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Taking Research Products to the End User

Taking Research Products to the End User

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Taking Research Products to the End User

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  1. Taking Research Products to the End User Presented by Hubert Manseau, President Multiple Capital At the LORNETSymposium November 7, 2007

  2. Who Am I? • Twenty years career in information systems development & management • Fifteen years in Academia • Five years in private business • Three years VP of a computer research institute • Ten years in venture capital • 7 years as CEO of Innovatech • 3 years as president and general partner of Multiple Capital • Participation in 3 successful spin offs: • SIGIRD-Multilis, licenced to Multitek, further sold to DRA • Metrowerks, further listed on VSX and sold to Motorola • Locus Dialog, further sold to Scansoft • Participation in 2 start ups: • SIPM, further sold to Télémédia • Hugo Plus, further sold to Microsoft • Posted 3 softwares for free distribution when in academia

  3. Taking Research Products to the End User • I am not an expert in e-learning, but I assume we’re talking about: • Development tools or platforms • Contents or components • Services and content delivery platforms • Monitoring and evaluation tools or platforms, etc • And I have direct experience in taking products from academia to a user community

  4. As a Matter of Introduction • A technology is not a product • Unit price at end user level can’t be higher than typical software prices • Technological platforms are rapidly outdated • Contents are rarely universal and must be localized • Learning contents compete media wise with leisure contents (e.g. video clips or games) • The value of any product is dictated by the market, not its development cost, that may never be recouped • If taking a product to the user is not done on a commercial basis, then it has to be done by the creator, or to be subsidized

  5. Taking Research Products to the End User Can Take Many Forms • Free distribution (open source) • Direct sale • IP sale • Licensing • Royalties • Spin offs • Partnerships

  6. Taking Products to the End User Through Free Distribution • The so called open source model is old, but the internet is a great facilitator • Works well in informal networks and academia • Products are rarely 100% end user proof • Potential lack of support at the source • IP rights may have to be dealt with • Intermediates may help: • Commercial: Red Hat • Non commercial: who finances?

  7. Taking Products to the End User Through Direct Sale • Needs proper organization internally for: • billing and selling • customer support • Conflicts of interests may and will arise • May go against the mission of the organization • But it’s the best proof of concept possible and can serve as a step towards other form of distribution

  8. Taking Products to the End User Through IP Sale • IP must be accurately protected. This is easier said than done! • Must be a «break through» • Must address a significant market • Needs access to commercial players decision centers • Payments often on milestones if technology is still evolving • Little follow-up • The «jackpot» but very rare with non patentable technologies

  9. Taking Products to the End User Through Licensing • Allows selling to several master users • Involves drafting and managing complex contracts • Involves sales and marketing • May involve setting up user support services • Involves many follow-ups

  10. Taking Products to the End User Through Royalties Based on Usage • May be highly lucrative • Involves drafting and managing complex contracts • Involves sales and marketing • Involves setting up user support services • Involves several follow-ups

  11. Taking Products to the End User Through the Creation of Spin Offs • Often the only way if the product is not 100% completed • Also, often the only way is if it is far from the decision centers • Involves financing • Needs employees ready to become «entrepreneurs» • Involves sharing the ownership between organization, founding employees and investors • End to end success rate is low, but it’s an iterative process • Returns may be very high, but not always filtered down to initial organization

  12. Taking Products to the End User Through Partnerships • Commercial partner will complete development and take care of marketing, sales and support • Partner will in exchange finance continuity of research activity in source organization (salaries, equipments, etc) • Partner may pay royalties in addition, generally based on sales levels

  13. Financing the Spin Offs • By research organization • By founding employees • By financial angels • By venture capital funds • Many subsidies available at that stage • Bank loans • Bootstrapping by sales of earlier versions of products or services • Bootstrapping by sales of consulting services • Generally by a combination of several or all these sources

  14. Venture Capital Not for every situation, not for everybody • We look for large and rapidly growing potential markets $250M+ • With an exit planned over 5 to 7 years • We participate in management • We bring experience and contact network • We help with other sources of financing • But yes, • We dilute owners/founders equity • We control what entrepreneurs do • We do what it takes to make projects succeed

  15. Some Challenges Taking E-learningProducts to the End User • Global market is not easy to access from Canada • Local market is limited in size and fragmented • Government support is paradoxal: • Many small subsidies • But a small number of purchase orders!!! • Contents are more local than tools and platforms • Few large commercial successes to generate traction

  16. Some Solutions • Be realistic, only a few initiatives will generate big hits • Understand the chasm between a research product and an end user proof product • Understand the cultural chasm between academia and the commercial world • Create a critical mass of expertise in taking products to market or end users: • Legal and business • IP protection • Commercial (industry data bases, market survey and analysis, etc) • Human (user interfaces) • Create a marketing and lobbying organization to gather interest on e-learning as a business sector and as a product class

  17. Questions • Do e-learning products and services have real commercial potential? • Does e-learning qualify for venture capital and/or other forms of financing? • Most organizations create both tools and contents. Is the best strategy to sell one, the other, or both? • Is e-learning products life cycle long enough to generate commercial success? • How do we make money in the learning business?