It has been awhile since I have talked about performing technical due diligence investigations. These investigations are critical in providing much need information to potential investors in a new technology – or in financing an entity that already exists. At Kevin Kennedy Associates we have always considered two experts for an investigation. You may ask why two people? Why not just one person that knows the technology? A good question – hopefully, I can answer that for you here.
It is always important to have one person step back and take a view of the organization from the 30,000 foot level. This type of review can look at any number of critical items. These might include the
- management team
- role of the entrepreneur vs. investors
- business development plans
- type of proposed sales force
- state of the technology
- manufacturing facilities or lack thereof
- existence of a quality program or the lack of one
- safety issues, environmental concerns, supply chain, etc.
This is not a comprehensive list, but rather a starting point of issues that can prevent a business from succeeding no matter how impressive the technology. Without a good team, plan, and the ability to execute this plan – many great business ideas can and do fail.
The second person on the team is a technology specialist. For a new technology or a new product in an existing market it is critical to assess the viability of that technology to succeed from a technical standpoint. The types of things to examine vary widely and truly depend on the investment opportunity. Some examples of the things the technologist can examine include
- patents: how well do they cover the technology
- patents: do additional patents need to be considered to protect the investment?
- can the product be easily manufactured?
- does the technology fill a niche in the market that isn’t already being met?
- is the proposed technology feasible?
- what are the remaining development challenges?
- are any of these remaining development challenges risky or difficult?
- are there shortcomings to the technology or limitations?
- is the proposed market for the technology highly competitive, or does it have room for new products and vendors?
- will the product demand a premium price point in the market?
Again, this list varies based upon the technology, stage in the development process, and type of product.
We at Kevin Kennedy Associates have worked on projects that range from “two guys in a garage” on a startup level to advising clients for hundreds of million dollar investment in solar energy technology. The types of technologies have considered nano technology, energy systems and devices, and traditional manufacturing investments of unique products.
Give us a call to discuss your needs. With over 600 experts we can put together the right technical team for your investment opportunity.