Industry Concepts: the Commercialization Curve
The commercialization curve is something we mention often in the NYS STLC. It’s a description of the journey a technology makes from its inception to final stage as a product or service offered in the market. It can be a daunting trek as each point along the curve comes with its own set of hurdles and necessary action.
The knowledge of a company’s location on the curve can be crucial as it allows for better understanding of both the current value of the technology and the appropriate steps forward. Many of the myriad economic resources available in New York State target a specific area of the commercialization curve, so self-awareness is important in utilizing relevant resources.
Companies just starting or innovators with technology but no company would do well to attend one of the Pre-Seed workshops. The two-day events provide expert information to assist in determining whether ideas are viable and if so how to continue with them. Idea champions should be assured that their technologies are commercially viable before investing further into the idea.
Once companies have a plan but are still in the early stage of the commercialization curve they begin to evaluate sources of funding. Commercialization can be expensive but a potential resource is one of the state-supported funds that provide pre-seed and seed stage financing. Last spring Innovate NY awarded $25 million to six investment entities throughout the state that provide much needed “seed-stage” capital. The funding is to be used to leverage matching investment funds from private sources with a ration of at least 2 private dollars to each awarded dollar.
After seed funding companies generally look for Series A financing, either from angel investors or venture capital funds. Throughout the state there are various networks of angel investors, individual investors who help fund companies in exchange for ownership equity or convertible debt. It’s important to note that a company should try to progress as far toward commercialization or build value into its business as much as possible before seeking outside investment. In this way they retain the value of their contributions. Angel investors are useful but they invest to be compensated for their risk. The more value a company has built on its own and the later it can put off outside investment the less stake of the company an outside investor will hold.
Companies at this stage may also try to procure venture capital investments. As with angel investors, venture capital funds invest money expecting to receive return on investment. They are not hands off and expect to provide advice and counsel to improve the company’s, and investment’s, eventual success. Again, the rule of achieving as much value as possible before investment applies. Knowledg commercialization checkpoints and corresponding challenges will increase chances of success by allowing more informed decisions.
For more information:
On angel investors:
On venture capital: