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Role of a modern university, like KBTU in PPAP (Public Private Academic Partnership) Programs, in the Economy and in Society By Ramesh G. Kini, KBTU Presented at Digital Communications Event 2010 September 22 nd , 2010 Almaty

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Page 1: Ramesh kini kbtu_eng

Role of a modern university, like KBTU in PPAP (Public Private Academic

Partnership) Programs, in the Economy and in Society

By Ramesh G. Kini, KBTU

Presented at Digital Communications Event 2010

September 22nd, 2010

Almaty

Page 2: Ramesh kini kbtu_eng
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12.04 University-industry

collaboration in R&D

...............................111

4.01 Business impact of malaria

.......................................................1

4.02 Malaria incidence*

.......................................................1

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Specialization of Regional Economies

Select U.S. Geographic Areas

Boston

Analytical Instruments

Education and Knowledge Creation

Communications Equipment

Los Angeles Area

Apparel

Building Fixtures,

Equipment and

Services

Entertainment

Chicago

Communications Equipment

Processed Food

Heavy Machinery

Denver, CO

Leather and Sporting Goods

Oil and Gas

Aerospace Vehicles and Defense

San Diego

Leather and Sporting Goods

Power Generation

Education and Knowledge

Creation

San Francisco-

Oakland-San Jose

Bay Area

Communications

Equipment

Agricultural Products

Information

Technology

Seattle-Bellevue-Everett,

WA

Aerospace Vehicles and

Defense

Fishing and Fishing

Products

Analytical Instruments

Houston

Heavy Construction Services

Oil and Gas

Aerospace Vehicles and Defense

Pittsburgh, PA

Construction Materials

Metal Manufacturing

Education and Knowledge

Creation

Atlanta, GA

Construction Materials

Transportation and Logistics

Business Services

Raleigh-Durham, NC

Communications Equipment

Information Technology

Education and

Knowledge Creation

Wichita, KS

Aerospace Vehicles and

Defense

Heavy Machinery

Oil and Gas

Note: Clusters listed are the three highest ranking clusters in terms of share of national employment

Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School

Page 5: Ramesh kini kbtu_eng
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SIMS:

School of

Info. Mgt. &

Sys.

Haas School

of Business

Berkeley

Engineering

Page 7: Ramesh kini kbtu_eng

SIMS: SIMS:

School of School of

Info. Mgt. & Info. Mgt. &

Sys.Sys.

Haas Haas School School

of Businessof Business

Berkeley Berkeley

EngineeringEngineering

U.C. Berkeley

Stanford

Page 8: Ramesh kini kbtu_eng

• Avalanche rescue beacons, e.g., the Ortovox X1 (www.ortovox.com), and Tracker

DTS, have become standard equipment for many skiers and snowmobilers – these

small radio transmitters, strapped to the body, use audio signals to aid rescuers in

locating someone buried under several feet of snow.

• Suppose Kairat, Kanat & Maxat (KKM), who are studying at KBTU, were to

submit a proposal for a new type of beacon detector (Digital Life Preserver)

• The proposed KKM model

is like the Tracker DTS (for

Digital Transceiving

System, patented by John

Hereford), in that it shows

the direction and distance

from the victim, and also

has digital displays to

interpret data, and flashing

lights to augment the audio

feedback signals.

• What process would we use

to take the KKM proposal

from Concept to

Commercialization to

Cash Positive (C2C2C)?

Page 9: Ramesh kini kbtu_eng

Evaluating the Concept and its Commercialization potential

Digital Life Preserver: Avalanche beacons help save lives by

allowing rescuers to find victims buried in snow. The beacons are

worn by a skier or snowmobiler and continuously transmit a radio

signal. When a victim is buried, people nearby can use their beacons

as receivers to search based on signal strength. Newer digital beacons

use microprocessors to more precisely guide searchers to the victim.

Page 10: Ramesh kini kbtu_eng
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Page 13: Ramesh kini kbtu_eng

Technology

BoardManagement

Board

PPAP Pr. Management

PPAP Program

(Board of Trustees)

Step I: Submit

Projects,

Proposals, Plans

KBTU

Faculty

Members

Students

Affiliates

KazCosmos

Stage I: Affiliation

Criteria: Time, Context, Scope

Resources, Sustainability, Value

Step II: Analysis,

Review

Feedback, Support

Step IA: Revise &

Rework Projects,

Proposals, Plans

•What is your target market?

•How big is it?

•Who will buy your product?

•Why do they need it?

•Who will pay for it?

•Who will use it?

•How do the users fix the problem you're addressing today?

•How important is the problem to them?

•How much are they willing to pay?

•Why would they buy from you?

•Are there any substitute products? Who are the rivals?

Page 14: Ramesh kini kbtu_eng

Cash

Flow

+ve

-ve

Market-Driven

• Market Segmentation, Market Opportunity Validation

• Market Size & Trends (Dynamics: Market

Expansion/Contraction, Market Penetration/Saturation, Market

Share)

Technology-Driven

• Technology/Product: Design,

Development, Demonstration,

Deployment, Deliverables

Go - No Go Hurdles/Milestones

Execution,

Execution,

Execution

Concept Commercialization Cash-PositiveBusiness

Model/Strategy/Plan

Value Proposition, Value Creation Value Extraction, Value Capture Value Apportionment

Conventional

Funding

3F: Friends,

Family & Fools

Seed

(Public

Sector, etc.)

Angels Venture

Capitalists

Exit: Buyout/IPO (Private Equity, Mutual

Funds, Retail & Institutional Investors, etc.)

The C2C2C (Concept to Commercialization to Cash-Positive) Model

Page 15: Ramesh kini kbtu_eng

Technology

BoardManagement

Board

PPAP Pro. Management

PPAP Program

(Board of Trustees)

Step I: Submit

Projects,

Proposals, Plans

KBTU

Faculty

Members

Students

Affiliates

KazCosmos

Stage I: Affiliation

Criteria: Time, Context, Scope

Resources, Sustainability, Value

Step II: Analysis,

Review

Feedback, Support

Step IA: Revise &

Rework Projects,

Proposals, Plans

Technology

BoardManagement

Board

PPAP Pro. Management

PPAP Program

(Board of Trustees)

Step III: Submission for

Approval by Technology

& Management Boards

Technology

BoardManagement

Board

PPAP Pro. Management

PPAP Program

(Board of Trustees)

Step IV: Submission

for Approval by

Foundation Board of

Trustees

Step IVA: Revise

& Rework

Step

IIIA:

Revise &

Rework

Profit

Sales

RevenueCosts

Sales

VolumePrice

Variable

Cost

Fixed

Costs

Unit

Variable

Cost

Sales

Volume

Business

Questions: What

are the Drivers of

Profit?

55

Fea

ture

s/F

ea

ture

s/

Perfo

rm

an

ceP

erfo

rm

an

ce

Qu

ality

Qu

ality

Flexibility/Flexibility/

ResponsivenessResponsiveness

Cost/Cost/

PricePrice

Speed/L

ead

Speed/L

ead

Tim

e Vari

ability

Tim

e Vari

ability

001122334455 11 22 33 44 55

1122

3344

5511

2233

44

Innovativeness/

Innovativeness/

Technological

Technological

Capabilities

Capabilities

Reliability/

Reliability/

Depen

dability

Depen

dability

Vari

ety/

Vari

ety/

Product

Mi x

Product

Mi x

Rival’s OfferingRival’s Offering

Firm’s OfferingFirm’s Offering

Customers’ NeedsCustomers’ Needs

Changes over timeChanges over time

Page 16: Ramesh kini kbtu_eng

Technology

BoardManagement

Board

PPAP Pro. Management

PPAP Program

(Board of Trustees)

Step I: Submit

Projects,

Proposals, Plans

KBTU

Faculty

Members

Students

Affiliates

KazCosmos

Stage I: Affiliation

Criteria: Time, Context, Scope

Resources, Sustainability, Value

Step II: Analysis,

Review

Feedback, Support

Step IA: Revise &

Rework Projects,

Proposals, Plans

Technology

BoardManagement

Board

PPAP Pro. Management

PPAP Program

(Board of Trustees)

Step III: Submission for

Approval by Technology

& Management Boards

Technology

BoardManagement

Board

PPAP Pro. Management

PPAP Program

(Board of Trustees)

Step IV: Submission

for Approval by

Foundation Board of

Trustees

Step IVA: Revise

& Rework

Step

IIIA:

Revise &

Rework

Technology

Issues: Aerial

Scanning to

Expedite Process

Base StationBase Station

Alternative Suggestion from 4E Alternative Suggestion from 4E

Center Technology Board Members: Center Technology Board Members:

Mount Scanner on a s mall Aerial Mount Scanner on a s mall Aerial

DeviceDevice

Page 17: Ramesh kini kbtu_eng

Pro’s & Con’s of Scanning from the Air

Larger Swept Areas, Quicker Sweeps & Faster

Zooming into Promising Areas (15-20 minute

window)

Parallel Processing (Multiple Aerial Scanners

attached to single Base Station)

Scan Areas that cannot be Manually Accessed

(Steep, Unstable Slopes)

Limited Charge on Battery Cells (5-8 minutes)

Susceptible to Ambient Conditions (Wind, etc.)

Page 18: Ramesh kini kbtu_eng

FINANCIAL PROJECTIONS (Stocks & Flows)

Current Sales

Time

Bass-Model with

Lanchester Market-

Share Dynamics

Distribution CentersDistribution Centers Plant APlant A

Plant B...Plant B...

Distribution CentersDistribution CentersDistribution CentersDistribution Centers Plant APlant APlant APlant A

Plant B...Plant B...Plant B...Plant B...

PeoplePeople

How How

Much?Much?

How? How?

Why?Why?

Where?Where?

When?When?

Who?Who?

What?What?

ProcessProcessPlantPlantPartnersPartnersProcurementProcurementProduct Product

/ Parts/ Parts

MoveMove

StoreStore

MakeMake

PlanPlan

SellSell

BuyBuy

Value AddedValue AddedVisibilityVisibilityVelocityVelocityVariabilityVariabilityVarietyVarietyVolumeVolume

55

Fea

tures/

Fea

tures/

Perfo

rma

nce

Perfo

rma

nce

Qu

ality

Qu

ality

Flexibility/Flexibility/

ResponsivenessResponsiveness

Cost/Cost/

PricePrice

Speed

/Lea

d

Speed

/Lea

d

Tim

e Var

iabi

lity

Tim

e Var

iabi

lity

001122334455 11 22 33 44 55

1122

3344

5511

2233

44

Innovativeness/

Innovativeness/

Technological

Technological

Capabilities

Capabilities

Reliability/

Reliability/

Dependability

Dependability

Var

iety

/

Var

iety

/Pro

duct

Mix

Pro

duct

Mix

55

Fea

tures/

Fea

tures/

Perfo

rma

nce

Perfo

rma

nce

Qu

ality

Qu

ality

Flexibility/Flexibility/

ResponsivenessResponsiveness

Cost/Cost/

PricePrice

Speed

/Lea

d

Speed

/Lea

d

Tim

e Var

iabi

lity

Tim

e Var

iabi

lity

001122334455 11 22 33 44 55

1122

3344

5511

2233

44

Innovativeness/

Innovativeness/

Technological

Technological

Capabilities

Capabilities

Reliability/

Reliability/

Dependability

Dependability

Var

iety

/

Var

iety

/Pro

duct

Mix

Pro

duct

Mix

55

Fea

tures/

Fea

tures/

Perfo

rma

nce

Perfo

rma

nce

Qu

ality

Qu

ality

Flexibility/Flexibility/

ResponsivenessResponsiveness

Cost/Cost/

PricePrice

Speed

/Lea

d

Speed

/Lea

d

Tim

e Var

iabi

lity

Tim

e Var

iabi

lity

001122334455 11 22 33 44 55

1122

3344

5511

2233

44

Innovativeness/

Innovativeness/

Technological

Technological

Capabilities

Capabilities

Reliability/

Reliability/

Dependability

Dependability

Var

iety

/

Var

iety

/Pro

duct

Mix

Pro

duct

Mix

Page 19: Ramesh kini kbtu_eng

Source: OECD (2010). Measuring Innovation: A New Perspecti8ve, based on Scopus Custom Data, Elsevier, July 2009; OECD, Patent Database,

January 2010; and EPO, Worldwide Patent Statistical Database, Sept. 2009. The list of environmental patent applications has been generated

through a search algorithm developed by the OERCD and EPO (European Patent Office).

Science for Green Innovation: Green Technologies draw upon a broad base of

scientific knowledge.

OECD: Multidisciplinary research is Emerging to Address Global Challenges

Page 20: Ramesh kini kbtu_eng

Sustainability themes –

Alternative energy,

Environmental

technologies, Biotechnology

Sustainable

Leadership

Integrating CSR& ESG…… with key drivers of

sector …

… and sustained

competitive advantage

Dynamics: Industry,

Competition, Market,

Product

Drivers &

Dynamics:

Industry,

etc.

CSR ESG: Corporate

Social Responsibility

Environmental, Social,

Corporate Governance Issues

Environment

Economy Industry

Society

CSR

ESG:

Returns: TSR

(Total

Shareholder

Returns),

CFROI, etc.

Returns

Based on Goldman Sachs GS Sustain methodology for picking long term winners -- see

Exhibit 1 of GS SUSTAIN by Anthony Ling,Sarah Forrest, Marc Fox and Stephan Feilhauer)

What PPAP Programs

can do for

sustainability and

corporate performance

Page 21: Ramesh kini kbtu_eng

What PPAP Programs

can do for

sustainability and

corporate

performance…

Environment

Economy Industry

Society

CSR ESG:

…PPAP Program Partners can collaborate on

many fronts to set the agenda for the future

Page 22: Ramesh kini kbtu_eng

Dana

Banking & Other

Financial Institutions

Government

agencies,

Ministries,

etc.

Firm

Kanat

Development

Finance

Institutions

(DFIs),

Business

Incubators, IT

Parks, Science

& Technology

Parks

Zhanna

PPAP Programs: Who Brings What to the Table?

What is the Value of that Contribution?

Academic & other

R&D Institutions

-- National & Foreign Partners

Information

Investments Institutions

Individuals

Ideas Insights

Incubation

Infrastructure

Innovation

Startups

Legal, Accounting

& Advisory

Service Providers

Micro-Angel

Networks

Retirees,

Professionals

Individual Retail

Investors

Human Resource

Networks

Page 23: Ramesh kini kbtu_eng

Emission reduction

of CO2

Decrease by

substitution

Decrease by

reduction of energy

consumption

of fossil fuels

of clinker

of cement

components

of raw-meal

components

of electrical

energy

of thermal

energy

Recuperation

Generation

Making the Cement Industry “Greener”

and more Sustainable

Based on Toward a Sustainable Cement Industry, an independent study by Battelle, commissioned by the World Business Council for Sustainable Development

Page 24: Ramesh kini kbtu_eng

Making the Cement Industry “Greener” and more Sustainable

Based on Toward a Sustainable Cement Industry, an independent study by Battelle, commissioned by the

World Business Council for Sustainable Development

Page 25: Ramesh kini kbtu_eng

Potential

Impacts of

PPAP

Contributions

Total Shareholder

Return

Revenue GrowthMargin

Improvement

Value Creation Levers

Pricing

Power

Cost

Savings

Employee

Recruitment, etc.

Risk

Premiums

New Market

Entry

Market

Share

Cost of

Capital

• Greater

operational

efficiencies

• More efficient

use of resources

• Supply chain

optimization

• Lower costs

and taxes

Valuation

MultipleProfits

Free

Cash Flow

PPAP Partners: Who Brings What to the Table?

What is the Value of that Contribution?

Page 26: Ramesh kini kbtu_eng

The PPAP Program would help KKM and other would be entrepreneurs to put

together a business plan, which would show potential investors convincingly:

1. How the idea/invention will be developed and successfully exploited

2. The capability and experience of the team responsible

3. How the investments needed will be financed, including second and

further rounds of financing

4. The proposed exit mechanism and timing, and the expected realization

value for the shareholders

Other key questions that need to be addressed by the Business plan are:

- what is unique about the innovation and is it protected (e.g. patents)?

- who will buy it and why?

- what price will it sell at and what will it cost to deliver?

- what will be the competition and how will it be resisted?

- when will the company start receiving income and when will it break even?

Page 27: Ramesh kini kbtu_eng

Base Station

Alternative Suggestion from PPAP

Program Technology Board

Members: Mount Scanner on a small

Aerial Device

Page 28: Ramesh kini kbtu_eng

PPAP Partners’ Role in Kazakhstani Society • What role should the PPAP Partners e.g.,

universities, play in the economy, in society? How

could these PPAP Partners make Kazakhstan more

innovative, more competitive?

• How do you measure the performance of these

PPAP Partners, e.g., any University and its

Schools, Centers, etc.? Over the Short-Term,

Medium-Term and Long-Term? How do we factor

in Endogenous vs. Exogenous, Tangible vs.

Intangible, “Hard” vs. “Soft,” and so on, issues?

• What Metrics should we use?

• How should we tie these Metrics to the Partners’

Operating Objectives, Targets and Initiatives?

• What Skills, Capabilities and Core Competencies would individuals involved, e.g., Program

administrators and University Faculty Members, need and how do they get the Training,

Knowledge, etc., for this?

• How should we strike the right balance between:

o the need for Private Partners to make a Profit, for Public and Academic Partners to at least

break even, and so on,

o the Societal Needs and Aspirations of ordinary Kazakhstanis;

o without compromising on University Autonomy, Faculty Academic Freedom, etc.?

• How do the PPAP partners, e.g., the IT Park, the Universities, etc., become more Self-

Sustainable and Independent over time?

• How can these universities, for instance, become more like MIT, Stanford, etc., over time?

Page 29: Ramesh kini kbtu_eng

Universities

& other Academic Institutions

Schools &

Departments

(Faculty Members, Researchers

Students & Alumni)

National Healthcare

System:

Universities’ Medical

Schools, Hospitals,

Research Labs., etc.

R&D Centers for

• Space

• Energy & Environment

• Nanotechnology

• Biotechnology & Life

Sciences

• ICT, or Information &

Communications Tech.

Kazakhstan’s DFIs (Development Financial Institutions): NIF, other Samrukh-Kazyna entities

Government Ministries, Agencies & Support Departments: Finance & Accounting, Grants, etc.

The proposed PPAP (Public-Private-Academic-Partnership) Program

Science & Technology Parks,

IT Parks &

Business Incubators

Kazakhstani and

non-Kazakhstani

Corporate Partners

Startups, New

Ventures

• Intellectual

Property

•Joint R&D

•Licensing &

Royalties

•More Value from

Better Quality,

Lower Cost,

Differentiated

Products &

Services

•Better

Healthcare;

•Longer,

Healthier &

More

Productive

Lives

GDP Growth, Taxes,

Duties, etc., Import

Substitution

New Jobs,

Better Skills

& Capabilities

Other Kazakhstani Firms, Government of Kazakhstan and People of Kazakhstan

Payment in Cash vs. Equity?

Page 30: Ramesh kini kbtu_eng

The 10-I Roadmap for Translating Knowledge into Commercially Viable

Products and Services: Individuals + Ideas + Information + Insights +

Institutions + Infrastructure + Incentives + Investments + Incubation

Intelligent Innovation

Academic & other

R&D Institutions

-- National & Foreign Partners

Dana

Banking & Other

Financial Institutions

OutboundOutbound

LogisticsLogistics

SupplierSupplier

SupplierSupplier

SupplierSupplier InboundInbound

LogisticsLogistics

CustomerCustomer

CustomerCustomer

CustomerCustomer

OutboundOutbound

LogisticsLogistics

OutboundOutbound

LogisticsLogistics

SupplierSupplier

SupplierSupplier

SupplierSupplier InboundInbound

LogisticsLogistics

CustomerCustomer

CustomerCustomer

CustomerCustomer

SupplierSupplierSupplierSupplier

SupplierSupplierSupplierSupplier

SupplierSupplierSupplierSupplier InboundInbound

LogisticsLogistics

CustomerCustomer

CustomerCustomer

CustomerCustomer

InboundInbound

LogisticsLogistics

InboundInbound

LogisticsLogistics

CustomerCustomer

CustomerCustomer

CustomerCustomer

CustomerCustomer

CustomerCustomer

CustomerCustomer

FirmFirmFirmFirm

FirmFirmFirmFirm

Government

agencies,

Ministries,

etc.

Firm

Kanat

Individuals

Development

Finance

Institutions

(DFIs),

Business

Incubators, IT

Parks, Science

& Technology

Parks

Zhanna

Innovation

Micro-Angel

Networks

Retirees,

Professionals

Human Resource

Networks

Individual Retail

Investors

Legal, Accounting

& Advisory

Service Providers

Ideas

Ideas

Ideas

Institutions

InfrastructureInsights

Investments

Investments

Information

Incentives

Information

Investments

Institutions

Infrastructure

Incubation

Incubation

Incubation

Page 31: Ramesh kini kbtu_eng

Needs Analysis and Gap Analysis

(for each of the Four Phases) using

the 7P-5W-2H Mapping Approach

• Programs (Support & Networking Activity-mix and Customized Programs for each Vertical)

• Participants (on an Equity + Cash basis in the Incubation & Tenancy Programs for each Vertical)

• Partners (Academic Partners; Public and Private Sector Corporate Partners; Financial backers, etc.)

• “Physical Plant” (Office space, Conference rooms, Laboratories, ICT equipment, etc.)

• Process (Customization for each Vertical, Sequencing and Concatenation of Activities & Programs)

• People (Boards of Directors and Advisors; Admin., Domain Experts, Local vs. Foreign trained

Coaches, Counselors and Catalysts; PPAP Associates, Affiliates and Faculty Members)

• Procurement (Facilities; Equipment; Make vs. Buy for expertise, services, courseware, etc.)

Roles of the PPAP Program Partners

Programs Participants Partners “Physical

Plant”

Process People Procurement

What?

Who?

When?

Where?

Why?

How?

How

Much?

Page 32: Ramesh kini kbtu_eng

Programs

How

Much?

How?

Why?

Where?

When?

Who?

What?

ProcurementPeopleProcess“Physical

Plant”

PartnersParticipants

The Innovation Park’s PPAP Partners might help answer most of the 5W-2H questions

Page 33: Ramesh kini kbtu_eng

Based partly on Figure 5.5, The Development of global innovation networks and the transfer of knowledge, by Dirk Pilat, Koen De Backer, Ester

Basri, Sarah Box and Mario Cervantes, Ch. 5 of Innovation and Growth: Chasing a Moving Frontier, Eds. Vandana Chandra, Denoz Erocal, Pier

Carlo Padoan, Carlos A. Primo Braga (original source, Chesbrough (2006), Open Business Models, Narvard Business Press, Cambridge, Mass.)

Own

Market

Revenue

Internal

Development

Costs

Revenue

Costs

Shorter Product

Life Cycles

Benefits to PPAP Corporate Partners from Open (rather than

Closed) Innovation in a Changing Business Environment

Rising Costs

of Innovation

Own

Market

Revenue

Internal

Development

Costs

Cost and Time Savings

by Leveraging External

Development through

PPAP Partners

Own

Market

Revenue

Internal

Development

Costs

PPAP Sales

Spin-offs, etc.

New

Revenue*

* New Revenue: from Sales to PPAP partners and their Affiliates, and from Spin-offs, Sales or

Divestitures of PPAP Joint Ventures and Incubator “Hatchlings,” and License Fees and Royalty

Payments from Jointly Developed Technologies

Page 34: Ramesh kini kbtu_eng

Incubator Tenants

for year n

Incubator Tenants

for year n-1

Graduation AttritionFresh

Intakes

Payment of Rent, etc., in (Equity + Cash)Payment of Rent, etc.,

in Cash

Normal Rent

Paying Tenants

Retention Attrition Revenue Forecast

for year n

Pricing of

Support Services,

Networking, etc.

Projected Profit & Loss

for year n

Projected Balance Sheet

for year n

Projected Funds Flow

for year n

Balance Sheet

for year n - 1

IV

III

The Four

Steps in

drawing up

Innovation

Park’s

Financial

Projections

PPAP Public

& Private Sector

Partners

PPAP Program

Academic PartnersPayments

Foreign Inputs Programs

National

Innovation Fund New

Hires

Attrition

Local Capacity

Development

Program

Domain Experts &

Coaches,

Counselors,

Catalysts

Operating Plan

for year n

• 8M Resource Allocation

• Incubator Performance

• Network Affiliates’

Contribution

• PPAP Program Inputs

& Outcomes

• Performance Metrics

Materials Manpower

Machinery Money

Method Management

Meters2 Space

Market Position

8M

OPEX (Operating

Expenditure) Plan

Headcount (Salary, etc.) Costs

Admin.

&

Misc.

Costs

Utilities

& other

8M

CostsLong Term

Financing Plan

CAPEX (Capital

Expenditure) Plan

Cash

Budget

Cash

Additional

Capital Issues,

Debt

Repayment,

Equity

Buybacks

Interest

Costs

Debt vs.

Equity

Long Term Debt &

Short Term Credit

III

Incubator Hatchlings

(Equity

+ Cash)

Page 35: Ramesh kini kbtu_eng

Operating

Revenues

Bank

Credit

Other

Credit

(e.g., from

IT Park’s

Partners)

EquityNew

Capital

Issues

Long Term

DebtRepay-

ment

New

Borrowings

Soft

Credit

Debt,

Repayments

Years

Funds

(A - B)+ ve

- ve

05 8

How can the Innovation Park

become Net Cash Positive earlier?

Salaries, Utilities, other

8-M Costs, etc.

Funds for

Operations(expenses excl.

notional items, e.g..,

Depreciation)

Liabilities

Assets(Cash +

other

Current Assets

+ Fixed Assets

+ Equity Stakes

in Tenants &

Hatchlings)

Inte

rest

Ta

xes

Timing of

& Value

Realized

from IPOs

Div

iden

ds

Funds

Flow for

PPAP

Program

Partners,

e.g., the

Innovation

Park,

University

-based

Incubators

(B – A) = (D + E + G) – (C + F)

G

F

E

DC

A

B

Page 36: Ramesh kini kbtu_eng

Bottom Line: Complex

Financial model but

simple takeaways

• Shift from Cash only Rental

Model to Cash + Equity

Incubator model will mean that

funds will be needed to sustain

operations for first 5-8 years till

self-sustainability

• Uncertainty vis-à-vis success of

startups (80% success rate if all

goes right) and also timing of

exit through IPO or strategic

sale of Equity slices

• Cash from exits may not be realized in near future – staying power

• Shared ownership of Innovation Park (PPAP) but land and buildings to remain as

property of people of Kazakhstan in perpetuity and part of Public share of equity

(lease structure)

• OPEX and CAPEX Plans, Long Term Financing and Cash Budgeting: