ml commercialization with venture funding

8/14/2019 ML Commercialization With Venture Funding

1/21

MIT Media Lab

Research Commercialization

Options for Venture SponsorshipRay Garcia

[email protected]


2/21

Goal

How to best leverage the ML assets to help facilitate

having its research artifacts get adopted either

commercially or integrated into beneficial public

services. Commercialization is a strong signal to the

sponsoring companies that the research results in

benefits to those who seize the opportunities early.

Engaging the VC community in Entrepreneurship at

MIT Media Lab


3/21

Desired outcomes

Enhanced learning experience for the students

Exploit all the resources at MIT for student performance

Realization of students/faculty passion to change the world

Sponsors desire to create breakthrough products and services Faculty/Researchers/Students desire to form commercial

enterprises

ML goal to retain, increase and acquire sponsorship

ML diversifying its sponsors to include Venture Capitalist Increase PR for ML to maintain reputation

Compliance with MIT Office of Technology transfer process


4/21

Constraints

Multi-constituency interest needed to be serviced

without compromising on a few essential core values

at the ML.

The commercialization should add to the learningand research environment.

The research commercialization should increase

relevancy and provide insights for further

development

VC has expectations of measurable results


5/21

Constituencies

Faculty

Research Scientist

Students

Alumni

Media Lab

MIT

Sponsors corporate, government, ventures

ML/MIT spin-off companies

Public Good


6/21

Challenges

Gap between research and products needs experience from

people who understand both and know how to convert

IP Ownership concerns need to be minimized to avoid

unnecessary complications until appropriate

Need early active sponsor involvement in the research

through the commercialization phase to act as catalyst

Funding and opportunities for large scale real-world context

for research opportunities to test commercial viability

Cultural Gaps between academia and commerce

Differing incentive models for academia and commercial

efforts need to be segmented not mixed


7/21

Candidate Options

Expand commercialization activities within the

existing Media Lab and MIT context

Sponsors users group

Sponsors research showcase to engage ML Expand/diversify sponsors with alliance categories

Encourage ML participation in 100k, Desphande, E-Club

and other MIT entrepreneurial activities

Tap alumni network of spin-offs

Engage the Venture Community

Funding entrepreneurship and commercialization


8/21

Build Leverage

Much of the ingredients for rich commercialization activity

already existing with the Media Lab and the Sponsors with all

the supporting programs at MIT

Sponsors have innovations programs and research

collaborations but these remain largely disconnected from the

ML research and should be further integrated

The gap exist in the high risk early stage nature of most

research used to launch a commercial entity, this gap remains

a void and obstacle for the ML and Sponsors to collaboratethus having more innovation pipeline tracked into the

sponsoring companies


9/21

ML & Sponsor Proposal

Establish an ongoing forum between sponsors

innovation and Media Lab constituents that have

research they believe is candidate for

commercialization and jointly chart out activities totest and develop the products within the Sponsors

company labs or market

Activate the Living Labs as a marketing commercial

test bed with research data being generated as a by-product not as the primary objective.


10/21

Catalyst

When ML Sponsors opt-out of commercialization

participation the local early stage Venture Capital

community should be engaged

An InnoVenture Lab should be created for VentureCapital Sponsorship of Post-Grad/Doc Fellowships in

technology entrepreneurship within the ML

Sponsors provide the potential market channels for

the commercialized products once they are proven

using Venture high-risk funding


11/21

InnoVenture Lab

Joint Lab with Sloan School, leverage entrepreneurship support at MIT

Entrepreneurship course requirements as pre-requisite (Sloan)

Proposals for ML research commercialization (product and business model plan)would be submitted on a competitive basis.

Only graduating MS and Ph.D. can apply as post graduate fellowship

Must have proof demonstration to enter and valid market test possible within 12

months Seed investment provided for market realization of the research

Small teams of 2 3 people to ready the product for full investment

Team of mentoring advisors with corp/start-up/academia experience who haveformed technology companies, (MIT Venture Mentoring Service)

C-Corp structure to address ownership via stock vesting period

VC reserve for 1st round full investment for successful spin-out Tech Licensing Office involvement and supporting activity throughout ML

Sponsors have option to participate in funding round or early exit licensing atcommercial terms if product proves to be market viable and VC opts-out of nextround investment


12/21


13/21

InnoVenture Feasibility

VC Event to explore feasibility jointly with ML

Closing the gap between research and commerce

Active Research presentations

Innovation processes

Past Commercialization case stories

Idea Storms and Streams

Research Commercialization Outlook


14/21

InnoVenture Structure

Venture Syndicate

Angel and Venture Capitalist (potential 1st round funding)

Corporate Strategic investors (potential acquirers)

Mentor network (commercialization process)

Legal Firm (entity governance)

Funding allocation structure

ML Sponsorship (what is done today with corp. sponsors)

Fund Entrepreneurship programs

Fund Contest [MIT 100k example]

Fund PostDoc Fellowships in Entrepreneurship

Funding grants to small teams with 5, 10, 20K amounts

Fund IP process, tech licensing and patent filings


15/21

Venture Commitment

Assuming a threshold of quality submittals VC discretion on

number, size and composition of funding

3 5 million over three years

1 Million of fellowship awards per year

2 Million of 1st round funding within 3 years

Lead investor in the 1st round

Generous stock pool with incentives for all constituents

VC option to fund IP filing or license if appropriate VC network to help fill out the business launch team

Target of 5 VCs in a consortium for total of $15 - $25 Million


16/21

Governance

Corporate entity

Board with By-Laws

Affiliation or Alliance with MIT but not part of the Media Lab

entity. This is set-up as a consortium for profit entity

Advisory board of vested participants

Shareholder voting

Spin-out from ML InnoVenture Entity after first year

Innoventure maintains small stake in spin-out


17/21

Results

The InnoVenture lab would remove the risk gap for Sponsors

and facilitate a clear path of commercialization for ML

research that has reached product feasibility

For each VC sponsor 2 companies would have been

bootstrapped through the process within 3 years with many

more attempting to discover viable business models for ML

research

As successful cases emerge ML Sponsorship from VC and

Corporate Sponsor should grow each year

InnoVenture Lab appreciates in value quickly with its shares in

spin-offs returning value until it becomes its own endowment

at which point it is self funded


18/21

Resolution

New source of Funding for ML consistent with its mission and

history

All constituents may participate in the InnoVenture Lab and

share in the rewards through the stock plan, including

Sponsors if they contribute funding or resources

Venture expertise is made readily available to the ML and

Sponsors that remove risk of early stage businesses

ML is able to clearly demonstrate one of its benefits to

Sponsors and continue to attract the best students and faculty


19/21

Next Steps

Explore ML interest and feasibility

Stakeholders feedback and model revisions

Sloan School engagement

Survey of ML research suitable for commercialization withtiming and interest

Team and committee formation

ML agreements and entity structure

Local VC community feedback Marketing and Business Dev


20/21

Candidate Investors

Venture Angels

commonangels.com

keiretsuforum.com (350 members)

ecoastangels.com

launchpadventuregroup.com

newyorkangels.com

1st Round VCs in Boston

Highland Capital hcp.com

sigmapartners.com Polarisventures.com

Center for Venture Researchat University of New HampshireSmall Business Association

estimates 260,000 Angels activein US funding +55,000 smallcompanies a year for a total of+20 Billion as compared to +28Billion a year from formal VCs

VC Discovery Tools:angelsoft.netthefunded.com

ncet2.org National Council ofEntrepreneurial Tech Transfer


21/21

References

MIT Entreprenuership Center http://entrepreneurship.mit.edu

MIT Enterprise Forum http://enterpriseforum.mit.edu

MIT 100k Contest http://www.mit100k.org

MIT Tech Licensing Office http://web.mit.edu/tlo/www

MIT Lemelson

http://engineering.mit.edu/education/special_programs/lemelson.php

Kauffman Foundation Feb 09 Report Entrepreneurial Impact : The Role of MIT

http://web.mit.edu/newsoffice/kauffman-report2009.pdf

Kauffman Foundation http://kauffman.org

Tech Stars http://www.techstars.org

Ycombinator.org http://ycombinator.org/about.html

Idealab http://www.idealab.com/about_idealab

National Venture Capital Association Yearly Report

http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=

446&ItemId
http://entrepreneurship.mit.edu/http://enterpriseforum.mit.edu/http://www.mit100k.org/http://web.mit.edu/tlo/wwwhttp://engineering.mit.edu/education/special_programs/lemelson.phphttp://web.mit.edu/newsoffice/kauffman-report2009.pdfhttp://kauffman.org/http://www.techstars.org/http://ycombinator.org/about.htmlhttp://www.idealab.com/about_idealabhttp://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=446&ItemIdhttp://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=446&ItemIdhttp://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=446&ItemIdhttp://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=446&ItemIdhttp://www.idealab.com/about_idealabhttp://ycombinator.org/about.htmlhttp://www.techstars.org/http://kauffman.org/http://web.mit.edu/newsoffice/kauffman-report2009.pdfhttp://web.mit.edu/newsoffice/kauffman-report2009.pdfhttp://web.mit.edu/newsoffice/kauffman-report2009.pdfhttp://engineering.mit.edu/education/special_programs/lemelson.phphttp://web.mit.edu/tlo/wwwhttp://www.mit100k.org/http://enterpriseforum.mit.edu/http://entrepreneurship.mit.edu/

ml commercialization with venture funding

Documents