Early-Stage Technology Valuation

• Author: Russell L. Parr
• Profession: President of Intellectual Property Research Associates
• Pages: 142-154

CHAPTER 11

EARLY-STAGE TECHNOLOGY

VALUATION

Early-stage technology typically means technology that has not yet been commercialized

or proven beyond laboratory experiments. Early-stage technology can also be nothing more

than a technical idea not yet fully expressed or tested. This chapter discusses the valuation of

early-stage technology. The same methodologies discussed throughout this book are used,

but the uniqueness of early-stage technology requires additional consideration. The math

is still easy, but nding the proper inputs is very difcult.

EARLY-STAGE TECHNOLOGY

Different intellectual properties can be referred to as early-stage technology. Included in

this broad category are some of the following:

• Untested ideas

• Benchtop technology

• Prototype technology

Untested ideas are merely the musings of great and sometimes not-so-great inventors.

They can be represented by as little as a pencil sketch. Seldom is this category of early-

stage technology accompanied by any test data or formulations. Very often itis not known

whether the untested technology will perform as expected. Also unknown is whether a

market exists for the product or process that would employ the technology.

Benchtop technology has evolved past the idea stage and has shown some promise

in laboratory testing. Study and experiments have shown that the new technology has

promise. Further research is considered prudent, and budgets are established for continued

exploration and renement. Continued research usually results in experimentation regard-

ing different materials, creation of samples, various formulations, collection of data, and

expanded testing.

Prototype technology is actually working in the form of a unique, usually hand-

constructed, version of the product or process that embodies the technology. At this point,

the technology is another step closer to commercialization, but full-scale manufacturing

viability is yet to be proven. Prototypes are usually scaled-down versions of what the

developers hope can become mainstream processes or products. At this stage, development

and testing focus on determining the potential for the new technology in the marketplace.

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