An example of the report produced by Inovo's PTO service. Based on the Growth Science Business Model Simulation tool, Inovo provides a detailed analysis of an opportunity a company is pursuing or considering to pursue and predicts it's probability of success and growth rate.

1. Predictive Testing of Opportunities
Report on “Commercial Vertical Farming” Opportunity
Certain information has been
altered to protect proprietary and
confidential information
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2. Opportunity Halo – Commercial Vertical Farming
Opportunity Description
Addresses the increasing desire for locally grown, high
value produce by growing it indoors in a controlled ‘vertical
farming’ system. High-value crops can be grown year-
round, economically and sustainably using technology to
obtain very high yields in little space and minimal labor.
Traditional land based agriculture is under pressure from
droughts, collapsing water tables, climate change, soil
depletion, fertilizer and pesticide overuse. Using new
technologies of materials, sensing, automation,
connectivity, software, energy management, and low
energy LED lighting, certain crops can be grown
hydroponically using no soil and 1% of the water and land
of field farming.
 Design and build all-encompassing Vertical
Farming equipment and systems
 Invest in or partner with development
partner (sensors, software, Internet of
Things, robotics) companies needed to
create an integrated VF system
 Invest or partner with established Vertical
Farming Companies
 Find best-in-class design and become a
commercially viable Vertical Farmer
 Develop a VF services business
Outcomes
 Profitably increase availability, reliability,
and sustainability of year round produce
 Minimize water & land usage, fertilizer and
pesticides, transportation, and spoilage
Experiences
 Mitigate seasonally poor produce
 Mitigate spoilage and pathogen risks
 Enhance local access to healthy food
The technologies that are necessary to integrate are
lighting, sensors, Internet of Things, software,
automation (robotics), materials, and plant science.
There are many companies developing specific
solutions in each of these technology areas but no
one to date has created a truly integrated system.
There are many possible development partners
available ranging from MIT’s CityFARM (an open
source resource for various production systems) to
Grove, an agri-software developer.
The growth of ‘Plant Factories’ (e.g. hydroponics and
vertical farming) is fueled by increasing food demand
and rising environmental concerns. The hydroponic
food production industry is expanding at a rate that
is set to outpace the 2014 IMF estimate of global
growth by 80% and show sustained strength with a
6.5% compound annual growth rate. Estimates of the
Plant Factory equipment market are at $2B by 2020
(the value of the crops produced being much higher).
Business Model
Value Claims Demand Side Factors
Design Side Factors
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3. Opportunity Assessment – Strategic Position
• This opportunity falls near the outer
boundary of the company’s strategic zone
• New-to-the-World factors include the
rapid pace of technology development in
lighting, plant-science and IoT analytics
• New-to-the-Company factors include the
new customers, channels, and business
models required to lead in this
market/industry
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Strategic Position

4. Opportunity Assessment – Should-Could
• High ‘should’ scores indicate that this
opportunity scores highly in those facts
that indicate it is an attractive
opportunity for someone to pursue
• Medium to low ‘could’ scores indicate
that this opportunity does not fit well
with current company competencies and
will require partnerships and a degree of
organizational independence to succeed
Should/Could
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5. Opportunity Assessment – Readiness Level
• Overall readiness level is almost four:
late stage validation to prepare for
transition to incubation
• Organizational readiness is lagging:
needs more attention
• Design readiness is ahead: can
temporarily dial back on technological
and engineering efforts to concentrate
on market and customer efforts
Opportunity
Readiness Level
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6. Results of Business Model Simulation: Opportunity Halo
6
Survival rate of
businesses with
similar indicators
67%
Growth outlook for
businesses with
similar indicators
9% Neutral
Negative
Positive
Inc+BP+GF+Auton
Please click here to see complete
simulation input form
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proprietary information

7. Survival and Profitability Assessment
• There is 67% probability of the
business as described existing in
10 years
• Most businesses (>80%) do not
survive
• The factors that most reduce the
probability of survival are the
competitive landscape and the
company’s ability to execute
• A long-term growth rate of 9%
places the business as growing 2-3
times GDP
• Initial growth rates can exceed this
rate by quite a bit as the business
penetrates the market and achieves
its nominal market share
• Mitigating growth factors include
competition, grower market
fragmentation, and product
differentiation
67% 9%
Probability of Survival Growth Outlook
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8. Competition
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Competition Insight
• There are a large number of participants in this
market but no large, dominant players yet
• Many companies are entering this space but all
are new and small
• Proliferation of new players provides
partnership or acquisition potential
• Industry is highly networked and interconnected
but with little coordination or standardization
• There are over 15 key CVF developers
globally (private & public)
• There are 100+ indoor ag. OEM
component suppliers
• Most companies are smaller companies
and relatively new (this is a new market)
• Many CVF facilities are currently
supported by government initiatives
• There is a high degree of variability in the
competitive landscape
• Hydroponic vs. Aquaponic
• Vertical vs. ‘Greenhouse’
• Consumer vs. Commercial
• DIY vs. Turnkey
• Hi-tech vs. Lo-tech
• Automated vs. Manual
• Sterile vs. Open
• Growers vs. OEMs
Competition Factors Competitiveness
Neutral
Extent to which the business is
likely to survive or fail within
its competitive environment,
as estimated using Business
Model Simulation™.

9. Competitive Landscape (Selected Players)
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DIRECT – TURNKEY SYSTEMS
PERIPHERAL – TECHNOLOGY/SOFTWARE/SUPPLIES FOR INDOOR AGRICULTURE
ADJACENT – COMPONENTS/SYSTEMS/EQUIPMENT/SERVICES
G-CON Manufacturing Inc (Green PODs)
GreenTech Agro LLC (Growtainer, Growtroller, Growtainer) Hioponica
Vertical Harvest Hydroponics (Containerized Growing System (CGS))
VertiCrop (VertiCrop)
CropKing Incorporated (NFT, Hydroponic Growing Systems)
Philips Lighting Holding B.V. (GreenPower LED)
Autogrow Systems Ltd (Minidose, Intellidose, Multigrow, My.Autogrow)
Argus Control Systems Ltd (Argus Control System)
Motorleaf (Powerleaf, Heart, Droplet, Driplet, Operating Software)
Growtronix (Growtronix Base System, Sensors, Detectors)
Ecotechnics (Hydroponic Technology)
Vertical Farm Systems Pty Ltd (XA Series Automated Growing System)
GreenGro Technologies Inc (GreenGro Blackout System, GroRooms)
Pure Hydroponics (Commercial Hydroponic System)
HydroStacker LLC (Hydrostacker Vertical Hydroponic Garden)
Vertical Harvest Hydroponics (Containerized Growing System (CGS))
Aero Development Corp (Commercial AERO Systems)

10. Organization
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Organizational Insights
• Compatibility with current organization is low
• No experience with the business model and
value network
• Upfront financial requirements is quite large
• Existing strong equipment design and
integration capability will be an asset
• Advantageous local market position could
provide startup insulation
Business Model Parent
Company Fit
Neutral
Extent to which the business is
likely to be supported, or
prematurely divested, by its
parent company as a result of
strategic alignment and
organizational structure.
• Business requires new channels, markets,
and customer relationships than the
company now has
• Business requires new supply-chain and
development partners than the company
now has
• The company has recent experience
launching a new business in a new
markets
• Top-level executive support is high and
commitment is sincere
• Company is willing to fund the effort
providing milestones are met
• Unclear who would lead the business or
how it would fit into existing
organizational structure
• Unclear how long the company would be
willing to fund the start-up incubation
period

11. Market Momentum
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Market Insights
• Independent grower entrepreneurs are driving
the market – few ‘major’ players
• Existing and new vertical farm
growers/operators are aggressive in building
capacity but are limited in scope
• Distribution is an issue – current system is
designed for non-local supply, but it is changing
rapidly
• The US Vegetable & Herb revenue in 2015
will reach $79 Billion in totality
• 11% of this current crop revenue comes
from indoor agriculture ($9B)
• Projected CAGR of 3% for the US
Vegetable & Herb Market through 2020
• Projected CAGR of 12.5% for the indoor
agriculture portion though 2020
• 80% of 9B people projected in 2050 will
be living in urban environments
• Avg. distance vegetables travel = 1500
miles
• 80% of land suitable for growing is in use
• Farmers need to produce 70% more food
to feed the population in 2050
• Consumers are demanding more locally
grown food
• Unavailability of labor is a market driver
Market Growth & Drivers Market
Momentum
Positive
Extent to which the target
market is showing signs of
likely interest and growth, or
apathy and decline.

12. Market Profitability (Commoditization)
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Profitability Insights
• Technology development (LEDs, Plant Nutrition,
Automation, Control, etc.) is rapid
• Growing efficiency is rapidly improving with
developments in plant science and controls
• Many alternative designs and options – no
standardization to date
• High value crops justify initial investment and
provide attractive returns
• Industry is far from commoditized: it is
characterized by a wide variety of
technologies, designs and solutions.
• Facilities & Equipment – up-front capital
expenses to purchase CVF system – are
significant
• Includes buying/securing (permitting)
land and assets, utilities (water,
electrical, sewer), environment
control, etc.
• Offerings are quite diverse and variable
• Custom design/build
• Modular systems and subsystems
• Components and technology
• Suppliers are struggling with scalability
• Overcoming distribution channels
• Differentiation of offerings
• Market fragmentation
Market Offerings Market
Profitability
Positive
Extent to which the target
market is showing signs of
profitability or
commoditization.

13. Focus Areas for Shaping
= Key focus area
Market Profitability
Technology Trajectory & Dynamics
Ability to Create Value
Alternatives & Differentiation
Market Momentum
Growth & Drivers
Players & Influencers
Partners & Action
Competition
Competitiveness
Competitive Companies
Value Network Dynamics
Organization
Business Model
Offering
Competencies
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14. Key Discussion Points
• Competitiveness
– The indicator is neutral indicating that the
business can be competitive despite some
negative attributes
– The indicator is not negative because there
is no dominant competitor in the space
– The indicator is not positive because the
competitive landscape is volatile and
dominated by many smaller, similar,
companies
– Potential Areas for Discussion:
• Identify and prioritize low-end or un-served
market segments
• Seek out partner to achieve scale and influence
• Business Model
– The indicator is neutral indicating that the
business model can work despite
differences from company core businesses
– The indicator is not negative because the
company has existing competencies in food
equipment and services
– The indicator is not positive because these
are new markets, customers, and services
the company has not addressed before
– Potential Areas for Discussion:
• The business may benefit from greater
integration with its parent company
• The business needs to be allowed a period of
incubation while it gets established
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15. Key Discussion Points
• Alternatives & Differentiation
– Market profitability potential is positive
due to the high value of the offerings
(products and services)
– A wide variety of offerings exists – from
$100 kits to $1M building-size systems
– A lot of new technology is being
introduced making it hard to differentiate
the attributes of any particular offering
– No standardization yet
• Partnerships and Actions
– Large number of established, but small,
companies provides partnership
opportunities to jumpstart the business
• Look to adjacent companies that design and
build automated CVF systems, for potential
partnerships
– Local growers and end-customers within
proximate geographic region provide
opportunities for initial business
• Focus on local region to reduce costs, develop
competencies, and establish a base of
business
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16. The Inovo Group
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For more information, check out the portfolio resources
on our website, or drop Larry an e-mail.
With Inovo as collaboration partner and
guide, clients transform their portfolios,
cultures and future potential
Larry Schmitt
Managing Partner and Co-founder
Ann Arbor, Michigan
P: +1 (734) 604-3887
E: lschmitt@TheInovo Group.com