TEDCO's TCF..CIF..WTF(unding) workshop covers the key points that Maryland entrepreneurs need to know when they are applying to TEDCO's funding programs.
4. Technology Commercialization Fund
Purpose:
Fund product development to position
a company for follow-on investment
Who:
Early-stage companies in MD meeting
eligibility requirements
What:
$100K Investment for up to 12 month
projects
When:
1st of every month
Program Contact:
Henry Ahn
hahn@tedco.md
5. Cybersecurity Investment Fund
Purpose:
Fund product development to position
a cybersecurity company for follow-on
investment
Who:
Early-stage “Cybersecurity” companies
in MD
What:
$100K Investment for up to 12 months
When:
15th of every month
Program Contact:
Ron Kaese
rkaese@tedco.md
6. TCF Eligibility Requirement
Contract or license
with:
• MD university,
• Federal lab with
partnership
agreement, or
• Other not-for-profit in
MD
OR
Affiliation with:
• One of Maryland’s
‘Qualified’ incubators
• RBI2, ACTiVATE, or
INNoVATE programs
For-profit with
less than 16
FTE employees
• At least 50%
working in
Maryland
• Potential for
growth in MD
AND AND
Pre-revenue
OR
Pre-
institutional
Investment
(Less than
$500K
investment)
7. CIF Eligibility Requirement
For-profit with
less than 16
FTE employees
• At least 50%
working in
Maryland
• Potential for
growth in MD
AND
Pre-revenue
OR
Pre-
institutional
Investment
(Less than
$500K
investment)
8. Review Timeline
TCF
CIF
Month 1 Month 2
1st
15th
Application
Due Date
Compliance Review + Site Visit
Compliance Review + Site Visit
Preliminary
Review:
2nd Wed of
the month
Preliminary
Review:
1st Monday
of the month
Pitch to
Committee:
3rd Wed of
the month
Pitch to
Committee:
1st Wed of
the month
Reference checks /
Additional due diligence as
necessary
9. TCF/CIF Reporting Requirement
Milestone Reports and invoice
Quarterly (April, July, October, January): Financial
statement
Annual (April of each year):
State and federal income and payroll tax returns
Financial statement (full year)
Annual economic reports (Revenue, # employees,
money raised)
10. 8% simple interest
May convert to equity or another
form of investment after the
company raises $500K or more
(TEDCO’s option)
No discount or cap provision
TCF/CIF Convertible Note Terms
11. Where do I get more information?
W W W . T E D C O . M D
12. Where do I get more information?
Request for
Application
Funding
Document
Application
Link
Program
Manager
Checklist
14. Project Orientation
Empirical evidence that the technology works
Commercial market(s)
identified
Target market justified
Designed to strengthens
IP position
Project within company’s commercialization
pathway
15. Project Orientation
Moves technology through next step(s) toward
commercialization
Leverages additional resources (Federal /
Academic / Incubator / …)
Achievable with the team proposed, funding
allocated, and within 12 months
16. A Good Project
Importance to Business
Project success likely to increase valuation of technology
and company
Advances along commercialization pathway
Builds business network
17. A Good Project
Importance to Business
Success attracts follow-on funding
Plan for follow-on funding
The Ask
Planned Uses of Funds
Anticipated Sources of Funding
18. A Good Project
Milestones
Three milestones of nearly equal budget (tranches)
Demonstrable achievement
TEDCO informed if changes need to be made
Closeout site visit scheduled as project end nears
Timely receipt of Comprehensive final report
Achieving technical/budget/schedule milestones
19. A Good Project
Budget
At least 80% “direct” funding to the technology project
25% paid upon signing of the Project Agreement
Entrepreneur does not need to float the start
Three 25% progress payments
50% company match (may be in-kind)
Company match keeps pace with TEDCO funding
TEDCO informed if changes need to be made
21. A Good Project Example
Entrepreneur licensed US Army technology
Added further collaboration to leverage resources
Started a company
Received funding through TEDCO
Joined local Incubator
Software development (neighbor in Incubator)
Product is a Research tool sold world-wide
Company remains small with 4 to 5 employees
Outsources 4 to 5 manufacturing jobs locally
Rural community now has 8 to 10 high tech jobs
23. Financial Projections
Financials are not separate from the business plan. They are
a different way of representing that plan
The key to securing investors is telling a consistent,
believable story, and your numbers should tell the same
story as your elevator pitch
24. Investment Needs
Strive to match critical milestones to capital needs
Figure out what level of traction and commercialization
different stage investors (i.e. angel, early institutional, series
A) need to see, then develop a credible plan to get to each of
those discrete points
Avoid common mistakes, such as:
Projecting negative cash flow (or leaving too narrow a
cushion)
Spending significantly less than the amount invested
Raising a dollar amount incommensurate with the
magnitude of the opportunity
25. Investment Needs
On the cost side of things, avoid fixing different categories in
operating costs at a certain percentage of revenue
Instead, take the time to build out an actual headcount
model, driven by key assumptions around how many leads
salespeople can generate and follow up on and how much
progress developers can make
26. Revenue Model
Use both the top-down and bottom-up approaches as aides.
The worst models rely on only one (e.g. we will grow from 1
– 5 % market penetration in the next five years). Ideally these
two approaches will converge
Research the implications of GAAP revenue recognition on
your revenue model
Marketplaces that do not take on inventory risk should
recognize only their commission as gross revenue, but
companies that utilize channel sales partners recognize all
the revenue with lower margins
27. Revenue Model
Keep any industry-specific sales cycle dynamics in mind
Retailers see sales spikes in December
Education technology companies see MRR increases at the
end of their sales cycles
Being conservative is good, but never be conservative about
metrics that are core to the value proposition
28. Operating Metrics
Let key operating metrics drive both sides of the model.
When revenue numbers fall behind projections, operating
metrics help inform why
General metrics that all companies should be tracking
Cost per customer
ARPU and lifetime value
Burn rate
Revenue model-specific metrics
Churn for SaaS
CPM for advertising
29. Example
Selling software into the corporate wellness space
Top-down (macro) approach:
Total employer-provided insurance market: $700 B
Roughly 2 pct. spent on wellness by payers and self-insured
companies
Approximately $14 B market for corporate wellness
30. Example
Bottom-up (micro) approach:
27 MM firms in the USA
21 MM are nonemployer firms
5 MM have fewer than 10 employees
1 MM have 10 – 100 employees
About 100,000 have 100 – 500 employees
About 20,000 have 500 employees or more
31. Segmenting the Market
Nonemployer firms and firms with fewer than 10 employees
are non-addressable; few offer coverage to employees
Large firms with over 500 employees are more likely to be
self-insured, have high actuarial standards, long sales-cycles,
and like to run wellness programs themselves
Opportunity is in the middle of the market
1 MM have 10 – 100 employees
About 100,000 have 100 – 500 employees
32. Assumptions
Friends & Family, development of prototype
Founder plus one engineer
Series Seed I, pilot with a few companies
Founders responsible for sales, marketing
4 engineers necessary for development
1 account management/support person
33. Assumptions
Series Seed II, acquisition and onboarding of ten paying
clients
5 salespeople
2 account managers
1 marketer
5 engineers
Series A, start tapping into the payer and self-insured market
Additional sales people to close higher quality deals
Additional development to add features unique to the Tier 1
market
36. What is TEDCO Looking For?
An innovative, possibly disruptive, seed stage, technology-
enabled solution to a big problem.
Biologic/diagnostic
Medical device
Health IT / Tele-health
Enterprise software
Web application
Engineered product
You get the picture…but, not simply a “me too” play.
37. TEDCO TOP 10 LIST
#1…
Please follow the instructions in the Request for Application
(RFA).
It sounds simple, but you’d be surprised!
And, remember, the “customer” is always right.
38. #2…
Prepare a high quality proposal that has been refined with the
help of outside advisors.
It’s a competitive process – and you’re up against previously
funded plans, not simply with those submitted “last month”.
And, remember, we use outside reviewers who see 100’s of
plans.
TEDCO TOP 10 LIST
39. #3…
Show us a technology, not just an idea.
Significant Discriminator/IP that directly impacts competitive
position
Preliminary data:
Life Sciences – in vitro studies
Engineered products – prototype & lab testing
Software – MVP & some user feedback
And, remember, we can always point you to other, more stage-
appropriate funding options
TEDCO TOP 10 LIST
40. #4…
Show us a team, not an individual.
We understand “stage-appropriate”
Blend business acumen with technical expertise
Identify no/low cost external resources that can help fill holes
Demonstrate that you understand what new hires are needed and
when
And, remember, marketing & sales is a commonly overlooked skill set
TEDCO TOP 10 LIST
41. #5…
Show us a company, not just a technology.
Revenue model w/ customer validation
Go-to-market plan
Realistic channel strategy
Target segment and follow-on segments
Breadth and depth
And, remember, this all needs to be linked directly to your P&L
projections
TEDCO TOP 10 LIST
42. #6…
Show us a clear, compelling value proposition.
Will anyone actually buy what you’re selling? Why?
Beta testers or early adopters (paying or not)
Evaluate competition, including “do nothing”
Be careful about a value proposition built on incremental
cost savings
And, remember, don’t forget to identify the paying customer
TEDCO TOP 10 LIST
43. #7…
Show us a validated understanding of customer & market.
Minimize macro research report market size data
Do some actual market research; talk to potential users and
build from the “bottom up”
If you’re a platform, identify a target segment
Life Sciences – address FDA & reimbursement pathways
And, remember, your market research conclusions should be
embedded into your P&L projections
TEDCO TOP 10 LIST
44. #8…
Show us a solid go-to-market plan.
Can be a really powerful differentiator among competitive
proposals
Address the classic 4 P’s of marketing
And, remember, don’t expect the customer to alter it’s buying
habits to suit your plan
TEDCO TOP 10 LIST
45. #9…
Show us a financial projections with clear, reasonable assumptions
that link directly to the other elements of your plan.
Can also be a really powerful differentiator among competitive
proposals
Include operating metrics so the reviewer can evaluate the “size of
the problem”
Support the amount of money you’re raising
And, remember, don’t run out of cash and don’t make math errors.
TEDCO TOP 10 LIST
46. #10…
Show us a set of project milestones that actually advance the
company.
Be realistic
Be detailed
And, remember, TCF/CIF is intended to get you either to the next
fundraising inflection point or to revenue generation.
TEDCO TOP 10 LIST
47. #11… because we all love Spinal Tap!
Show us that you’re an effective communicator.
Follow the RFA
Balance between technology & business
Don’t assume that TEDCO’s reviewers are experts in your technology –
pitch so your grandparents get it
Get outside help with your pitch…and practice
And, remember, please have your proposal & presentation proofread by
someone not familiar with your application.
TEDCO TOP 10 LIST