Technology innovations and new ventures

The role of ecosystems in coping with challenges

Somnath Chatterjee Well managed technology innovations can trigger rapid growth in new ventures leading to higher value addition, income and employment generation. To ensure early success, however, technology starts-ups need to rely on robust business models, processes and practices that would lead to effective risk mitigation. Failure rates can bring down through customer-centric innovations and a shorter time-to-time market. Against this scenario, the role of all-encompassing ecosystems to catalyze technology innovations can be critical in spawning new ventures that are commercially viable. Case studies show that the risks and uncertainties in converting innovations to commercial enterprises can be reduced by efficient ecosystems. Introduction Alongside the complete dismantling of customs tariff and entry barriers, the new genre of technology entrepreneur is faced with shorter product cycles as well as a stricter IP (Intellectual Property) regime. All this calls for robust business models and practices that are effectively integrated with global market dynamics to mitigate risk factors and develop closer links with the markets. Hence, the technology entrepreneur, grapping with quick commercialization and viable scaling-up operations, is bound to face a host of challenges. Nevertheless, technology-based innovations and knowledge entrepreneurs will shape the future trajectory of Indian Industry, which needs to grow by 11 per cent during the Tenth Five Year Plan (2002-03 to 2006-07) and beyond to sustain a GDP growth of 8 per cent. This also calls for significant rise in value added by Indian Industry, from $ 139 billion to $ 302 billion between 2003 and 2010, a magnitude of tasks never attempted before. Besides, India has to ride the next outsourcing wave for manufactured goods, estimated to exceed $ 1.6 trillion. While IT and other services had been propelling economic growth, there is now a dire need to gear up manufacturing to remain competitive and to meet the enormous requirement of employment generation. This would be possible partly through a series of technology innovations in diverse sectors fuelling the growth of several new ventures and entrepreneurs. Thus it would be absolutely necessary quickly to put in place an ecosystem for nurturing and managing innovations. It is, therefore, not surprising to find an orchestrated effort the globe to fine-tune existing ecosystems and create new ones. In India, The Department of Science and Technology (DST) pioneered the creation of such ecosystems, primarily in the public domain, through collaboration with academic, research and technology institutions by promoting Technology Business Incubators (TBIs) and Science and Technology Entrepreneurs Parks (STEPs). In more recent times, professionals, technologists, entrepreneurs and other start-up agencies have been trying to come together to manage and hand-hold new ventures, Interestingly, there are several private initiatives coming up today. Apart from some limited private incubators, Venture Capitalists (VCs) and funding agencies are exploring possibilities of introducing start-up services (mentoring and consulting on

business plans, strategies, IPR management, etc.) along with their usual financing package offered to new ventures. Strategic partnerships amongst various start-up agencies are also in the offing. Figure 1 : Technology innovations Reality check in the marketplace

Proven Idea Concept-made reality with customer-centric approach. Fast moving and operational business model

Converting risk into opportunity

Figure 2 : Journey from idea to marketplace

Labs and tech nurseries

Basic R & D

Invention & Innovation Early stage development (reaching prototype stage)

TBI, STEP, VC, SPA

Product development (seed funding, validation, best test, pilots, design, IPR))

Viable commercialization and test-mile-to-the-market.

Managing technology innovations Given the high historic failure rates, taking technology innovations to the marketplace to spawn viable commercial ventures is widely acknowledged as a most challenging proposition. Risks and uncertainties in technology ventures are often too high. Success stories in labs and even at pilot stage do not imply ensured acceptance at the marketplace. The last mile to the market continues to be the biggest stumbling block. There are several stages till idea reaches the marketplace from basic R & D, through concept or invention, through early stage technology development through product development. To create business opportunity from an idea, reality checks have to be conducted. Proving the idea and making the concept a customer-centric reality are essential pre-requisites for early stage progress towards successful commercialization. In the next phase, checking out and verifying the effectiveness of the business models will eventually ensure converting risks into opportunities in the marketplace (Figure 1). Several technology products backed by massive R & D spending are now swiftly becoming commodities, with prices plummeting to rock bottom levels. For instance, the consumer electronics division of Philips was under tremendous pressure to quickly recover its high R & D expenses in DVD technology products before the Chinese began extensive mass manufacturing. Time-to-market needs to be reduced drastically with customer-centric innovations and faster response to opportunities. Well-designed ecosystems can hasten the journey from the idea to the marketplace. Following basic R & D to prototype development in laboratories and tech nurseries, the most crucial role thereafter is played by technology management till the last mile to the market is successfully traversed. Innovation failure rates are rising as Indias traditional ecosystems are geared to address the first phase, ending with the prototype, and some beta testing. Hence, competency building to address the last-mile-to-themarket phase assumes great significance. Much of these competencies are lacking in TBIs and STEPs, which can play a dominant role by collaborating with start-up professionals, business schools, VCs and entrepreneurs. Figure 2 attempts to provide a schematic presentation of this journey from idea to marketplace. SPA : Start-up professionals and agencies The innovator, being too preoccupied with specifics, is usually quite divorced from market realities and secluded from potential customers as well as investors. But the test of a good innovation is economic and not technological. For the success of both product as well as process innovations, well conceived customer-centric project management milestones are absolutely necessary, along with robust business processes and practices to hasten the pace of commercialization. Customer-centric project management and business processes are the risk mitigation tools for new technology ventures. These eliminate the R & D-market disconnect, enhancing the success rate of projects and leading to rapid growth of customer base and better prospects of early stage funding from investors. Well designed ecosystems should provide the techno-commercial support for the economic success of the project.

Ecosystems Effective and all-encompassing ecosystems are not only the launching pad for innovations but also provide support through the entire value chain, from idea to viable enterprise, connecting technology to the marketplace. Enabling resources for this rapid progress from idea, innovation or invention to an enterprise for generating wealth ad creating new economic activities would become absolutely necessary. A typical ecosystem comprises a variety of resources, like infrastructure (start-up workspace and related facilities, lab, testing, tooling centers, etc.) and ready access to technology networks and the professional community of start-up professionals, institutions, funding and other enabling agencies. Knowledge and technology hubs, R & D labs, government funding, infrastructure, incubators, technology parks (in academic institutions and elsewhere) are part of the typical ecosystem for technology start-ups. Apart from providing infrastructure and an enabling policy environment for entrepreneurial culture, effective ecosystems should ensure net inflow of talent and resources. There are essential prerequisites for grooming and managing technology innovations. For instance, the Taiwanese ecosystem encouraged the return of diaspora with tremendous government support, infrastructure, technology part, finance and technology development. Many developing countries are focusing on the ICT (Information and Communication Technology) based ecosystem to promote new and innovative ventures. World Banks Infodev programme promotes ecosystems and programmes with such ICI initiatives. Silicon Valley (SV) benchmarking To address the challenges of technology innovations and to encourage technopreneurs, incubators are being promoted across the world, strengthening the existing ecosystems. Incubators have catalyzed technology commercialization and spawned business enterprises in the UK, France, Germany, Sweden and other parts of Europe. China is moving ahead with incubators to stimulate the private sector and encourage technology-based start-ups led by technology professionals, especially those returning home after a stint in technology ventures in the USA. Countries like Australia, New Zealand, Japan and Korea and parts of the Asia Pacific are also witnessing a rise in the incubator movement. Incubators are seen as playing a vital role for regional development through training of entrepreneurs, identifying business opportunities and tapping them. The developing world, including parts of Africa and Latin America, are increasingly relying on incubators for income and employment generation through new business ventures. Silicon Valley in California, USA, is acknowledged as probably the best known ecosystem for technology innovation. This is quite evident, with members of the Stanford University community in the silicon valley area founding over 1200 companies, for which around 350 are technology-based. Many of these technology companies have quickly grown into giant enterprises driving the global market. Now Stanford Asia technology Initiative is exploring the prospect of exporting the Silicon Valley ecosystem to India and developing links with Indian professionals and aspiring technology entrepreneurs. Professional bodies like India US Entrepreneurs (TIE) And IVCA (Indian Venture Capital Association) are expected to take forward these initiatives.

Before closely evaluating the Indian scenario with some case studies, it would be most useful to learn from a snapshot of the major milestones of the SV ecosystem. It is apparent that the SV ecosystem offered all the elements for nurturing, grooming and managing technology innovations, addressing the entire value chain from idea to enterprise. Silicon Valley (SV) ecosystems Major milestones over the past 100 years 1891 1920s Standard University founded by Governor Leland Stanford nearby El Palo Alto Stanford hired top East Coast faculty including Frederick Terman from MIT the father of Silicon Valley, who encouraged his students to start companies near Stanford to stop migration to the East Coast for Jobs. Student start-ups, with Hewlett and Packard being one of them. William Hansen, Professor of Physics, teamed with Sigurd and Russel Varian to develop the Klystron tube. Sigurd and Russel Varian worked rent free in the Stanford lab on their Klystron tube and later on, radar plus microwave radiation evolved. Stanford provided a rent free lab, $ 100 for supplies and in return, shared profits bringing several millions as royalties. Major developments like Stanford Research Institute, and Stanford Industrial Park offering start-up facilities and defence programmes to stimulate massive semiconductor procurements. Lockheed Aerospace Co. located in the park and a year later in Sunnyvale. Lockheed spurred the growth of others like IBM (1952), NASA (1958), Xerox (1970). Silicon comes to the valley. Stanford graduate Shockley founded Shockley Transistor. Robert Noyce leaves Shockley to join 7 others (Gordon Moore and others) to start Fairchild Semiconductor choosing Silicon as semi conducting material. Fairchild led to start-ups like Intel Signetics (now Phillips Semiconductors), National Semiconductors and AMD.

1937

1945

1946-56

1956 onwards

1958 1970s

1975 onwards 1990s till now

Formation of the biology and chemistry business From specialized high-tech to massproduction. Silicon Valley gets its name in 1971. Intel introduces 1k DRAM chip, 4 K DRAMs (1974), 16 companeis producing cheap 16 k DRAMs (1979). Intel chip becomes the industry standard and prices crash. PC revolution, IBM enters PC market in big way from 1982 and HP in 1980. Silicon valley to internet valley. Cisco ships first products in 1986. Internet becomes hot in early 1990s with the development of browser but origins found in 1964. Usage of WWW began to grow exponentially from 1993 and this continues WWW changes ICT world with the change from client / server to web applications. New revolution continues with Sun, Cisco and Netscape making dent in the marketplace followed by Google and Ebay.

Success factors Some useful lessons can be learnt from this success. SV : Provided an ideal setting for hi-tech innovations and entrepreneurship; Made a conscious and concerted effort to evolve as a knowledge and technology hub; Gained immensely as academia led by Stanford shed functional rigidities to actively encourage and create new ventures; Evolved an environment for networking, minimal corporate secrecy, and free flow of knowledge and talented people; Received support from Government R&D, which triggered new enterprises and start-ups; Found large-scale demand for technology projects and ongoing R&D, spurred by Defence procurements; Created a strong stimulus for starting tech-based firms; Ensured access to extensive VC funding and other sources of finance (including angels); Underwent a cultural transformation facilitating technologists to emerge as manager; and Had Stanford and others in Silicon Valley developing resources for encouraging best practices in entrepreneurship and evolving new models.

Emerging trends in India With the SV benchmarks before us, it is obvious that India needs to move beyond the Bangalore clich and reach out for an all-encompassing and effective ecosystem addressing the entire value chain from idea to enterprise. The focus has to be on spawning enterprises with proprietary knowledge and IPs (Intellectual Property) and hi-tech manufacturing to move up the value chain. This could be an emerging trend but India has to do a lot of catching up. Figure 3 makes an attempt to present an allencompassing and effective ecosystem for taking technology innovations to the market. The lacunae in the existing ecosystem can be seen. Here we need to provide a much greater emphasis for commercializing technology innovations. Currently, Indias over 35 TBIs and STEPs and more than a dozen EDCs (Entrepreneurship Development Centers) supported by DST are located in engineering colleges and in science and technology institutes, including the IITs (Indian Institute of Technology). Now IIMs (Indian Institute of Management) and business schools are joining in to provide managerial inputs to technology startups by setting up incubators. To reinvigorate the Indian ecosystem for promoting new technology ventures, all these agencies have to work in tandem with a multitude of labs under the aegis of government, including CSIR (Council of Scientific and industrial Research) and those in the private domain, as well as various educational institutions. VCs law firms, start-up agencies, technology entrepreneurs and so on. But a traditional approach so far with very little focus on the last mile to the market, appears to be the main drawback. Unlike SV and other successful ecosystems, resources for start-up best practices are not available and the network for promoting new ventures is not well-integrated. In most cases, academia-industry interface is weak. The involvement of VCs, angels, start-up professionals and knowledge entrepreneurs with technology hubs in the country remains casual, with some occasional interest. Thus, several key success factors are often missing and a great deal of collaborative initiative is necessary among diverse agencies for quickly moving ideas to enterprise and ushering in an environment that stimulates technology innovations. There are diverse sources of technology-based innovations, hence the ecosystems need to promote a collaborative approach. New ventures in technology-based innovations across India originate from : Professionals in technology hubs and hi-tech corporates in India; Indian professionals in technology hubs and hi-tech corporates abroad (a recent trend); IPR holders; Technologists in government labs and research institutes; Offshoots from academics, including student or faculty ventures and those jointly floated by student-faculty teams; and Technology business incubators and technology parks.

There could be overlaps among the above sources but what really matters is the continuous intermingling of professionals and innovators within an all-encompassing and robust ecosystem. Active exchanges of ideas and expertise are absolutely

necessary so that the innovator is not working in isolation from the market reality, a major cause of failure and delay in reaching the marketplace. Far more important than pushing innovations to the market is customer pull for technology innovations, which will reduce the time to market. This focus is usually lacking within the present Indian ecosystem. Entrepreneurs driving technology innovation It is imperative to have the entrepreneur as the driver. The real assessment of market potential of technology innovations could come from the entrepreneur. There is a growing breed of high net-worth knowledge entrepreneurs scouting for investmentready technologies. Also, in many cases, the innovator or technology owner (IP holders and so on) may not be interested manufacturing or mass production or commercialization. This is quite apparent, considering the profile of innovators and the sources of innovation high lighted above. Besides, the innovator may also like to partner with an entrepreneur. Professionals and knowledge entrepreneurs with experience of successfully managing technology start-ups have to be critical players in the Indian ecosystem. A bunch of new venture specialists with hands-on start-up experience in Silicon Valley and elsewhere are now showing interest in volunteering to mentor and fund technology start-ups. Despite the existence of TI and IVCA for some time, progress has been tardy. Barring BPOs, IT-enabled services and other low risk ventures, VCs and private equity funds have been shy of technology ventures, especially those involving manufacturing with longer gestation period. There is also an urgency for new entrepreneurship models to manage technology innovations, where the entrepreneur takes all necessary preemptive measures for startup risk mitigation and ensures timely implementation of business processes and best practices. In this context, the 2004 survey of hi-tech entrepreneurs in India, under taken by Subodh Bhat and Richard McCline of San Francisco State University, could be of specific interest. This survey highlights that Indian hi-tech ventures are primarily located in urban areas and are yet to percolate into rural area. Indian hi-tech start-ups are not engaged in real high-tech, and have slim IP holdings in the IT sector. Hitech entrepreneurs do not think internationally as the world being their market. The vast intellectual capital in India is hardly tapped to encourage technology ventures. Moreover, hi-tech companies have not bothered to build brands. The influence of a good ecosystem can bring about a transformation in this scenario. For instance, entrepreneurship curricula in educational institutes engineering colleges and business schools are stimulating young aspirants to seriously explore technology startups. Entrepreneurs in hi-tech areas are widely dispersed amongst communities, unlike the earlier era, when business ventures were confined to only a few communities and run by families. It is clear that knowledge entrepreneurs can drive innovation and yet not much is happening. IT services are estimated to be miniscule 3 per cent of the 53 per cent share of services in Indias GDP. And many these IT services are not hi-tech, implying there is a lot of catching up to be done.

Figure 3 : Ecosystems for commercializing technology innovations

Entrepreneurs (especially from user industry seeking new technologies)

Tech labs

Design house & IPR support Commercial Exports

Investors and VCS

Domain Experts

Government Agencies

Legal forms and other startup agencies Innovation (from diverse sources) Incubator (academic and tech institutions, TBIs, STEPs, govt. and pvt. Firms) Enterprise (with customer centric approach and shorter time to market

Innovator support system Academia, idea generators, R&D centers and proactive corporate organizations.

Incubator challenges and best practices Since the mid-1940s, when the first formally known incubator came up, the incubation movement worldwide has traveled a long way. Faced with ensuring challenges to reduce failure rates and time-to-market, there has been a perceptible shift in demand for incubator resources for spawning viable commercial ventures. Traditionally, incubators focused on real estate, office space and infrastructure along with start-up office support systems covering administration, secretarial functions, etc. Currently, the demand for incubator resources are primarily confined to start-up advisory services, networks (comprising technologists, entrepreneurs, investors, etc. for quickly taking the technology to the marketplace), business plans, operational models, processes and practices. Clearly, strategic managerial inputs and networks happen to be the clinching factors for new ventures and incubators need to focus on them. Making hi-tech innovations and projects investor-ready, with support services like training, consulting and mentorship from domain experts, VCs investors and successful entrepreneurs are on the agenda (Figure 4).

Figure 4 : Shift in demand for incubator resources

Real estate office space and infrastructure, along with administrative and secretarial support services

Strategic managerial inputs addressing the entire value chain from customer-centric ideas to viable commercial enterprises

Networking comprising technologists, VCs/investors, entrepreneurs and other start-up enabling agencies

The impending challenges of managing hi-tech innovations makes it imperative for incubators and other new venture support systems to develop resources for focusing on two major areas: (a) business acceleration and (b) risk mitigation. Business acceleration can be ensured inter alia through the following : Technology benchmarking, validation and valuation. Accurate evaluation of customer perception and commercialization potential; and Right sequencing of startup activities for catalyzing the process of converting innovations into viable commercial enterprises.

The risk mitigation exercises is primarily to cope with the uncertainties and high failure rates of new ventures based on technology innovations. Hence, long gestations (with high burnout rates) for technology development and stabilization, acceptance in the market and attaining the mass production stage are essentials. How to develop best practices for effective technology start-up risk management is discussed in more detail in the last section of this article. Case Studies Project management at IIMA To reduce he cycle time for converting innovations into commercial enterprises, incubators and start-up promoters need robust systems and processes for on-line scouting and screening. An anytime-anywhere scouting and screening of hi-tech and mass impact innovations by the Centre for Innovation, Incubation and Entrepreneurship (CIIE) at the Indian Institute of Management, Ahmedabad has reduced cycle time. Following screening and selection, the technology innovations are converted into well-defined projects with a proactive team designed to work around

them. It is critical to have direct and indirect involvement of the user industry (players within India and the global market), suppliers (to develop supply chain links), technologies, entrepreneurs, startup advisors, investors, or VCs, and legal experts in the project time. This team is expected to set properly sequenced milestones for various activities. Thereafter, managerial and technical inputs are offered by domain experts, mentors and consultants during special sessions. There are also specific subprojects assigned to selected groups for managing them. Right from the outset, strong linkages are developed with technology hubs, entrepreneurs, investors and other startup resources, depending on the needs of the project. For the selection of technology projects, the novelty (IP generation) value, substantial value addition and more crucially, the commercial application and direct customer feedback are assigned significant weightages. Some of the projects selected and managed by the Centre include biotechnology (an innovative low-cost process technology to produce agents for DNA analysis), health electronics (the monitoring of fluids administered to patients, using sensors and microprocessors), an IT solution for education process management, nanomaterial applications, ceramic casting, an eco friendly technology for dyeing textiles and water purification. Sources of technology includes CSIR labs, defence labs, technopreneurs, self-employed professionals, research scholars in private labs, IIT faculty-student initiatives, engineering college students and medical professionals. CIIE is now striving for a highly responsive ecosystem to attract technology ventures and hit-tech entrepreneurs. The pooling of complementary assets and skills, the evolution of best practices for startups and the creation of a panel of project managers, investors, legal experts and entrepreneurs are high in the agenda. Partnership with government is accompanied by extensive outreach programmes and a promotional campaign. IIMA experience with projects Two specific cases of technology innovations presented here pertain to hi-tech as well as mass-impact innovations. An infusion flow-rate monitor, based on sensor and microprocessor technology is now solving a major long pending customer problem at the most competitive prices. This innovative product was highly in demand and the innovator worked closely with the market. The IIMA incubator managed by CIIE provided a wide range of support, including product upgradation through design and other specification based on customer feedback collected through clinical trials. An extensive customer survey and interactive sessions with users were crucial to find quick market acceptance and to work on product features, prices, distribution channels and other requirements. Branded as INFLO, this Infusion flow years of development, testing and continuous improvement, as well as trials at various hospitals. Developed and patented by innovator Sanjiv S. Gokhale, this microprocessorcontrolled device with high levels of accuracy is used to monitor the infusion flow rate for patients being administered saline, blood or any other fluid. A competitive price, low operating costs and a long life cycle makes it an alternative to the expensive influence monitoring devices that exist in the market. An entrepreneur closely associated with the user industry was brought in by CIIE at IIMA during the

early stages of the project for mentoring as well as other forms of active association. Much valuable insight on market dynamics came from this entrepreneur, who finally became the lead partner to quickly take the technology to the marketplace. Apart from the domestic market, INFLO will be pushed in 30 export markets. CIIE also prepared a business plan and strategy for this venture. The second case is that of a patented technology for water filtration, which came out of a government lab with the enthusiastic backing of a team of scientists. The product was quickly licensed out to entrepreneurs, thus shortening the time to market. The innovator team was well aware of the growing need for such a product and focused on its cost advantage as well as certain robust features that suited market requirements. The business plan and the commercialization strategy for this innovative product prepared by CIIE suggest tremendous scope for design improvement and weight reduction using substitute materials to bring costs further down. With these modifications, the penetration rate of this technology should increase rapidly. Conclusion : Strategies and a working model for managing technology innovations IPR strategy For technology innovations, managing IPRs (Intellectual Property Rights) is a strategic issue. Assessing the commercial value of an innovation alongside proper prior art search would be necessary before deciding on patent filing. Proper valuation of the patent can attract early investment and also involve other stakeholders in the project. Valuation of the new venture also provides a sense of direction in terms of future discounted cash flows. To avoid infringement and yet commercially exploit the IP flowing from the technology, the innovator has to proceed with the costly process of patent filing. In this context, it is noteworthy that of the 43 million patents filed till date, only 3 per cent have had any active association with a business venture. Moreover, 50 per cent of patents filed in the USA and Europe are not maintained. Since an innovator has to shell out around $ 3,800 on average for filing a global patent, the equation may not work unless significant commercial value is realized. Patent has no meaning without a business context and a commercialization value. Hence, a proper mechanism for cost-benefit analysis of patenting must be in place. Early stage competencies The new entrepreneurship model for managing technology innovations calls for developing early stage competencies, identifying and building startup competencies happen to be the major tasks for hi-tech volumes. It is crucial to make a quick beginning with the new venture by analyzing critical business processes and mapping best practices, followed by process documentation with regular fine-tuning. Setting the right milestones, evaluating periodically and properly sequencing activities are often the keys to success. For a typical technology start-up venture, this could be done in two phases:

Phase I : Customer survey, design, compliances, IPR management, fine tuning product development and supply chain management. Phase II : Business development by scanning, segmenting and driving the market to connect with the business plan. This is followed by valuation, HR and organization structure, financials, investment and alliance strategies. Furthermore, developing project management skills for scaling up operations and defining processes and systems would be required. Based on experience gathered from wide ranging cases of technology innovations and new ventures, the following checklist of processes and practices can provide a working model with some guidelines (though variations are expected from case to case). The emphasis on processes and practices results in risk mitigation, which is the major concern for technology-based start-ups. These are risks involved at very stage of a start-up, demanding specific activities an practices associated with these stages. The checklist and risk management tables are useful guidelines but the list is meant to be illustrative and not comprehensive. Process and practice of technology innovations For technology licensing 1. 2. 3. 4. 5. 6. Design IPR management Certifications and customer endorsements Final product development and customization Operational business plan Seed fund and cash flow management

For creating new ventures 1. 2. 3. 4. Supply chain management and sourcing strategy (in-house versus outsourcing) Fund raising / resource mobilization drive Organizational structure, HR, governance and crisis management guidelines Documentation of processes and best practices

To develop a risk mitigation model for technology-based startups, the activities flowing from processes and practices need to be prioritized, depending on the type of risk involved at each stage as the new venture evolves through various stages of metamorphosis. Depending on the nature of technology project, an appropriate weightage can be assigned to each activity at all the four stages. This could also be the foundation for risk model building exercise for technology start-ups (Table 1).

Table 1 : New venture risk management by operational stages (for hi-tech enterprises) Pre-start up risks
Technology validation IPR analysis Enterprise Valuation Process streamlining Business plan outline Market testing DCF analysis Resource plan Asset management New venture location Incorporation activities Networks Defining communication channels

Early stage startup risks

Seed funding and Angels Technical / customer validation and bench marks Project Management Change Management Product / Service costing Business model testing Scaling-up plans IPR management and strategy HR plans Effective communication Promotion Exploring value addition and diversification

High growth risks

Strategic fund raising Market estimation Market driving skills Cash flow management Operations management HR management Scaling up and SCM CRM Conflict and crisis management Value chain analysis and mapping Cyclical assessment and preparing for downturn

Exit risks
Right Valuation Certification/validation, etc. Performance bench marks Change management Defining competition Product-service differentiation Timing and market Stakeholding issues Cash accruals and future plans Post exit association / plans IP Customer loyalty and CRM

Conclusion As argued in various sections above, customer-centric project management and business processes are critical risk mitigation tools for new technology ventures. This eliminates the R&D market disconnect and enhances the success rate of projects, leading to a rapid growth of customer base and attracting early stage funding from investors. A well-designed ecosystem can not only play a catalytic role in providing technocommercial support but also offer resources of the kind discussed here for the economic success of start-ups. The biggest challenge, therefore, is to strengthen the existing ecosystem by encouraging active participation from all stakeholders intimately associated with nurturing and managing technology-based new ventures. Emerging market realities in terms of growing competition and shorter technology cycles warrant far stronger linkages with the last-mile-to-the-market than exist today.

Readings and References 1. Booz Allen and Hamilton, Summary Report (1994), Between invention and Innovation: An Analysis of Funding for Early-Stage Technology Development. 2. Brij Khorana (2004), From concept to Market Role of Innovation and Entrepreneurship, Presented at Global Forum on Business Incubation, Rose-Hulman Ventures, Rose-Hulman Institute of Technology, Terre Haute Indiana, USA. 3. Howard S. Rasheed (2001), Navigating the Entrepreneurial Journey; Using innovations to Bridge the Gaps of Technological Discontinuity, Working Paper, University of South Florida. 4. Innovation, Firm Strategies and Development, New York: Plagrave Macmillan. 5. Luca Rigotti, Matthew Ryan and Rhema Vaithianathan (2001), Entrepreneurial Innovation, University of California, Berkeley. 6. John Baldwin and Guy Gellatly (2004), Innovation Strategies and Performance in Small Firms, Edward Elgar, UK. 7. Michael Porter (2001), Clusters of Innovation: Regional Foundations of U.S. Competitiveness, National Clusters of Innovation Meeting, Washington D.C. 8. Michael Hobday (1996), Innovation in East Asia, Edward Elgar, UK. 9. M.R. Dixit, B.Varkkey and Somnath Chatterjee (forthcoming), Case Study of Hi-tech incubates, IIM Ahmedabad. 10. Nagesh Kumar and K.J. Joseph (2004), National Innovation Systems and Indias IT capability: Are there any lessons for ASEAN Newcomers? RIS Discussion Paper, New Delhi. 11. Orietta Marsili (2000), Technological Regimes and Sources of Entrepreneurship, Working Paper, Eindhoven Center for Innovation, Studies, The Netherlands. 12. R. Sunder (2004), Taking technology to the market: Ten years of BISS experience, Keynote address at Anveshan, IIM, Ahmedabad. 13. Sangmoon Park and Zang Tae Bae (2003), New venture strategies in a developing country: Identifying a typology and examining growth patterns through case studies, Korea Advanced Institute of Science and Technology, Graduate School of Management. 14. Somnath Chatterjee (2005) Entrepreneurship: New Models and Technology Innovations for Competitive Advantage, Discussion Paper, Entrepreneurship Workshop, MDI, Gurgaon. 15. Subodh Bhat and Richard McCline (2004), Understanding High-tech Entrepreneurship in India, San Francisco State University.