Funding

SECTION I: ESTIMATION OF COSTS

 

1 Taking into account the rest of the cost evaluation please provide an overall estimation of the total costs for full deployment/production of the R & D result.
… in terms of IPR protection
The cost of the design protection could vary between 400 EUR (national protection) and 1,000 EUR (Community protection). On top of that the prosecution should be paid, which is an additional 500 EUR approximately.
…in terms of product development
Prototypes should be manufactured first; there will be several prototypes needed, because when identifying the class of security different violation methods are applied, so the prototypes will be damaged or ruined. The estimated cost of the prototypes is 2,000 EUR, the testing cost 8,400 EUR. The staff cost of the development is another 2,000 EUR.
…in terms of mass production
Mold for the concrete part should be manufactured (2,000 EUR). The estimated cost of a single unit is 80 EUR in total, including protection packaging; this could be considered as a fixed cost element. According to the plans the first year sales volume would be 100 pieces.

 

… in terms of marketing
The marketing expenses could vary depending on the sales vs. rental choice. In the case of a clear profile (spin-off) enterprise, the first year marketing cost could easily be around 20.000 EUR. Exhibitions, fairs, and direct marketing applications would lead to such a significant amount.

 

 

 

2 Based on the above assessment as well as the marketing information please provide the correct estimation of the price for R&D product in correlation with costs
  Year 1 Year 2 Year 3 Year 4 Year 5
Fixed costs 8,000 EUR 24,000 EUR 48,000 EUR 80,000 EUR 80,000 EUR
Personnel 18,000 EUR 18,000 EUR 24,000 EUR 36,000 EUR 36,000 EUR
Other running costs 15,400 EUR 3,000 EUR 3,000 EUR 3,000 EUR 3,000 EUR
Marketing costs 20,000 EUR 10,000 EUR 10,000 EUR 10,000 EUR 10,000 EUR
TOTAL EXPECTED COSTS 61,400 EUR 55,000 EUR 85,000 EUR 85,000 EUR 85,000 EUR
Price per Unit 150 EUR 150 EUR 150 EUR 150 EUR 150 EUR
Type of Unit Pcs
Number of Units 100 300 600 1000 1000
TOTAL Expected Revenues 15,000 EUR 45,000 EUR 90,000 EUR 150,000 EUR 150,000 EUR
CASH FLOW REQUIRED (REVENUES-COSTS) -46,400 EUR -10,000 EUR 5,000 EUR 55,000 EUR 55,000 EUR
TOTAL CAPITAL required for five years 110,000 EUR

 

SECTION 2: QUALITATIVE FACTORS

 

3 Dimension of identified target groups
The pre-calculation was made for the sales model. The target market is identified on the basis of Hungarian data. Hungary does not have seaside, so the most frequented destination, Lake Balaton was taken into consideration. It has a coastline of approx. 150 km in length. In five years time the company wants to sell 3000 safes, which means 20 per kilometer. On another basis 40 towns and villages have coastline on the lake; all of them have a beach, 2,5 on average. This would mean a coverage of 30 units per beach. According to the estimation that is the maximum reachable share at the Lake Balaton. From this point of view the estimation is pessimistic, since the developed bathing culture, the other lakes and rivers are not even mentioned. The market size is somewhere around 10,000 units. The beaches are owned by local governments or enterprises. A few hotels have beaches, thus hotels can have alternative solutions for keeping the valuables safe.

 

4 Evaluation of financial Risks for R&D result
The product has a medium financial risk. The investment capital can be lowered if the sales run up in the first years, so that the cash flow and savings will cover the production and the fixed costs. With flexible or on-demand production the cash-flow can be improved. The use of the proposed product (obviously) shows strong seasonality, so the preparations, the marketing activity should be synchronized with production and distribution activities also from the cash flow point of view. The success of the product strongly depends on the business model applied; it is strongly advised to create detailed feasibility studies also for the rental model.

 

 

 

SECTION 3: IDENTIFICATION OF FINANCING SOURCES

After evaluating all the above mentioned criteria, please tick the best financing source for the achievement of R&D result (i.e. own capitals, banking credits, venture capital, business angels, etc)

 

1. European Funding

Define relevance of the product with the following potential funding sources and comment

European Funding is possible for the project, calls for original spin-off ideas are not uncommon.

 

2. National Funding
Recently the New Széchenyi Plan was announced in Hungary, numerous programs support the small and medium enterprises’ research and development and innovation (R+D+I) activities. Grant proposals could be posted to foundations, there is also a possibility to find financial support for spin-off enterprises.

 

3. Private funding
In private funding aspects the business angels can come in the picture. With careful planning and adequate marketing activity the investment returns by around 20% annual rate.

 

4. Other
Eventually licensing agreement is possible, only after a broad and deep analysis of the market needs and potentials. If it seems the market is not big enough, first the marketing cost would benefit from the agreement, secondly the marketing mix elements, finally the product concept itself could be revised.

SECTION 3: FINAL EVALUATION

It is requested a final evaluation considering the funding opportunities you believe most suitable for the exploitation of the R&D result, considering the possibility of the creation of a spin-off, further research, in particular, a cost/benefit analysis and a financial projection for the R&D result, type of collaboration identified (i.e. Licensing Agreement, Technical Cooperation, Joint Venture, Manufacturing Agreement, Commercial Agreement with Technical Assistance, Creation of a spin-off, Joint further development)…
For valorizing the proposed product definitely a spin-off should be created. The spin-off partners should include an actor from the concrete or the metal processing industry to rationalize the investments. Further prototyping activities, careful functional and market testing are needed. The test results should be used to assess the product and identify the needs for changing the technical concept. The manufacturing assignment should be given on a good bargain. The direct marketing tools seem to be applicable in the market launch phase. The initial capital need should be provided by the industry partner, while it is possible to get funding for a spin-off either from the Community or from domestic resources as well.

 

 

Decision of evaluation

The R&D has a high potential of exploitation

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