[MUSIC] Hello, dear listeners. My name is Ekaterina Spiridonova, and I'm the Assistant Professor of Saint Petersburg State University. Today, we are going to discuss the specificity of the startup simulation. We all understand that before calculating how much does our business cost, we ought to make some kind of preliminary analysis. There are several reasons why this analysis is important. First of all, we know there are first stages of startup development. We have no information for quantitative assessment. So startup is some kind of business embryo, it doesn't have profit or any other financial indicators of success. But we have to prove to our potential investors that our business concept is reliable. By the way, among these potential investors, we can mention the government, business partners, or venture investors. The second reason is the following. The results of preliminary startup assessment influence the further startups variation. For example, we're not able to calculate cash flow without the information about expected demand, financial strategy, etc. So let's bounce to three main aspects of preliminary startup's analysis. It includes our intellectual property, expected demand, and our competitiveness analysis. Now we will regard them in detail. You know that the majority of startups is based on some innovation, so we all understand no technology, no business. That's why the potential investor will probably ask you, is your intellectual property strongly protected? Startup owners have two main opportunities, so they can patent their technology. In this case, they address the patent office, the government will provide them the support, and they will pay the patent fee. Another situation is establishing their own commercial secret regime. In this case, the company itself is responsible for intellectual property protection and the information will be closed. By the way, it is available as long as it is closed. The advantages of the patent is evident. First of all, it gives you the opportunity to minimize so-called transactional costs. And they appear within judicial proceedings connection the illegal usage of intellectual property right. Second, if one day startup for owners decide to sell the license and to transfer the intellectual property rights to someone else, and this patent license will have a higher price. And third, startups owners can feel themselves also more calm and not so nervous within the negotiations with the potential investors so they can tell them about the technology without any fear. But now we are to mention a very important aspect. If you decide to patent your technology, the information will be published at the site of the patent office, so everybody will have the access to it. These causes the risk of parallel patents, you can ask me, can't we do something with this risk? Of course. Generally, if startup decides to patented its technology, there are two opportunities. You can patent just their key technological aspect and you can patent all technological aspects. The second situation is a quote of triadic patent, and in this case, the risk of parallel patent is minimized. Another important aspect of intellectual property protection strategy is their patent geography. So you can receive patent just in one country in the Russian Federation for example, you can address several patent officers and to work with Russian and German patent offices, for instance. And we can speak about so-called triadic patent. Triadic patent is supported by Japanese, European, and American patent offices, and it is the most expensive. I'd like to mention that pattern geography is closely connected with startups expansion plans. So if you are going to work only in Russian Federation, it will be absolutely enough to receive patent only in our country. But USPTO has implants expansion to the foreign market, startup owners are to think about receiving patterns in these countries in advanced. The second aspect of preliminaries startups analysis is the study of expected demand. Okay, we understand that within the start periods of startup development, it hardly produces anything. But even if the startups founders have just business plans, it is evident what is going to be produced. So, the potential investor will probably ask you, is there a need for your commodity within the market? By the way, even if there is a need, sometimes it is unconscious. We can take the beauty industry for instance, by the way, there are still many startups in this sphere. So in the middle of the 20th century, it was absolutely normal women are getting old, but talented entrepreneurs understood women don't want it. So, there are many interventions targeted on helping women in their struggle with old age. But parallel, it was a great promotion campaign convincing women, even if are 90, nobody should know about it. What I mean, we must think about a proper promotion campaign. The second thing, we have to take into account is key segments of our consumers. So the potential investors will ask you, what are your consumers? By the way, each segment can have their own preferences towards product concept. Starting from technical parameters and ending with different approaches towards pricing, delivery, etc. The third thing is the analysis of effective demand, so we are to analyze the solvency of our consumers. Here, I'd love to pay your attention that sometimes their income of their representatives of the segment is not really high, but the segment itself is very huge. So, it compensates this low income and it makes the segment interesting for us, so at least we are able to assess the size of the market. Now with regard to the example. Here we deal with a startup that produces medical covering, so we can see four key segments, two on b2b market. These are hospitals that conduct surgery and centers of plastic surgery and to own b2c market, these are patients who suffered from a trophic ulcers and burns. Taking into account just the market of Saint Petersburg Bureau, based on all statistical information, analyzing the average consumption of our product. We can easily estimate to their market size, but we are to remember that the production of startup will have just the share of this market. And this fair market share depends on the level of competitiveness. So now, we're passing through the third aspect of preliminary startup assessment, the study of competitiveness. The competitiveness is the ability of our product to satisfy the consumer in comparison with alternative suggestions. The algorithm of assessment to the competitiveness is not really difficult, also first of all, we are to form so-called ideal product model. For doing it, we can organize the consumer survey and to ask them to rank the parameters of our product, or model, or what are less, or more important. After this, we ask them to give their quantitative assessment to each parameter. So we have this idea of modal, and we understand that it was hypothetical, so it doesn't really exist. After it, we are to compare our product with this ideal model, taking into account the coefficients of significance. By summing all ratios we received, Consumer Satisfaction Index, CSI, it shows how our product satisfies the consumers, at the maximum level is 100%. We can do the same calculations for our competitors. And after this, if we compare CSI of our product with a CSI of our best competitor, we can analyze their level of competitiveness. So if this ratio exceeds 1, we can say that our product is competitive. Now we'll pass to the example of competitiveness analysis. Here, we're dealing with a startup, a producer of anti-florant extract, you can see four key or technical parameters. And here we simplify and assume that all of them are tenth amounts, so the coefficient of significance is 25%. By conducting not really a difficult calculation, so we can always assume that our product satisfies the consumer for 70%, and the products of our competitor only for 58. So we can or make the conclusion that our product is competitive. In conclusion, let's say, if you wrote about the specificity of competitiveness analysis for startups. First of all, very often startups production doesn't have direct analogs within the market. It means that we are to find some product that satisfies the same need, but mainly in absolutely another way. Another thing is the forum. Very often, startup owners conduct their competitiveness analysis a long before the product finally enters the market. So we are to understand, even if the results of this analysis are marvelous, it's not the reason to be happy. Because when the product finally enters the market, there we'll probably be absolutely another market suggestions and maybe the level of quality of these new products will be higher than ours. What does it mean? It means that you are to organize the constant monitoring of the market.
