO (Private Equity, Mutual Funds, Retail & Institutional Investors, etc.) The C2C2C (Concept to Commercialization to Cash-Positive) Model
  10. 10. Technology Board Management Board PPAP Pro. Management PPAP Program (Board of Trustees) Step I: Submit Projects, Proposals, Plans KBTU Faculty Members Students Affiliates KazCosmos Stage I: Affiliation Criteria: Time, Context, Scope Resources, Sustainability, Value Step II: Analysis, Review Feedback, Support Step IA: Revise & Rework Projects, Proposals, Plans Technology Board Management Board PPAP Pro. Management PPAP Program (Board of Trustees) Step III: Submission for Approval by Technology & Management Boards Technology Board Management Board PPAP Pro. Management PPAP Program (Board of Trustees) Step IV: Submission for Approval by Foundation Board of Trustees Step IVA: Revise & Rework Step IIIA: Revise & Rework Profit Sales Revenue Costs Sales Volume Price Variable Cost Fixed Costs Unit Variable Cost Sales Volume Business Questions: What are the Drivers of Profit? 55 Features/Features/ PerformancePerformance QualityQuality Flexibility/Flexibility/ ResponsivenessResponsiveness Cost/Cost/ PricePrice Speed/Lead Speed/Lead Tim eVariability Tim eVariability 001122334455 11 22 33 44 55 112233445511223344 Innovativeness/ Innovativeness/ Technological Technological C apabilities C apabilities R eliability/ R eliability/ Dependability Dependability Variety/ Variety/ ProductM ix ProductM ix Rival’s OfferingRival’s Offering Firm’s OfferingFirm’s Offering Customers’ NeedsCustomers’ Needs Changes over timeChanges over time
  11. 11. Technology Board Management Board PPAP Pro. Management PPAP Program (Board of Trustees) Step I: Submit Projects, Proposals, Plans KBTU Faculty Members Students Affiliates KazCosmos Stage I: Affiliation Criteria: Time, Context, Scope Resources, Sustainability, Value Step II: Analysis, Review Feedback, Support Step IA: Revise & Rework Projects, Proposals, Plans Technology Board Management Board PPAP Pro. Management PPAP Program (Board of Trustees) Step III: Submission for Approval by Technology & Management Boards Technology Board Management Board PPAP Pro. Management PPAP Program (Board of Trustees) Step IV: Submission for Approval by Foundation Board of Trustees Step IVA: Revise & Rework Step IIIA: Revise & Rework Technology Issues: Aerial Scanning to Expedite Process Base StationBase Station Alternative Suggestion from 4EAlternative Suggestion from 4E Center Technology Board Members:Center Technology Board Members: Mount Scanner on a small AerialMount Scanner on a small Aerial DeviceDevice
  12. 12. Pro’s & Con’s of Scanning from the Air  Larger Swept Areas, Quicker Sweeps & Faster Zooming into Promising Areas (15-20 minute window)  Parallel Processing (Multiple Aerial Scanners attached to single Base Station)  Scan Areas that cannot be Manually Accessed (Steep, Unstable Slopes)  Limited Charge on Battery Cells (5-8 minutes)  Susceptible to Ambient Conditions (Wind, etc.)
  13. 13. FINANCIAL PROJECTIONS (Stocks & Flows) Current Sales Time Bass-Model with Lanchester Market- Share Dynamics Distribution CentersDistribution Centers Plant APlant A Plant B...Plant B... Distribution CentersDistribution CentersDistribution CentersDistribution Centers Plant APlant APlant APlant A Plant B...Plant B...Plant B...Plant B... PeoplePeople HowHow Much?Much? How?How? Why?Why? Where?Where? When?When? Who?Who? What?What? ProcessProcessPlantPlantPartnersPartnersProcurementProcurementProductProduct / Parts/ Parts MoveMove StoreStore MakeMake PlanPlan SellSell BuyBuy Value AddedValue AddedVisibilityVisibilityVelocityVelocityVariabilityVariabilityVarietyVarietyVolumeVolume 55 Features/Features/ PerformancePerformance QualityQuality Flexibility/Flexibility/ ResponsivenessResponsiveness Cost/Cost/ PricePrice Spe ed /L ea d Spe ed /L ea d Tim e Var ia bi lit y Tim e Var ia bi lit y 001122334455 11 22 33 44 55 112233445511223344 In no va tive ne ss / In no va tive ne ss / Tec hn ol og ical Tec hn ol og ical C ap ab ili ties C ap ab ili ties R el ia bi lit y/ R el ia bi lit y/ D ep en da bi lit y D ep en da bi lit y Var ie ty / Var ie ty / Pro du ct M ix Pro du ct M ix 55 Features/Features/ PerformancePerformance QualityQuality Flexibility/Flexibility/ ResponsivenessResponsiveness Cost/Cost/ PricePrice Spe ed /L ea d Spe ed /L ea d Tim e Var ia bi lit y Tim e Var ia bi lit y 001122334455 11 22 33 44 55 112233445511223344 In no va tive ne ss / In no va tive ne ss / Tec hn ol og ical Tec hn ol og ical C ap ab ili ties C ap ab ili ties R el ia bi lit y/ R el ia bi lit y/ D ep en da bi lit y D ep en da bi lit y Var ie ty / Var ie ty / Pro du ct M ix Pro du ct M ix 55 Features/Features/ PerformancePerformance QualityQuality Flexibility/Flexibility/ ResponsivenessResponsiveness Cost/Cost/ PricePrice Spe ed /L ea d Spe ed /L ea d Tim e Var ia bi lit y Tim e Var ia bi lit y 001122334455 11 22 33 44 55 112233445511223344 In no va tive ne ss / In no va tive ne ss / Tec hn ol og ical Tec hn ol og ical C ap ab ili ties C ap ab ili ties R el ia bi lit y/ R el ia bi lit y/ D ep en da bi lit y D ep en da bi lit y Var ie ty / Var ie ty / Pro du ct M ix Pro du ct M ix
  14. 14. Source: OECD (2010). Measuring Innovation: A New Perspecti8ve, based on Scopus Custom Data, Elsevier, July 2009; OECD, Patent Database, January 2010; and EPO, Worldwide Patent Statistical Database, Sept. 2009. The list of environmental patent applications has been generated through a search algorithm developed by the OERCD and EPO (European Patent Office). Science for Green Innovation: Green Technologies draw upon a broad base of scientific knowledge. OECD: Multidisciplinary research is Emerging to Address Global Challenges
  15. 15. Sustainability themes – Alternative energy, Environmental technologies, Biotechnology Sustainable Leadership Integrating CSR& ESG… … with key drivers of sector … … and sustained competitive advantage Dynamics: Industry, Competition, Market, Product Drivers & Dynamics: Industry, etc. CSR  ESG: Corporate Social Responsibility  Environmental, Social, Corporate Governance Issues Environment Economy Industry Society CSR  ESG: Returns: TSR (Total Shareholder Returns), CFROI, etc. Returns Based on Goldman Sachs GS Sustain methodology for picking long term winners -- see Exhibit 1 of GS SUSTAIN by Anthony Ling,Sarah Forrest, Marc Fox and Stephan Feilhauer) What PPAP Programs can do for sustainability and corporate performance
  16. 16. What PPAP Programs can do for sustainability and corporate performance… Environment Economy Industry Society CSR  ESG: …PPAP Program Partners can collaborate on many fronts to set the agenda for the future
  17. 17. Dana Banking & Other Financial Institutions Government agencies, Ministries, etc. Firm Kanat Development Finance Institutions (DFIs), Business Incubators, IT Parks, Science & Technology Parks Zhanna PPAP Programs: Who Brings What to the Table? What is the Value of that Contribution? Academic & other R&D Institutions -- National & Foreign Partners Information Investments Institutions Individuals Ideas Insights Incubation Infrastructure Innovation Startups Legal, Accounting & Advisory Service Providers Micro-Angel Networks Retirees, Professionals Individual Retail Investors Human Resource Networks
  18. 18. Emission reduction of CO2 Decrease by substitution Decrease by reduction of energy consumption of fossil fuels of clinker of cement components of raw-meal components of electrical energy of thermal energy Recuperation Generation Making the Cement Industry “Greener” and more Sustainable Based on Toward a Sustainable Cement Industry, an independent study by Battelle, commissioned by the World Business Council for Sustainable Development
  19. 19. Making the Cement Industry “Greener” and more Sustainable Based on Toward a Sustainable Cement Industry, an independent study by Battelle, commissioned by the World Business Council for Sustainable Development
  20. 20. Potential Impacts of PPAP Contributions Total Shareholder Return Revenue Growth Margin Improvement Value Creation Levers Pricing Power Cost Savings Employee Recruitment, etc. Risk Premiums New Market Entry Market Share Cost of Capital • Greater operational efficiencies • More efficient use of resources • Supply chain optimization • Lower costs and taxes Valuation Multiple Profits Free Cash Flow PPAP Partners: Who Brings What to the Table? What is the Value of that Contribution?
  21. 21. The PPAP Program would help KKM and other would be entrepreneurs to put together a business plan, which would show potential investors convincingly: 1. How the idea/invention will be developed and successfully exploited 2. The capability and experience of the team responsible 3. How the investments needed will be financed, including second and further rounds of financing 4. The proposed exit mechanism and timing, and the expected realization value for the shareholders Other key questions that need to be addressed by the Business plan are: - what is unique about the innovation and is it protected (e.g. patents)? - who will buy it and why? - what price will it sell at and what will it cost to deliver? - what will be the competition and how will it be resisted? - when will the company start receiving income and when will it break even?
  22. 22. Base Station Alternative Suggestion from PPAP Program Technology Board Members: Mount Scanner on a small Aerial Device
  23. 23. PPAP Partners’ Role in Kazakhstani Society • What role should the PPAP Partners e.g., universities, play in the economy, in society? How could these PPAP Partners make Kazakhstan more innovative, more competitive? • How do you measure the performance of these PPAP Partners, e.g., any University and its Schools, Centers, etc.? Over the Short-Term, Medium-Term and Long-Term? How do we factor in Endogenous vs. Exogenous, Tangible vs. Intangible, “Hard” vs. “Soft,” and so on, issues? • What Metrics should we use? • How should we tie these Metrics to the Partners’ Operating Objectives, Targets and Initiatives? • What Skills, Capabilities and Core Competencies would individuals involved, e.g., Program administrators and University Faculty Members, need and how do they get the Training, Knowledge, etc., for this? • How should we strike the right balance between: o the need for Private Partners to make a Profit, for Public and Academic Partners to at least break even, and so on, o the Societal Needs and Aspirations of ordinary Kazakhstanis; o without compromising on University Autonomy, Faculty Academic Freedom, etc.? • How do the PPAP partners, e.g., the IT Park, the Universities, etc., become more Self- Sustainable and Independent over time? • How can these universities, for instance, become more like MIT, Stanford, etc., over time?
  24. 24. Universities & other Academic Institutions Schools & Departments (Faculty Members, Researchers Students & Alumni) National Healthcare System: Universities’ Medical Schools, Hospitals, Research Labs., etc. R&D Centers for • Space • Energy & Environment • Nanotechnology • Biotechnology & Life Sciences • ICT, or Information & Communications Tech. Kazakhstan’s DFIs (Development Financial Institutions): NIF, other Samrukh-Kazyna entities Government Ministries, Agencies & Support Departments: Finance & Accounting, Grants, etc. The proposed PPAP (Public-Private-Academic-Partnership) Program Science & Technology Parks, IT Parks & Business Incubators Kazakhstani and non-Kazakhstani Corporate Partners Startups, New Ventures •Intellectual Property •Joint R&D •Licensing & Royalties •More Value from Better Quality, Lower Cost, Differentiated Products & Services •Better Healthcare; •Longer, Healthier & More Productive Lives GDP Growth, Taxes, Duties, etc., Import Substitution New Jobs, Better Skills & Capabilities Other Kazakhstani Firms, Government of Kazakhstan and People of Kazakhstan Payment in Cash vs. Equity?
  25. 25. The 10-I Roadmap for Translating Knowledge into Commercially Viable Products and Services: Individuals + Ideas + Information + Insights + Institutions + Infrastructure + Incentives + Investments + Incubation  Intelligent Innovation Academic & other R&D Institutions -- National & Foreign Partners Dana Banking & Other Financial Institutions OutboundOutbound LogisticsLogistics SupplierSupplier SupplierSupplier SupplierSupplier InboundInbound LogisticsLogistics CustomerCustomer CustomerCustomer CustomerCustomer OutboundOutbound LogisticsLogistics OutboundOutbound LogisticsLogistics SupplierSupplier SupplierSupplier SupplierSupplier InboundInbound LogisticsLogistics CustomerCustomer CustomerCustomer CustomerCustomer SupplierSupplierSupplierSupplier SupplierSupplierSupplierSupplier SupplierSupplierSupplierSupplier InboundInbound LogisticsLogistics CustomerCustomer CustomerCustomer CustomerCustomer InboundInbound LogisticsLogistics InboundInbound LogisticsLogistics CustomerCustomer CustomerCustomer CustomerCustomer CustomerCustomer CustomerCustomer CustomerCustomer FirmFirmFirmFirm FirmFirmFirmFirm Government agencies, Ministries, etc. Firm Kanat Individuals Development Finance Institutions (DFIs), Business Incubators, IT Parks, Science & Technology Parks Zhanna Innovation Micro-Angel Networks Retirees, Professionals Human Resource Networks Individual Retail Investors Legal, Accounting & Advisory Service Providers Ideas Ideas Ideas Institutions Infrastructure Insights Investments Investments Information Incentives Information Investments Institutions Infrastructure Incubation Incubation Incubation
  26. 26. Needs Analysis and Gap Analysis (for each of the Four Phases) using the 7P-5W-2H Mapping Approach • Programs (Support & Networking Activity-mix and Customized Programs for each Vertical) • Participants (on an Equity + Cash basis in the Incubation & Tenancy Programs for each Vertical) • Partners (Academic Partners; Public and Private Sector Corporate Partners; Financial backers, etc.) • “Physical Plant” (Office space, Conference rooms, Laboratories, ICT equipment, etc.) • Process (Customization for each Vertical, Sequencing and Concatenation of Activities & Programs) • People (Boards of Directors and Advisors; Admin., Domain Experts, Local vs. Foreign trained Coaches, Counselors and Catalysts; PPAPAssociates, Affiliates and Faculty Members) • Procurement (Facilities; Equipment; Make vs. Buy for expertise, services, courseware, etc.) Roles of the PPAP Program Partners Programs Participants Partners “Physical Plant” Process People Procurement What? Who? When? Where? Why? How? How Much?
  27. 27. Programs How Much? How? Why? Where? When? Who? What? ProcurementPeopleProcess“Physical Plant” PartnersParticipants The Innovation Park’s PPAP Partners might help answer most of the 5W-2H questions
  28. 28. Based partly on Figure 5.5, The Development of global innovation networks and the transfer of knowledge, by Dirk Pilat, Koen De Backer, Ester Basri, Sarah Box and Mario Cervantes, Ch. 5 of Innovation and Growth: Chasing a Moving Frontier, Eds. Vandana Chandra, Denoz Erocal, Pier Carlo Padoan, Carlos A. Primo Braga (original source, Chesbrough (2006), Open Business Models, Narvard Business Press, Cambridge, Mass.) Own Market Revenue Internal Development Costs Revenue Costs Shorter Product Life Cycles Benefits to PPAP Corporate Partners from Open (rather than Closed) Innovation in a Changing Business Environment Rising Costs of Innovation Own Market Revenue Internal Development Costs Cost and Time Savings by Leveraging External Development through PPAP Partners Own Market Revenue Internal Development Costs PPAP Sales Spin-offs, etc. New Revenue* * New Revenue: from Sales to PPAP partners and their Affiliates, and from Spin-offs, Sales or Divestitures of PPAP Joint Ventures and Incubator “Hatchlings,” and License Fees and Royalty Payments from Jointly Developed Technologies
  29. 29. Incubator Tenants for year n Incubator Tenants for year n-1 Graduation AttritionFresh Intakes Payment of Rent, etc., in (Equity + Cash) Payment of Rent, etc., in Cash Normal Rent Paying Tenants Retention Attrition Revenue Forecast for year n Pricing of Support Services, Networking, etc. Projected Profit & Loss for year n Projected Balance Sheet for year n Projected Funds Flow for year n Balance Sheet for year n - 1 IV I II The Four Steps in drawing up Innovation Park’s Financial Projections PPAP Public & Private Sector Partners PPAP Program Academic Partners Payments Foreign Inputs Programs National Innovation Fund New Hires Attrition Local Capacity Development Program Domain Experts & Coaches, Counselors, Catalysts Operating Plan for year n • 8M Resource Allocation • Incubator Performance • Network Affiliates’ Contribution • PPAP Program Inputs & Outcomes • Performance Metrics Materials Manpower Machinery Money Method Management Meters2 Space Market Position 8M OPEX (Operating Expenditure) Plan Headcount (Salary, etc.) Costs Admin. & Misc. Costs Utilities & other 8M Costs Long Term Financing Plan CAPEX (Capital Expenditure) Plan Cash Budget Cash Additional Capital Issues, Debt Repayment, Equity Interest Costs Debt vs. Equity Long Term Debt & Short Term Credit III Incubator Hatchlings (Equity + Cash)
  30. 30. Operating Revenues Bank Credit Other Credit (e.g., from IT Park’s Partners) Equity New Capital Issues Long Term Debt Repay- ment New Borrowings Soft Credit Debt, Repayments Years Funds (A - B) + ve - ve 0 5 8 How can the Innovation Park become Net Cash Positive earlier? Salaries, Utilities, other 8-M Costs, etc. Funds for Operations (expenses excl. notional items, e.g.., Depreciation) Liabilities Assets (Cash + other Current Assets + Fixed Assets + Equity Stakes in Tenants & Hatchlings) Interest Taxes Timing of & Value Realized from IPOs Dividends Funds Flow for PPAP Program Partners, e.g., the Innovation Park, University -based Incubators (B – A) = (D + E + G) – (C + F) G F E DC A B
  31. 31. Bottom Line: Complex Financial model but simple takeaways • Shift from Cash only Rental Model to Cash + Equity Incubator model will mean that funds will be needed to sustain operations for first 5-8 years till self-sustainability • Uncertainty vis-à-vis success of startups (80% success rate if all goes right) and also timing of exit through IPO or strategic sale of Equity slices • Cash from exits may not be realized in near future – staying power • Shared ownership of Innovation Park (PPAP) but land and buildings to remain as property of people of Kazakhstan in perpetuity and part of Public share of equity (lease structure) • OPEX and CAPEX Plans, Long Term Financing and Cash Budgeting:

×