Writing a Good Commercialization Plan: Suggestions for SBIR/STTR Applicants
1
–
Writing a Good
Commercialization
Plan: Suggestions for
SBIR/STTR Applicants
Phase II Fast-Track and Phase II Competing Renewal applications must
include a succinct Commercialization Plan within the SBIR/STTR
Application (https://grants.nih.gov/grants/how-to-apply-application-
guide/forms-h/sbir-sttr-forms-h.pdf). During Phase III, the small business
concern (SBC) is to pursue commercialization with non-SBIR/STTR funds
(either Federal or non-Federal).
Overview
The commercialization plan should offer a clear and concise description of
the proposed work’s market potential and the planned path to
commercialization.
It describes the strategy that your organization will use to generate
revenue and business opportunities, maps out a strategy to move forward,
and describes the current and anticipated landscape/resources required
to address the opportunity enabled by your innovation.
Objectives
As it is specified in the SBIR/STTR Application Guide (SF424 (R&R)
SBIR/STTR Application Guide for NIH and Other PHS Agencies),
potential applicants are to create a document entitled “Commercialization
Plan”, no longer than 12 pages, and to provide a description of each of the
following areas:
A.
Value of the SBIR/STTR Project, Expected Outcomes, and Impacts
B.
Company Overview
C.
Market, Customer, and Competition Analysis (TPP or equivalent)
D.
Intellectual Property (IP) Protection
E.
Regulatory Strategy
F.
Finance Plan
G.
Production and Marketing Plan
H.
Revenue Stream
I.
Risk Analysis/Mitigation Strategy
Key Ideas
The Commercialization Plan should
illustrate your vision for the enterprise
and how the proposed innovation fits
into the future market.
This goal could be achieved by clearly
articulating a compelling value
proposition for your intended
customer.
Keep in mind:
1.
Reviewers see the
Commercialization Plan first
2.
Clear Value Proposition is Key
(Educate/Few Business Experts on
Review Panel Despite Strong Effort)
3.
Don’t Worry, It Doesn’t Have
to Be Perfect, Plus Everyone
Gets It Wrong
Writing a Good Commercialization Plan: Suggestions for SBIR/STTR Applicants
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A)
Value of the SBIR/ STTR Project, Expected
Outcomes, and Impact
A good starting point for writing a commercialization plan is a clearly
written statement that identifies the overall commercial goal of the
project. This is your vision of what the product will do to meet a need
and whom the project will affect.
Define the specific problem or opportunity addressed and its importance.
The project and key technological objective(s) should describe enough of
the technical aspects of the project for experts to appreciate the technical
merit without going too deep into detail. Also, remember that failure to
give sufficient detail may cause knowledgeable readers to question
credibility.
Give a brief background/history that suggests there is a real problem that
your project is addressing. The background should only be detailed
enough to outline why there is a need for action to be taken. If applicable,
state the advancements that have happened which have allowed your
project to address the issue/problem. Expand on how your project
creates a better solution to the previously addressed concern, specifying
weaknesses in the current approaches (the advantages compared to
competing products or services).
Describe the commercial applications of the research. List the potential
impact a successful project could have. Identify key technical objectives
and general expectations in terms of market opportunities, potential
future products, or new areas of research. This is a brief overview of the
market; a more detailed look into the market will follow in section C.
Be sure to highlight the non-commercial impacts on the overall significance
of your project (specify the potential societal, educational, and scientific
benefits of this work). Then finally, touch on how the SBIR/STTR project
integrates with the overall business plan of the company.
P
oints of Emphasis
Commercial and societal benefits
Competitive advantage over
existing technology
Outline of Part A
Overall goal/objective
The product, the problem it
solves, and the benefits
History/past data suggesting a
problem
The advantages compared to
competing products or services
Recent advancements
Commercial application
Market potential, future markets,
new research
Non-commercial impact
SBIR/STTR integration with
the business plan
Writing a Good Commercialization Plan: Suggestions for SBIR/STTR Applicants
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B)
Company Overview
The company overview asks for a brief description of the company to give
the reviewers a better understanding of the company as a whole. They are
looking for basic information such as when the organization was created,
current number of employees, corporate objectives, core competencies,
and a short description of the company’s origins. If the company consists
of only a few employees, then you should describe the team’s capabilities
specifically as they relate to the commercialization of your technology
(example below).
Organizer: Christopher C. King, Founder & CEO, We Are Marcus - He is a
social entrepreneur, activist, and educator. He earned his MBA from Howard
University School of Business in 2018, MPA from Baruch College, Austin Marxe
School of Public Affairs. He recently joined DC's premier Accelerator at 1776.
The beta-launch of his product spans across several states in the US-including
NYC, DC, Charlotte, and abroad in London, Dubai, Capetown, Ghana, and
Jamaica. He has been featured in Black Enterprise and recently moderated at
National Public Radio. Beyond these achievements, he brings with him a decade
of diverse experiences from higher learning, consulting at Intel Corporation, to
working on the operations staff for President Barack Obama in 2012.
Go into detail when listing previous history of Federal and non-Federal
funding, regulatory experience, subsequent commercialization, and any
current products/services that have significant sales. These past funding
experiences, if applicable, should show that the funding awarded for the
project was adequately used and provided a favorable outcome for the
company.
Include your vision for the future in the short and long run. How will you
grow/maintain a sustainable business entity? Will you meet critical
management functions as your company evolves?
C)
Market, Customer, and Competition
Market size is defined by the total annual sales of products that address a
market’s particular need. But one has to be specific about what the
market’s needs are. If applicable, when considering the market you are
targeting, break it into primary, secondary, and tertiary customer bases.
This will help you describe the target market segments and size while
providing a brief profile of the potential customers.
When identifying these markets, it is helpful to ask the questions of why to
target these markets, what the benefits are, and what data and studies
would support this conclusion. Statistical data that shows the potential
market size, market trends in the area, and potential profits from
capturing a percentage of the market may be useful.
For Example, 10% penetration into a $2B market results in annual
sales of $200M. If a $2B market is growing at 10% a year and your
product can capture 50% of new patients, then first-year sales would
be $100M, followed by $210M in the second year, $330M in the
third, and so on.
Points of Emphasis
Relevant commercialization
capabilities of your team [Short
Bios – Business Experts First]
Tap into your Board of Directors
or Scientific Advisory Board
Product lines that show
successful market implementation
[e.g., Services that the company
provides]
Outline of Part B
Company information including:
Corporate objectives
Core competencies
Present size, products/services
with significant sales
History of previous Federal and
non- Federal funding
Regulatory experience
How the company plans to
develop from a small technology
R&D business to a successful
commercial entity
Points of Emphasis
Know your market and market
needs
Identify main customer bases
Know your competition
Look into what similar
competition has done and amount
of the total market they are
attracting
Reiterate the need for the product
and address your competitive
advantage
Consider if collaboration/
partnering is strategically smart for
you and if so, explain why
Describe your market and sales
strategy
Writing a Good Commercialization Plan: Suggestions for SBIR/STTR Applicants
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Overestimating market penetration is a common mistake. Consider
whether or not it is easy to gain market shares in a mature, slow-
growing market. Look at how other competitors penetrated the same or
similar markets.
Clearly explain the Target Market [Will Later be Expanded Upon in the
Customer Section of the Commercialization Plan - Personas]
Market characteristics to consider would be the motivation of customers
to buy the product, the number of people that could potentially utilize
the product and selling characteristics that make your project appealing.
Keep in mind and reiterate the need for the product on the market and
be proactive in identifying, characterizing, and marketing for the future.
In cases where no comparable products exist to estimate a market's size,
look at comparable markets and analogous products.
Make clear the advantages your product will bring to the market. How is it
better than your competitors or previous way of meeting the need being
addressed? For example, better performance, lower cost, faster, more
efficient, or effective, or new capabilities. Explain the hurdles you will have
to overcome to gain market/customer acceptance of your innovation.
[Leads into next section, Competitors]
Each customer actually consists of an end user and a decision-making
unit (DMU). The end user is very likely an integral part of DMU but
may not be the most important person in it. More specifically:
End User: The individual (a real person) who will use your product.
The end user is usually a member of the household or organization
that purchases your product.
DMU: the individual(s) who decides whether the customer will buy
your product, consisting of:
o Champion: the person who wants the customer to purchase
the product; often the end user.
o Primary economic buyer: the person with authority to spend
money; sometimes, this is the end user.
o Influencers, Saboteurs, Purchasing departments: people who
have sway to direct control over the decisions of the Primary
economic buyer.
You will find much variety among the end target users. But as a
startup, you will have to exclude many potential customers in order to
stay focused on a key group of relatively homogeneous end users, who
Notes on Part C
Company analysis
Corporate strengths and weakness
need to be understood. Assessing
product/company fit requires an
understanding of the finances, R&D
capacity, manufacturing capacity,
and other assets of the firm.
Competitive Analysis:
Identify both current and potential
competitors. Competitor’s strengths
and weaknesses must be understood
to seek differentiating possibilities.
It is very important that you
understand and know the
competition.
Collaborator Analysis:
Two key collaborators are the
retailers and suppliers. With respect to
the trade, the firm must understand
their cost structure; expectations
about margins and allocations of task;
support and training requirements;
and the nature of their relationship
with the firm’s competitors.
Context Analysis:
Politics, regulation, law, and social
norms are not fixed features of the
marketing landscape, but factors to
consider and monitor for signs of
disruption
Writing a Good Commercialization Plan: Suggestions for SBIR/STTR Applicants
5
will provide much needed initial cash flow. In biotech, the end users
(customer who will use your product) is not the same person who
makes the purchase decision (the buyer). The buyer often has distinctive
needs from the end user that need to be addresses to achieve PMF, and
you should define your target buyer in addition to your target end user
when warranted.
D)
Intellectual Property (IP) Protection
This section should summarize how the company will protect the
intellectual property that enables the commercialization of its products
while keeping competitors at bay. Should take note if the company plans to
issue additional patents throughout the process.
What patents protect the project or idea, and to whom do
they belong?
If the company does not already have the IP it needs to discuss the
licensing/filing strategy to make sure that no one else gets it first. If
applicable, note other actions that the company may consider to constitute
a temporal barrier to others aiming to provide a similar solution.
E)
Regulatory Strategy
Describe the regulatory strategy that you are going to be undertaking to
move your product towards the market. Outline how you plan to
address data compliance and security (as this has become a very
sensitive and large problem in the space).
F)
Finance Plan
Start off with estimations of raised financing broken out by the different
phases. The assumptions in phase II/III should identify the timing of the
financial event(s) and milestones the company hopes to achieve in the
forecasted time period. These should clearly describe the timing and
financial needs to commercialize the product, process, or service.
Points of Emphasis
List current patents or describe
how the company plans to
protect the IP
Sources of Funding for
Commercialization
SBIR/STTR firm itself; private investors
or “angels”; venture capital firms;
investment companies; joint ventures;
R&D limited partnerships; strategic
alliances; research contracts; sales of
prototypes (built as part of this project);
public offering; state finance programs;
non SBIR-funded R&D or production
commitments from a federal agency with
the intention that the results will be used
by the United States government; or
other industrial firms.
Writing a Good Commercialization Plan: Suggestions for SBIR/STTR Applicants
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Plans for financing may be demonstrated through one or more of the
following ways:
Letter of commitment of funding
Letter of intent or evidence of negotiations to provide
funding, should the Phase II project be successful and the
market need still exists
Letter of support for the project and or some in-kind commitment,
e.g., to test or evaluate the innovation
Specific steps you are going to take to secure Phase III funding
Applicants are encouraged to seek commitment(s) of funds and/or
resources from an investor or partner organization for the
commercialization of the product(s) or service(s) resulting from the
SBIR/STTR grant. Phase III funding may be from any of several
different sources.
Writing a Good Commercialization Plan: Suggestions for SBIR/STTR Applicants
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G)
Production and Marketing Plan
Describe how the production of your product/process/service will occur.
Describe each step involved with taking your product to the market to sell
which may include plans for licensing or internet sales.
Think about the 4 P’s:
1.
Product
2.
Place (Channels of Distribution)
3.
Promotion (Communications Strategy)
4.
Pricing
Product: It should not be the thing itself but rather the total package of
benefits obtained by the customer. After introducing a new product to the
market, there should be a process of Product Life Cycle Management
where the company continually tries to learn more about consumers from
their reactions to the introduced product.
Place: The marketing channel is the set of mechanisms or networks from
which a company takes its product to market with its customers for
various tasks.
Promotion: Determining the appropriate ways to communicate with
customers to foster awareness, knowledge about its features, interest in
purchasing, likelihood of trying the product, and/or repeat purchasing.
Pricing: The value of the product can come from the customers’ perception
or from the actual product.
H)
Revenue Stream
This section describes exactly how you plan to make money selling your
product that is developed as the result of NIDA SBIR/STTR funding. A
clearly laid-out explanation of how you plan to generate a revenue
stream may incorporate many tools, such as revenue model estimations,
charts, and graphs to display timeline goals. If a market is large and
fragmented enough, a potential option would be to partner with other
companies with a proven history of generating revenue. Also, take note of
whether the company is a well-diversified company that has multiple
products with few shared risk factors or if the company is developing a
single product where the risks may be more centralized.
Examples of revenue stream generation include but are not limited to:
Manufacture and direct sales
Sales through value-added resellers or other distributors
Joint venture
Licensing
Service
Two Key Questions:
1.
Which potential buyers should the
company attempt to serve?
2.
How much customization should the
firm offer in its programs, i.e., at
which point on the market
continuum will the firm construct
plans:
o
Mass Market – Market Segments
– Market Niches – Individuals
Place
Channel Design
Distribution via direct, indirect, or
both ways
Proper design of contracts, good
communication
Channel Management
What policies and procedures will
be used to have the necessary
functions performed by the various
parties?
Promotion
Market - to whom is the
communication to be addressed?
Mission - what is the objective of the
communication?
Message - what are the specific
points to be communicated?
Media - which vehicles will be used
to convey the message?
Money - how much will be spent on
the effort?
Measurement - how will impact be
assessed after the campaign?
Writing a Good Commercialization Plan: Suggestions for SBIR/STTR Applicants
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I) Risk Analysis
This section describes all possible risks to the proposed to be developed
product and mitigation strategies.
Opportunities
(external, positive)
Threats
(external, negative)
Strengths
(internal, positive)
Strength-Opportunity strategies
Which of the company's strengths
can be used to maximize the
opportunities you identified?
Strength-Threats strategies
How can you use the company's
strengths to minimize the threats
you identified?
Weaknesses
(internal, negative)
Weakness-Opportunity strategies
What action(s) can you take to
minimize the company's
weaknesses using your identified
opportunities?
Weakness-Threats strategies
How can you minimize the
company's weaknesses to avoid the
threats you identified?
