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| title | chunk | source | category | tags | date_saved | instance |
|---|---|---|---|---|---|---|
| Technology life cycle | 2/3 | https://en.wikipedia.org/wiki/Technology_life_cycle | reference | science, encyclopedia | 2026-05-05T07:12:54.417280+00:00 | kb-cron |
=== In the R&D phase === There are always smaller firms (SMEs) who are inadequately situated to finance the development of innovative R&D in the post-research and early technology phases. By sharing incipient technology under certain conditions, substantial risk financing can come from third parties. This is a form of quasi-licensing which takes different formats. Even large corporates may not wish to bear all costs of development in areas of significant and high risk (e.g. aircraft development) and may seek means of spreading it to the stage that proof-of-concept is obtained. In the case of small and medium firms, entities such as venture capitalists or business angels, can enter the scene and help to materialize technologies. Venture capitalists accept both the costs and uncertainties of R&D, and that of market acceptance, in reward for high returns when the technology proves itself. Apart from finance, they may provide networking, management and marketing support. Venture capital connotes financial as well as human capital. Larger firms may opt for Joint R&D or work in a consortium for the early phase of development. Such vehicles are called strategic alliances – strategic partnerships. With both venture capital funding and strategic (research) alliances, when business gains begin to neutralize development costs (the TLC crosses the X-axis), the ownership of the technology starts to undergo change. In the case of smaller firms, venture capitalists help clients enter the stock market for obtaining substantially larger funds for development, maturation of technology, product promotion and to meet marketing costs. A major route is through initial public offering (IPO) which invites risk funding by the public for potential high gain. At the same time, the IPOs enable venture capitalists to attempt to recover expenditures already incurred by them through part sale of the stock pre-allotted to them (subsequent to the listing of the stock on the stock exchange). When the IPO is fully subscribed, the assisted enterprise becomes a corporation and can more easily obtain bank loans, etc. if needed. Strategic alliance partners, allied on research, pursue separate paths of development with the incipient technology of common origin but pool their accomplishments through instruments such as 'cross-licensing'. Generally, contractual provisions among the members of the consortium allow a member to exercise the option of independent pursuit after joint consultation; in which case the optee owns all subsequent development.
=== In the ascent phase === The ascent stage of the technology usually refers to some point above Point A in the TLC diagram but actually it commences when the R&D portion of the TLC curve inflects (only that the cashflow is negative and unremunerative to Point A). The ascent is the strongest phase of the TLC because it is here that the technology is superior to alternatives and can command premium profit or gain. The slope and duration of the ascent depends on competing technologies entering the domain, although they may not be as successful in that period. Strongly patented technology extends the duration period. The TLC begins to flatten out (the region shown as M) when equivalent or challenging technologies come into the competitive space and begin to eat away marketshare. Till this stage is reached, the technology-owning firm would tend to exclusively enjoy its profitability, preferring not to license it. If an overseas opportunity does present itself, the firm would prefer to set up a controlled subsidiary rather than license a third party.
=== In the maturity phase === The maturity phase of the technology is a period of stable and remunerative income but its competitive viability can persist over the larger timeframe marked by its 'vital life'. However, there may be a tendency to license out the technology to third parties during this stage to lower risk of decline in profitability (or competitivity) and to expand financial opportunity. The exercise of this option is, generally, inferior to seeking participatory exploitation; in other words, engagement in joint venture, typically in regions where the technology would be in the ascent phase, as say, a developing country. In addition to providing financial opportunity it allows the technology-owner a degree of control over its use. Gain flows from the two streams of investment-based and royalty incomes. Further, the vital life of the technology is enhanced in such strategy.