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ICIC 2017: Funding early-stage research software: from concept to prototype and beyond. Case studies from Digital Science’s Catalyst Grant

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Steve Scott (Digital Science, UK)
Since it launched in 2011, the Digital Science Catalyst Grant has awarded 13 groups with grants of up to £15,000 each to fund exciting innovations, and to take them from concept to prototype. The grant also comes with the opportunity to work with the Digital Science team to help refine, develop and promote the innovation. In this way we hope to lower barriers and foster greater creativity in research solutions for science. This presentation will outline the increasing need for grants such as Catalyst, and describe how we support founders with their early-stage ideas.

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ICIC 2017: Funding early-stage research software: from concept to prototype and beyond. Case studies from Digital Science’s Catalyst Grant

  1. 1. Work smart. Discover more. The Catalyst Grant from Digital Science Steve Scott – Director of Portfolio Development
  2. 2. Work smart. Discover more. Our mission is to make scientific research more efficient so there’s more time for discovery. We want to empower scientific researchers with the best technology.
  3. 3. Work smart. Discover more. Our portfolio companies offer support at every stage of the research cycle
  4. 4. Work smart. Discover more. We serve researchers, funders, institutions, publishers, governments, laboratories and industry. However, a few years ago we spotted a funding and support gap at the pre-seed stage… We identify, invest in and support innovative businesses and technologies that makes collaborative research practices more open, efficient and effective. We invest for long-term benefit rather than short-term returns.
  5. 5. Work smart. Discover more. Finding appropriate funding for really early stage ideas is hard. At Digital Science we wanted to change that. The Catalyst Grant plugs the gap for people trying to get their ideas off the ground.
  6. 6. Work smart. Discover more. Where does Catalyst fit into current models? Catalyst 6-12 mths No Grant Competitive Idea Validation Light touch Light touch Off-site
  7. 7. Work smart. Discover more. Three clear goals: 1. To support early stage projects with beneficial impact on research 2. To give Digital Science media exposure 3. To build up future deal flow Awarded twice a year (June and December) Grant of up to £25k Funding usually covers projects for 6-12 months
  8. 8. Work smart. Discover more. We follow a strict review process: Team (Does the team have the relevant technical/scientific knowledge/management experience? (or a plan in place to get it) Problem (What do they understand that others don’t? Does it help research become more efficient, impacts the scientific community or processes within?) Product/Solution (Why hasn’t someone else already done this? Is the product vision convincing?) Competitors (Is there a high chance for the product to be better than those of competitors. How strong are those competitors? Who are they?) Market (Is there a realistic description of the market size and its needs?) Progress to date (How far along in their thinking/development are the applicants? Have they shown enough initiative without funding?) Fit with Digital Science (Is there a clear fit with Digital Science (either fits into one of the silos with potential for partnerships and synergies or adds a new subsector to the portfolio which we have not looked at before))
  9. 9. Work smart. Discover more. Past winners (and losers) have gone on to great things Writefull - http://writefullapp.com Amsterdam, The Netherlands An AI software application that provides editing and authoring guidance to enhance academic writing. TetraScience - www.tetrascience.com Boston, USA TetraScience is an IoT company, connecting existing lab instruments to a single online dashboard where you can remotely monitor manage experiments and access data. Nutonian - www.nutonian.com Boston, USA Software which looks for patterns in vast data sets without human intervention. Since Catalyst , raised $4m funding round from Atlas Ventures. Customers now include Amazon, General Motors, US Air Force, Rolls Royce. Ada Lovelace Day Resources Database www.findingada.com/stem-resources London, UK An online resources database to empower women working in STEM. Overleaf www.overleaf.com London, UK Overleaf is an online LaTeX and Rich Text collaborative writing and publishing tool. Enables direct submission and streamlined editorial workflows for over 10,000 journals
  10. 10. Work smart. Discover more. We respond with constructive feedback on all applications that request it This leads to many applicants re-applying, or in some cases going on to become portfolio investments. How many of your best ideas came from your first idea?
  11. 11. Work smart. Discover more. The Catalyst Grant does serve as an onramp to investment (although that’s not it’s sole aim). We realised it is only the start of the journey… While Catalyst meets a need at the ideation stage and early stage of product development (MVP), there is a large funding gap, which is extremely difficult for startups to bridge
  12. 12. Work smart. Discover more. Catalyst Grant positioning – accounting for innovation KPIs Key activities Validation of product idea (R&D stage 1) Product validation (R&D stage 2) Growth business Mature business Business model validation (R&D stage 3) R&D budget Hypothesis-driven = achieve product/market fit Funding released in stages Product P&L Implementation-driven = pursue growth and profitabilit Long-term financial plan • Product / solution validation (hypothesis-driven approach) – market research – proto-typing – customer interviews • Acquire initial users • Create, test and iterate MVP (build-measure-learn) - split testing - cohort analysis - customer interviews • Optimise conversion funnel to improve conversion rates and eliminate product activation hurdles • Develop monetisation strategy - B2B / B2C / B2B2C? - CLTV > CPA • Add additional features to improve customer retention and CLTVs • Number of customers surveyed (outcomes statistically significant?) • Indications of interest / financial commitments secured • Conversion funnel, e.g. - unique visitors - registrations - downloads - trials - paying customers • Product activation • Customer retention - repeat visits - satisfaction ratings • Referrals / virality - viral coefficient • Customer life time value (CLTV > CPA) • Marketing effectiveness - CPC / CPR / CPA - Channel effectiveness - Sales force effectiveness • Scale business model and infrastructure • Roll out product globally and acquire market share • Improve customer referrals and pursue upselling opportunities • Revenue growth • Gross margin • Uplift from upselling existing customers (ARPU) • Market share • Improve operating efficiency to improve margins • Pursue incremental innovation to retain customers and defend market share • Revenue growth • Market share • Profit margins • Industry-specific benchmarks R&D budget Hypothesis-driven = achieve product/market fit Funding released in stages Product P&L Implementation-driven = pursue growth and profitability Long-term financial plan
  13. 13. Work smart. Discover more. KPIs Key activities Validation of product idea (R&D stage 1) Product validation (R&D stage 2) Growth business Mature business Business model validation (R&D stage 3) • Product / solution validation (hypothesis-driven approach) – market research – proto-typing – customer interviews / smoke tests • Acquire initial users • Create, test and iterate MVP (build-measure-learn) - split testing - cohort analysis - customer interviews • Optimise conversion funnel to improve conversion rates and eliminate product activation hurdles • Develop monetisation strategy - B2B / B2C / B2B2C? - CLTV > CPA • Add additional features to improve customer retention and CLTVs • Number of customers surveyed (outcomes statistically significant?) • Indications of interest / financial commitments secured • Conversion funnel, e.g. - unique visitors - registrations - downloads - trials - paying customers • Product activation • Customer retention - repeat visits - satisfaction ratings • Referrals / virality - viral coefficient • Customer life time value (CLTV > CPA) • Marketing effectiveness - CPC / CPR / CPA - Channel effectiveness - Sales force effectiveness • Scale business model and infrastructure • Roll out product globally and acquire market share • Improve customer referrals and pursue upselling opportunities • Revenue growth • Gross margin • Uplift from upselling existing customers (ARPU) • Market share • Improve operating efficiency to improve margins • Pursue incremental innovation to retain customers and defend market share • Revenue growth • Market share • Profit margins • Industry-specific benchmarks Catalyst Grant Seed stage DSci funding Catalyst Grant positioning
  14. 14. Work smart. Discover more. Where does Catalyst fit into current models (pt2) Catalyst I Catalyst II 6-12 mths Flexible No No Grant Convertible note Competitive Selective Idea Validation Product/Biz Validation Light touch As needed Light touch As needed Off-site On-site
  15. 15. Work smart. Discover more. Datasharing Data publication Open Data Data intensive research Research evaluation The Catalyst Grant is also a great way to gauge the Zeitgeist
  16. 16. Work smart. Discover more. Thanks. Any questions?

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