- Patent AttorneyBond, Schoeneck & King, PLLC
- MemberSeed Capital Fund of Central New York
- Tech-Transfer Challenges and Opportunities
- Current state of Funding in New York
- III. Snapshot of the Univ. of Utah Model
2. Bridging the Technology Commercialization Gap R&D
Institutions Mission Commercial Sector Basic Research Applied
R&D Business Development Full-Scale Commercialization
Source: Technology Commercialization OfficeUniversity of Utah 3.
Opportunity & Challenge
- US research Universities are an economic engine
-
-
- conduct >2/3 of all basic research
-
-
- are primary source of technology
-
-
- produce >400 start-ups per yr
- Universities vary dramatically in their ability to convert
research into results.
- Majority of Tech Offices cant hit break even
- Pressure to produce results linked to Federal and State
sponsored economic development
- Companies and VCs still find it difficult to engage
Universities in innovation development
Source: Technology Commercialization OfficeUniversity of Utah 4.
WHATS REALLY HAPPENING?
- 2006--$32.5B in State Funds spent on building technology
ecosystems from US Universities with broken infrastructure
-
-
- $116 million in annual patent costs
-
-
- 70% of patents will go unlicensed
-
-
- 60% of TTOs arent even at breakeven
-
-
- Avg revenue of ~$460,000 per office
-
-
- Avg of 2.8 start-ups per year
-
-
- 80% of venture funding targeted to 12 metro areas
Source:Technology Commercialization OfficeUniversity of Utah 5.
The Case for University Spin-Outs
- 1. More likely to have large outcomes
- Go public at 114x the rate of other startups
2.Less likely to fail Rate of Going Public Failure Rate
Source:Technology Commercialization OfficeUniversity of Utah .07%
6. Start-up Activity Source: Technology Commercialization
OfficeUniversity of Utah 7. Number Start-ups: US Universities -
2007 Source: Technology Commercialization Office University of Utah
8. Start-up Activity (by industry sector) Source: Technology
Commercialization Office University of Utah 9. CRITICAL
QUESTIONS
- Can Universities drive economic development?
- Can they effectively serve their communities?
- Can you build a model that can be replicated?
- Can you stimulate continued innovation?
- Can you build business in the confines of a non-profit?
- Can you generate a long term equity structure?
Source: Technology Commercialization Office University of Utah
10. Most Challenging aspects for TCOs Source: Technology
Commercialization OfficeUniversity of Utah
- Access to CEOs/executive management talent
- Access to seed or venture funding
- Access to start-up resources
- Ability to create university start-ups in their
environment
11. Seed Capital hasnt recovered Source: Technology
Commercialization Office University of Utah 12. Traditional Funding
Continuum VALUATIONS INCREASE BUSINESS RISKS DECREASE MENTORING
NEEDS DECREASE $5M-20M $500K-5M $50K-500K >$20M Sweat Source:
Technology Commercialization OfficeUniversity of Utah SEED/START-UP
FUNDING DEVELOPMENT FUNDING EXPANSION FUNDING OPPORTUNITY
DEVELOPMENT CONTINUED GROWTH ANGELS,FOUNDERS & SEED FUNDS
VENTURE CAPITAL GROWTH EQUITY PE - PUBLIC MARKETS 13. Strong need
for a new model Opportunity For Alignment Source: Technology
Commercialization OfficeUniversity of Utah Stage Pre-Seed
Seed/Start-Up Funding Gap between $100,000 and $2,000,000 Early
Later Source Founders, Friends and Family Individual Angels Venture
FundsInvestment $25,000 to $100,000 $50,000 to
$150,000$2,000,000/$5,000,000 and up 14. Information courtesy of,
and used with permission from, Excell Partners, Inc 15. Information
courtesy of, and used with permission from, Excell Partners, Inc
16. Information courtesy of, and used with permission from, Excell
Partners, Inc 17. Information courtesy of, and used with permission
from, Excell Partners, Inc 18. Information courtesy of, and used
with permission from, Excell Partners, Inc 19. Information courtesy
of, and used with permission from, Excell Partners, Inc 20.
Information courtesy of, and used with permission from, Excell
Partners, Inc 21. 50/50 Information courtesy of, and used with
permission from, Excell Partners, Inc 22. Information courtesy of,
and used with permission from, Excell Partners, Inc 23. Information
courtesy of, and used with permission from, Excell Partners, Inc
24. TAKE HOME POINTS
- NYS isnotthe hub of venture activity that some might think
- NY City VCs have not invested much in their own state
- The problem for seed-stage start-ups is growing
- *Are the companies in NYS not worth investing in?
- *Are seed stage investments in NYS so low that we cannot feed
thepipeline for later stage investments?
- *Do we have a brain-drain problem?
25. Where do Tech Transfer Offices Start?
- Know what you do best-do IT
- Add Value in Every Transaction
- Support all Phases of Start-Up Development
- Identify High Value Collaborative Research
26. The Initial Want List
- Build a community based fund
- Have the follow-in funders at the table
27. University Alignment 28. New Company Formation Source of
Equity Funds Typical Year 29. Angel Organizations:
-
- 70% of angel groups leave investment decisions up to the
individual members
-
- 23% of the angel groups invest by majority group decision
-
-
- Of those that invest by majority decision, 90% are structured
as LLCs, supporting previous discussions that the LLC legal
structure appears to be the preferred group investment vehicle
-
- 7% of angel groups invest through investment committee
decision
-
- No responding angel group required unanimous decision for
investment
- Source: Center for Venture Research, University of New
Hampshire 2005 Angel Organization Survey
30. Reasons For An Angel Organization
- Greater investment clout from combined dollars
- Education: formal and informal
31.
- Due diligence:venture capital-style due diligence pays off
- Experience:engaging individual with direct industry
experience
- Participation:High participation is interacting with the
company 1 or 2 times per month, Low is 1-2 times per year
1 HIgh due diligence was defined as > 20 hours
spentSource:Kauffman Study: Returns to Angel Investors in Groups ,
2007 Average Return Impact High 1due diligence: 5.9X Low due
diligence: 1.1X High experience vs. low experience nearly 2X
improvement:High participation: 3.7X Low participation: 1.3X
32.
- Strategies for secondary cities:
- Strengthen Clusters and Networks Use local groups and virtual
organizations to bring together investors, entrepreneurs,
researchers and other parties to establish formal and informal
relationships.
- Encourage a Continuum of Capital Support local angel
capitalinvestors who can nurture early-stage companies
- Investment Creativity Seek out alternative models of
investment
- Enhance Accessibility Create policies and programs to support
entrepreneurship
Source: www.icic.org - 2007 The 10 highest-performing secondary
cities in the U.S. (ranked by number of private equity deals per
city) are (1) Boulder, Colo., (2) Salt Lake City, (3) Westborough,
Mass., (4) Ann Arbor, Mich., (5) Norwalk, Conn., (6) Providence,
R.I., (7) Southborough, Mass., (8) Stamford, Conn., (9) Melbourne,
Fla., and (10) New Haven, Conn. 33. Post- Bubble Seed Capital
Source: Venture Source, NASVF 34. Why a Venture - Seed model is
critical
- A great investment committee can:
-
- Has the follow-on funding available
-
- Works full time fund manager
-
- Help sober up an entrepreneur art to saying no
-
- Provide necessary Board and mentor roles
-
- Provide some unrestricted capital
-
- Encourage entrepreneurship
35. Lessons Learned
-
-
- No good deed goes left unpunished
- Business diversity the market knows
- Dont focus on the Univ. needs-community needs also
important
- Consider the economicsitmustwork!
36. SCF/CNY invests in and helps guide early stage companies in
Upstate New York.Our goal is to create wealth for investors and
assist with the regions transition to a successful, high-tech,
high-growth economy. www.scfcny.com EXCELL PARTNERSRANUVANYBFLO
ANGELSCVFBINGHAMTON OTTKAUFMANN FOUNDATIONSIMON SCHOOL ..