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Insight Robotics Limited: A Start-up with a Happy Problem  
Product Ref: 13/529C Company: Insight Robotics Limited

Product Type: Case Industry: Software & Services
Technology Hardware

Related Product(s): Teaching Note
Authors: Ali Farhoomand   W. H. Lo
Insight Robotics Limited (ˇ§IRLˇ¨) is a start-up in Hong Kong. It was formed by two young engineers and an experienced but young entrepreneur in 2009, specializing in research and development (R&D) of new technologies for critical infrastructure management. Critical infrastructure includes natural resources, energy, transportation, water, security and agriculture. The entrepreneurs see the opportunities presented by problems associated with conventional critical infrastructure protection systems and set up IRL to exploit such opportunities. IRL develops products that provide fully automatic detection, reporting and prediction of unwanted incidents (e.g., forestry wildfires) and help authorities to manage the critical infrastructure in an efficient and cost-effective way. By 2012, IRL had obtained its first contract from the Guangdong Academy of Forestry; it had also introduced angel investors, and funding was available for expansion.

With a strong product for wildfire prevention, IRL wants to move quickly to penetrate into forestry markets, including 10 provinces in the Peopleˇ¦s Republic of China; Malaysia; Australia; and countries in Africa, the Middle East and South and Central America. For reasons associated with the nature of emerging economies, IRL decides to let local system integrators (ˇ§SIsˇ¨) in each market own and serve the end customers, that is, the local government agencies. To mitigate credit risks, IRL also allows direct procurement of hardware by the SIs from IRLˇ¦s manufacturer. As the company is considering whether to address the market potential of developed countries, such as Australia, it is pondering whether it should follow the same business approach it has adopted for the emerging economies.

In addition, the company has an opportunity to raise up to US$7 million in capital in the near future. IRL has only spent around US$1 million since its inception. Should the company take this opportunity and raise the capital all in one go? What factors should the founders consider before making up their minds about this opportunity? With seven core critical infrastructure sectors that the company might target-including transportation, water resources, power supplies and natural resources mining, agriculture, oil and gas, border security, and critical facilities-IRL sees huge market potential ahead. Facing the happy problem of market potential overwhelmingly disproportionate to its size and resources, what should the company do in the short-, medium- and long-term?
Functional Area : Marketing
Strategy & General Management

Learning Objective: 1.To appraise how start-ups persist during difficult years with extremely tight resources. 2.To recognise how emerging economies influence firms. 3. To introduce angel investing as a source of early-stage funding and to discuss the risks involved.
Length: 18 pages Country: Hong Kong SAR

Pub. Year: 2013 Level of Difficulty: 1
This product type is available in the following language(s):      English
Related Information: N/A
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