Papers_Julian Webb

International vs Local: The Different Strategies for Different Markets: an incubation perspective : 

1 International vs Local: The Different Strategies for Different Markets: an incubation perspective 2nd APEC Incubator Forum, Taipei, 31st August to 2nd September 2004 Julian Webb Julian.webb@creeda.com.au With thanks to the Ice House in NZ www.theicehouse.co.nz

Topics Covered : 

2 Topics Covered Issues Case Study Example Lessons for Business Incubators

International Vs Local : 

3 International Vs Local Harder More costly Ideally established in the domestic market before export But not always possible Need to be Export Ready

Export Ready : 

4 Export Ready Proven technology, services and capacity E.g for 24x7 support, internationalization of product and documentation Good management team Sufficient capital to tackle export The right partners in target countries The right markets Similar to “investment ready”

What can go wrong? – LOTS! : 

5 What can go wrong? – LOTS! Insufficient capital Poor planning and execution Poor positioning Wrong market Wrong partners Product not ready Cultural differences Lack of committment

Needed : 

6 Needed ACCESS to: Capital and the right investors Right markets Quality introductions to potential customers The right partners in the market concerned

GP Sport Case Study : 

7 GP Sport Case Study New IP based sports product Used by: US Cycling team World Triathlon Championship K1 & K2 canoeing Australian football Soccer (South America) Endorsed by Hong Kong Jockey Club www.gpsports.com adrian.faccioni@gpsports.com

The Sport Performance Indicator (SPI 10) : 

8 The Sport Performance Indicator (SPI 10) The SPI 10 (Pronounced "SPY") is a world's first in miniaturised tracking technology for athletes and fitness enthusiasts alike. GPSports has developed the SPI 10, a miniature device worn by the athlete, which stores important training and performance data such as: Time, Speed, Distance, Position, Altitude Direction, and Heart Rate.

GP Sports Now : 

9 GP Sports Now AUD$750K turnover Valuation AUD$2.5M (based on last investment round) 5 staff 12 investors Breaking even (including R&D costs) Trade sale exit planned in 18 to 24 months

GP Sports Marketing : 

10 GP Sports Marketing Global market – Australian too small to be much of a focus Marketing plan 2002 (realistic) Predicted 100 units sold by mid 2004 (achieved sales of 150) Global doorknocking 2003 – demonstrating prototype Using elite sports network contacts (one of the 2 founders & investors) As well as sporting product companies such as Nike and Venture Capitalists Gall (confidence, arrogance, doggedness) Costly exercise No response for 4 months January 2004 the phone started ringing with orders

GP Sports Incubation : 

11 GP Sports Incubation Entered incubator 2000 Initial prototype phase Coaching Exit planning Business planning Market planning Management team Board restructuring Coach invested, joined the board and management team as COO Finance 2001, AUD$30K (incubator), AUD$150K (Govt) 2003, AUD$200K (angel and existing investors) 2004 (current), AUD$500K (angels, VCs)

GP Sports Incubation Lessons : 

12 GP Sports Incubation Lessons Coaching critical All aspects including very early exit planning Excellent outcome for the coach to join the management team Vision, confidence and networks required Initial incubator investment negotiated too hard: Minimal investment (30K) for maximum equity Damaged the relationship and cost AUD$8k to remedy AUD$200K investment was possible and GP Sports would have been 12 months faster and 6 month ahead of competition

GP Sports Korean Manufacture : 

13 GP Sports Korean Manufacture Manufacturing was being done in Korea Via Korean Australian investor and his contacts Australia: Korea costs 1:1 but Koreans prepared to pay for tooling Relationship soured: Korean investor had promised production runs in the ‘000s but they were only in the ‘00s 50% failure rate Korean investor was “saving face” and not open with manufacturers Directors were up front and open and the manufacturing relationship was broken amicably Now manufactured in Australia Lesson: Korea was used too early, for short production runs, whereas it is better later for larger runs

Lessons for Incubators : 

14 Lessons for Incubators Export ready programs for incubator clients E.g. New Zealand Incubators Ice House incubator in Auckland www.theicehouse.co.nz International incubators E.g. International Business Incubator (IBI) in San Jose www.ibi-sv.org/

Information, guides, export readiness diagnostics etc : 

15 Information, guides, export readiness diagnostics etc www.austrade.gov.au (Australia) Export Market Development Grants (Australia) www.sba.gov/OIT/info/Guide-To-Exporting/ (USA) www.marketnewzealand.com/common/files/readytoexport-htg.pdf (New Zealand) www.exportsource.ca/gol/exportsource/interface.nsf/ (Canada) www.aiia.com.au/wppuser/aiia/export/ex_info_serv.html (Australian Information Industry Association)