MARKET READINESS AND VALUATION
Technology Readiness Levels (TRLs) are a type of measurement system to assess the maturity level of a particular technology. TRLs are based on a scale from TRL 1 to TRL 9, with TRL 9 being the technology at its most mature level. The primary purpose of using TRLs is to help management in making decisions concerning the development and transitioning of technology, but they can also be used as a benchmark for assessing the valuation of a startup.
THE HISTORY OF TECHNOLOGY READINESS LEVELS
TRLs were developed at NASA in 1974 and formally defined in 1989. Originally, the methodology was a seven-level scale. However, in the 1990s, NASA adopted the current nine-level scale that has subsequently gained widespread acceptance.
DEFINING THE DIFFERENT LEVELS
When a technology is at TRL 1, it means that the research is beginning, and those results are being translated into future research and development. TRL 2 occurs once the basic principles have been studied and practical applications can be applied to those initial findings.
Once active research and design has begun, a technology is raised to TRL 3. It is common that during TRL 3, a proof-of-concept model is constructed. Once the proof-of-concept technology is ready, the level is raised to TRL 4. TRL 5 is a continuation of TRL 4 but must undergo more rigorous testing than technology that is at TRL 4. Once these more strenuous tests are complete, the technology may advance to TRL 6. A TRL 6 technology is defined as being a fully functioning prototype or representation model.
To reach TRL 7 a technology needs to be demonstrated in an operational environment. TRL 8 technology has been tested and proven it is ready for implementation. Finally, once a technology has been validated and successful in an operational environment, it can be called TRL 9.
MODERN USE OF TECHNOLOGY READINESS LEVELS
The European Space Agency embraced the TRL scale in the mid-2000s. In 2010, the European Commission recommended research and innovation projects funded by the EU to embrace the scale. TRLs were subsequently used by the EU Horizon 2020 program. In 2013, the TRL scale was acclaimed by the ISO 16290:2013 standard.