- On 31 January 2020
- In Content of Application Form Impact Phase 1/2
- Tags:
What is expected in section Impact?
ADVICE FOR IMPACT SUB-SECTIONS IN TEMPLATE
ENTERING THE MARKET 1/4
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** Who are the targeted users and/or customers and why will they want to buy your product/ service (unique selling point)?
** Are they new or already part of your customer base? What is your relation with them (e.g. market survey, testing/feedback, letters of intent)?
Evaluation criteria
Convincing description of targeted users or customers of the innovation, how their needs have been addressed, why the users or customers identified will want to use or buy the product, service or business model, including compared to what is currently available if anything at all.
Expectations
Identify and prioritize user needs and detail user profile(s).
⇒ Identify and quantify client segments.
⇒ Explain why are you so sure that the customers will be willing to pay for your product, given its competitive advantage.
⇒ If you already have ‘market connections’ or relationships with potential customers/distributors, show it by adding (as annexes, and reference here) letters of intent, memorandums of understanding, even contracts/agreements. If you already have paying customers, don’t forget to mention them – this might be one of the most important factors in the evaluation.
⇒ Demonstrate the need. Know your market. Show how your solution answers these market needs.
⇒ Any element showing demand for your solution/product gives you extra points. If you already have paying customers that’s great, but in the absence of that, LOIs or even successful meetings with potential clients and partners should be mentioned explicitly.
ENTERING THE MARKET 2/4
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** What is the market in terms of type (e.g. niche, / high volume, new/mature, growth rate), size (e.g. volume, value, geographical scope) and growth?
** What is your targeted market share?
Evaluation criteria
Convincing description of substantial demand (including willingness to pay) for the innovation; demand generated by new ideas, with the potential to create new markets, is particularly sought after.
Total market size envisaged.
Expectations
Research the global marketplace.
⇒ Do not narrow your research to a few national markets, if possible. Demonstrating international expansion is crucial.
⇒ Note that a market sizing exercise needs to be performed bottom up and not top down.
⇒ Keep in mind that your total addressable market (TAM) is only a subset of the overall industry market and can often be only a fraction of it.
⇒ Narrow your export markets – which international markets would be targeted first? Consider how you will communicate with buyers. You may need a distributor that can close the language and culture gap between your product and the client.
⇒ If you need actual presence (a subsidiary of your company – not just a local distributor) in some geographies in order to sell there, show how you create that presence.
⇒ Explain the market conditions and the current trends, and the evolution of the competition.
ENTERING THE MARKET 3/4
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** Who are your main direct and indirect competitors? (Competitors, substitutes and alternatives).
Evaluation criteria
Phase 1 (only): Good understanding of need for a realistic and relevant analysis of market conditions…
Phase 2 (only): Realistic and relevant analysis of market conditions and growth-rate, competitors and competitive offerings, key stakeholders, clear identification of opportunities for market introduction, market creation or disruption (e.g. via new value-chains).
Expectations
Make sure to include an in-depth competitor analysis, as this is one of the most important parts of the “impact” section.
⇒Show that you know your competitors (as well as your competitive advantage – why you are better than them).
⇒ The statement “we have no competition” is never true – don’t forget that indirect competitors are also relevant. Any product that competes with you on the client’s money/ attention is a competitor. Example: one of the competitors of an electronic car navigation system is a paper roadmap.
⇒ You may use any graphical element to illustrate competitors’ analysis.
ENTERING THE MARKET 4/4
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** Which are the barriers to entry? How do you intend to overcome them?
Evaluation criteria
Phase 1 (only): Good understanding of need for a realistic and relevant analysis of market conditions, total potential market size and growth-rate, competitors and competitive offerings, key stakeholders, clear identification of opportunities for market introduction.
Phase 2 (only): Realistic and relevant analysis of market conditions and growth-rate, competitors and competitive offerings, key stakeholders, clear identification of opportunities for market introduction, market creation or disruption.
Expectations
Types of barriers to market entry could be capital costs, economies of scale, legal barriers, vertical integration, predatory pricing, etc…
BUSINESS MODEL 1/4
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** How does this innovation fit with your company’s overall business strategy?
** Describe your value chain. Identify which of these or other stakeholders should be involved to ensure successful commercial exploitation. Define the nature of your current relation with them.
** Outline your business model, including the revenue model and your commercialization plan with an approximate time-to-market or deployment.
Evaluation criteria
Phase1 (only): Outline of initial commercialisation plan and how this will be developed further (in- house development, licensing strategy, etc.).
Phase 2 (only): Realistic and relevant strategic plan for commercialisation, including approximate time-to-market or deployment. Activities to be undertaken after the project. The ‘commercial strategy’ aspect is particularly examined in Step 2 of the evaluation of Phase 2 proposals.
Expectations
Explain how you make money.
⇒ Do you sell your product?
⇒ Do you provide it for free but make money from advertising and/or for selling data you’ve gathered?
⇒If you don’t sell directly to end users, do you intend to use licensing or other business models? Are post-sale services a money making element too?
⇒If you make money from sales – what is your pricing model and how did you choose it?
⇒ You may also include a Business model canvas/lean canvas.
Definition
Business Model Canvas is a strategic management and lean start-up template for developing new or documenting existing business models. It is a visual chart with elements describing a firm’s or product’s value proposition, infrastructure, customers, and finances.
BUSINESS MODEL 2/4
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** Why is your model scalable? How do you intend to scale-up and reach European and/or global markets?
Evaluation criteria
Realistic and relevant description of how the innovation has the potential to scale-up the applicant company. This should be underpinned by a convincing business plan with a clear timeline, and complemented, where possible, by a trackrecord that includes financial data.
European/global dimension of innovation with respect to both commercialisation and assessment of competitors and competitive offerings.
Expectations
This part should focuses specifically on scaling and there is no need to repeat what was written earlier.
⇒ In how many countries do you already have presence with clients/ distributors/ staff/ offices?
⇒ Are you commercializing with your own sale force/ Distributors/ partners/ the internet?
⇒ Consider using different commercial channels for the different geographical areas in order to accelerate market penetration.
⇒ You may need to have a separate approach per market segment/country.
⇒ Know the different countries’ export regulation and licensing laws. Do not forget about foreign import regulations. Get export counseling.
⇒ If there may be a need to localize the product – make sure to explain how it will be changed to meet local conditions.
The right meaning for a scalable business
- Businesses that scale are businesses with operating leverage. Put simply, if you add operating costs (sales, marketing, administrators, R&D, etc.) at the same rate you grow revenue, then your business does not scale.
- Alternatively, if additional revenue requires relatively smaller and smaller additions to operating costs, then congratulations… your business scales!
BUSINESS MODEL 3/4
Template
** What is the company’s ownership and capital structure?
** Phase 2 only: What would be the impact of your innovation on the company financials (profit/loss, turnover and cash flows), jobs and efficiency/productivity improvement in the 3 years following the launch of this Phase-2 project?
** Phase 1 only: What is the expected growth potential of your solution in terms of turnover, profit and jobs?
Expectations
Indicators for growth potential of your solution should be presented in a table with projections for at least three years.
⇒ You need to demonstrate that your project will generate revenues and create jobs.
⇒ P&L forecast: provide information on why this forecast is realistic and on why you think you will reach it (“we will increase sales by 3 million!” How? Why?).
⇒ Use a standard P&L table.
⇒ Detail your go-to-market strategy: will you sell your product directly? Through distribution channels? On the internet? Who is the purchasing “champion” in the client company [for B2B]?
BUSINESS MODEL 4/4
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** Phase 2 only: Indicate the estimated funding requirements and the timeline to reach the commercialization stage of your innovation. How you intend to finance the 30% co-financing rate?
** Phase 1 only: Indicate the estimated funding requirements to reach the commercialization stage of your innovation. What are your plans to ensure the subsequent financing of your?
Expectations
Provide a graphic showing the company’s funding requirements over the next few years and the milestones reached with that financing.
⇒ Show that each fundraising round gets you to a fundable stage.
⇒ How do you plan to co-fund the 30% of the SME instrument grant?
⇒ What additional financing is needed to reach the market apart from the SME instrument funding (5me & budget)?
⇒How will you get it? Prove you have the relevant resources to execute the project. Show that you know you will need to raise money and that you have experience in doing so.
INTELLECTUAL PROPERTY RIGHT (IPR) AND LEGAL FRAMEWORK
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** Describe the legal and regulatory requirements to be fulfilled for the exploitation of your innovation and whether it is incorporated in or compliant with standards relevant to the technology.
** What are your IPR assets? Describe the key knowledge items and who owns them and who else may have rights to use them; patents (applied/granted) or other ways of protection.
** What is your strategy for knowledge management and protection?
** What are your measures to ensure commercial exploitation (‘freedom to operate’)?
Evaluation criteria
Phase 1 (only): Realistic and relevant description of knowledge protection status and strategy, need for ‘freedom to operate’ (i.e., possibility of commercial exploitation), and current IPR situation or a plan for obtaining this information. Where relevant, description of potential regulatory requirements.
Phase 2 (only): Evidence of or realistic measures to ensure ‘freedom to operate’ (i.e., possibility of commercial exploitation), convincing knowledge protection strategy, including current IPR filing status, IPR ownership and licensing issues. Regulatory and/or standards requirements addressed.
Expectations
⇒ Which kind of IP applies to the product/service?
⇒ Highlight the conclusions of your Freedom-to-Operate analysis.
⇒ If you depend on standard certifications (like CE etc.) – make sure to describe why you are confident that you will receive the certification.
⇒ For phase 1 – make sure to conduct an FTO; do not write you will only do it in Phase 2.
COMMUNICATION AND ACCESS TO RESEARCH DATA
Template
** How will you publicly communicate about your innovation during the period of the grant? Where relevant, mention measures for public/societal engagement on issues related to the project.
Expectations
Identify the key events in your target market where you will showcase your product/ service.
⇒ Specify the communication means to promote the project and its results during the time span of the project (for instance – company website, participation in conferences and international events etc).
⇒ Consider different audiences in your communication strategy.
⇒ Have a clear marketing message per each target audience.
