Very briefly onto the next part now, which is introduction to some basic terms and concepts which I wish I had known when I started this.
And I will go through this relatively quickly. The first and most important thing to think about with your big idea is the addressable market.
That's not the total market. It is actually the market.
Which your specific idea? Can.
It can address. And that means identifying the ultimate customer, deciding whether it's an existing or a new market,
which you are creating and whether it's a single or a scalable market.
And this is the most difficult question you have to answer in a business plan because you don't just Google it.
There's actually a lot of market research that goes into identifying what the correct market to be going into the particular product is.
In the case of organics, as I said, the turning point for us was the realisation that not only could we do better with existing transplants,
but there was a subset of transplants which were not taking place which only our technology could enable to happen.
And so that raises a very interesting question, which I will not answer, because I'd like to have a job tomorrow.
What is the addressable market in this case? You've got a more complex, more expensive technology that works a lot better.
Are people only going to use it for the extreme cases or people going to use it for every single case?
The second is identify your products and its unique selling points.
What is it that is actually unique about it?
What is the customer gaining? And can anything else come close?
The third key term is intellectual property. Patents matter a lot less than you think they matter.
They are a mechanism for investment. But the key here is knowing how to generate and protect,
know how and how to get that knowhow from its previous environment into your company and how to keep it there.
The fourth to get right at the beginning are what are called inflection points.
And I'm sure most people here have a good enough mathematical background to know what an inflection point is,
but to accompany it means something different. When you start a business, you think its value is going to move like this.
If you get things wrong, it's actually going to do this. But in reality it will probably do neither.
What it will actually do and no one had ever told me this is this.
What you actually have is you start with a certain company value and then virtually nothing will happen until you hit a particular event.
And then virtually nothing will happen until you hit another event.
And then at some point you might be able to achieve this type of very linear growth that we all dream about.
And these events are key. They tend to be real events.
Now, I was so proud when I produced my first working prototype, I thought investors were going to be flooding the gates.
Matter to no one but us. Because it's not a real event.
Yes. You have a demonstrator. Yes. It makes it a little bit easier to raise investment.
But no one in the outside world sees it. It's not validated by any external party.
The first real inflection point is some sort of real events.
In the case of MedTech, you'd be a first in man trial showing that the technology can work in humans.
And the second inflection point would be another real world events such as first sales and where it's pretty soul destroying
for the founders is this bit where you're working incredibly hard and no one is telling you you've done anything that matters.
And then suddenly you cross the threshold and then you are in for another period like that, and you've got to be prepared for that.
And the absolute key is raise enough funding to go from here to here and to cross the next inflection point.
An exit. You always have to have a strategy for an exit.
When you start and it's a case of coaches for horses, you might do it for an initial public offering,
a trade sale or acquisition or combinations thereof and combinations thereof is very interesting if you have a company that might become sustainable.
But part of it you don't intend to pursue. You might also wish to contemplate having a strategy that allows you to segregate your
intellectual property so that you can have a dual exit from within the same company.
So for these reasons, it's very important to think about these things at the beginning.
Last but not least, the pitch is what you need before you go and talk to investors.
Use the smartest people you know to test it.
Make sure all of the key points you've just mentioned are covered.
And prepare both a cocktail room and a boardroom version because you will need both.
My supervisor said to me,
If it takes you more than 2 minutes to describe to a specialist what it is you're doing for your Ph.D., it's not worth doing.
The same applies to a business pitch. You've got to be able to get someone's attention in 2 minutes.
And now that you've got to pitch a plan a market, you're going to go out and look for investment.
Now investment is needed in order to proceed.
It's not actually what determines the business, although it's very, very important to it.
But because you need people to value your company.
The best advice I ever got is create consortia of likely investors and get them to look at your proposition independently.
Make a list as to who's the most likely to fund you and work your way from the bottom up to that list from least likely to most likely,
because you're going to be getting really good questions from the investors that are quite unlikely investors.
And by the time you get to your really likely investors, you'll have most, if not all of the answers.
And the swear word in starting a company is valuation.
Now, the party line is this is some clever mathematical formula which somehow balances potential of the company versus risk.
The honest truth is a company is only worth as much as someone is willing to pay for it.
And there are several conflicting constraints in reaching a valuation.
The valuation needs to be high enough to make it worth your while to be involved,
but it needs to be low enough that it leaves enough growth potential for future investors coming in.
Because if you overvalue something at the beginning, it will no longer be a good investment in your second and third funding round.
And the only thing that really matters is not the valuation.
It's actually getting the right investment. You need to cross your next inflection point on the reasonable terms.