technology commercialization at georgia tech

© 2008, Georgia Institute of Technology

Technology Commercialization

at Georgia Tech

Stephen FlemingChief Commercialization Officer

<[email protected]>

mailto:[email protected]

mailto:[email protected]

7/14/08 Technology Commercialization at Georgia Tech 2

Stephen Fleming

• 13+ years venture capital investment experience.–General Partner, Alliance

Technology Ventures.–18 investments as lead

investor, 15 exits to date.

• BS, Physics, Ga. Tech (Highest Honors).• 15 years operational experience at AT&T Bell Labs,

Nortel, LICOM (venture-backed startup).–Supervised startups developing first ADSL modem and one of the

first cablemodems in early 1990s.

• Multiple advisory boards at Georgia Tech; endowed chair in telecomm; occasional instructor in MBA entrepreneurship program.

• Strong regional technology leader.


Organization Chart


U.S. Economic Challenges

• Globalization, “Flattening of the world” means the U.S. can’t compete as in the past.

• Innovation is essential to creating revolutionary products & processes

• 2005 Georgia Manufacturing Survey underscored importance of innovation.

• Companies competing on innovation:–Reported return on sales 50% higher than

others–Paid wages 30% higher than others–Were 40% less likely to lose work to

outsourcing than others


“Innovation U.” Report

“Virtually every combination of industry relationship or economic development activity can be found at Georgia Tech, and in a very real sense, the university is an operating partner with Georgia state government in the implementation and management of a variety of technology-focused initiatives. Perhaps more than any other research university in North America, economic development is an integral, critical component of the mission of the Georgia Institute of Technology, and this has been true from its very inception.”

–Southern Growth Policies Board, 2002


Building an Ecosystem

41

Nutrients

Signs of Life

GrowthIncubation

Renewal

NaturalSelection


National Rankings

U.S. News & World Report, America’s Best Engineering Graduate Schools 20081. Massachusetts Institute of Technology

2. Stanford University

3. University of California — Berkeley

4. Georgia Institute of Technology

5. University of Illinois — Urbana-Champaign

6. California Institute of Technology (CalTech)

7. Carnegie Mellon University

8. University of Southern California (USC)

9. Cornell University

tie University of Michigan — Ann Arbor

http://grad-schools.usnews.rankingsandreviews.com/grad/eng/search




National Rankings

U.S. News & World Report, America’s Best Engineering Graduate Schools 2008

Strength across the board!

Aerospace #4

Biomedical #2

Chemical #13 Industrial #1 17 years!

Civil #6 Materials #8

Computer #7 Mechanical #7

Electrical #6 Nuclear #9

Environmental #6 Petro/Mining not offered

7/14/08 Technology Commercialization at Georgia Tech

GT Research Distribution

Approx. half a billion dollars total R&D on campus for FY2008!

9

College ofEngineering

GTRI

College ofSciences

Research Centers

College ofComputing

Other


Nutrients

• Recruiting research talent—worldwide

• Georgia Research Alliance (GRA)–Eminent Scholars–Facilities/equipment

• Reinventing academic disciplines–College of Computing–Emory/GT Biomedical

Engineering Dept.


Signs of Life

• Emphasis on interdisciplinary research

• Research centers –Over 100 on campus,

from textiles to nanoscience

–MARC, MiRC, GEDC, Broadband Institute, GTEC Tissues, etc.

• GRA Phase Zero awards

# patents1 390 University of California (system)2 136 Massachusetts Institute of Technology3 101 California Institute of Technology4 90 Stanford Universitytie 90 University of Texas5 77 University of Wisconsin6 71 John Hopkins Universitytie 71 University of Michigan7 64 University of Florida8 57 Columbia University9 43 Georgia Institute of Technologytie 43 University of Pennsylvania10 41 Cornell University


Patent Ranking

U.S. Patent & Trademark Office, Calendar Year 2005 (last year available)


Natural Selection

• Intellectual property protection (OTL)

• VentureLab–Business plan–Management–Money

• GRA Phase I and II awards

• GT Edison Fund• SBIR Assistance

Commercialization Services


Intellectual Property Goals

• Reward the faculty for creation of valuable IP• Support innovation

• Strengthen research programs• Strengthen global reputation• Attract top-quality faculty & students• Fulfill tech-transfer obligations

• Add value to intellectual property• Strengthen industry relationships• Create successful entrepreneurs• Strengthen local technology community


Income Distribution

15

0%

33%

66%

100%Fir

st $

25

00

$500K $1M+

Georgia TechResearch Corp.

Inventor(s)

Academic Unit(s)

$2,500


Converging Challenges

• Increasing number of disclosures drives overall demand

• “The World is Flat” –Increasing GT demand for overseas filings

• Drives patent cost from ~$15K to ~$100K

–Increasing competition for research partnerships from overseas universities

• Increasing ratio of biotech at GT (requires overseas protection)

• Potential USA shift from “first to invent” to “first to file”

• USTPO proposed limitations on claims, etc.


IP Mgmt./Evaluation

InventionDisclosures

Dept. Chairs /Deans / GTRI

TechnologyEvaluation

Path?

Rights toFaculty?

Initiate IP Prot.

Need more information / development

MarketEvaluation

TechnologyAnalysis

ProtectIP?

MarketAnalysis

PatentApplication

ExternalCounsel

$

...continued

Export Control

Industrial Contracts

Screens

Responsibility

GTRC

EI2 / CS

$ $


IP Business Development

Rights toFaculty?

VentureLab Tech. Marketing

Path?

Startup / Spinout Industrial License

Consulting

GeorgiaResearchAlliance

$

Licensee? Rights toFaculty?

Funding& CEO?

Term Sheet Negotiation

Rights toFaculty?

LicenseNegotiation

ComplianceReview

StandardTemplates

...continued

Responsibility

GTRC

EI2 / CS

MarketingWhite Paper

External Counsel

BusinessPlan

Conflict ofInterest Plan

StandardTemplates

COI Review


Royalty Collection Monitoring

Compliance / LitigationPatent Maint. & Defense

IP Licensing/Compliance

License

LicenseNegotiation


Startup Formed

Incubator?

SuccessfulStartup

ATDC orEmTech Bio

IndustrialPartner

Responsibility

GTRC

EI2 / CS

Distributionof Payments

Inventor(s)

Academic Department(s)

GTRC

PortfolioLIquidation

$

Royalties & etc.Equity


IP Business Development

VentureLab

Rights toFaculty?

Tech. Marketing

Path?


Consulting

GeorgiaResearchAlliance

$

Licensee? Rights toFaculty?

Funding& CEO?

Term Sheet Negotiation

Rights toFaculty?

LicenseNegotiation

ComplianceReview

StandardTemplates

...continued

Responsibility

GTRC

EI2 / CS

MarketingWhite Paper

External Counsel

BusinessPlan

Conflict ofInterest Plan

StandardTemplates

COI Review


VentureLab

• Founded September 2001–Now a model for other universities–Part of Enterprise Innovation Institute

• Reports up through Office of the Provost

• Faculty-focused process –Risk identification and mitigation–Venture-backable innovations

• Goal: Successful startup companies based on Georgia Tech research


VentureLab

MarketMilestonesMeetingsManagementMoney

22


Market: Business Plan

• Classic startup questions—Who, What, Where, When, Why, How:–Who is the customer?–What is the pain they are trying to eliminate?

• Candy, vitamin, or painkiller?–Why is your technology the right answer?–Where (geographically) are your customers?–How much are they willing to pay?–When will effective competition emerge? –What are the growth trends?–What is the right sales channel?–Who are potential partners? Exit through M&A?

23


Milestones: Business Plan

• It’s far too easy to focus on the technology promise, and ignore the “details”:–When will you have a prototype?–When will you have a beta test?–When will you have a paying customer?–How many people do you need to hire?–When will you hire them?–How much money do you need at first?–When does that run out?–How much will you need after that?–How do you know when you are winning?

24


Meetings

• Launching a startup company is a team sport!• VentureLab can introduce you to:

25

Angel investors

Venture capitalists

Government grantors

Business advisors

Potential employees

Beta customers

Corporate partners

Regulatory experts

Bankers

Accountants

Corporate lawyers

Patent lawyers

Recruiters

Marketers

Consultants

and more...


Management

26


Dealing with Universities

• Teaching a professor how to be an entrepreneur is like teaching a cat to swim:–It can be done.–You will lose blood.–You’ll never be satisfied with the results.–You will annoy the cat.

• Different motivations, different priorities, different views of “proper procedure”

• Best bet: Recruit an entrepreneur to work with the professor. 1+1=3.

27


Money

28

Assistance with small-business grants from eleven Federal agencies.

Grants and loans to startups based on Georgia university research.

Equity investments in startups with a connection to Georgia Tech.


Georgia SBIR Assistance

• Small business R&D funding available from eleven Federal agencies–NASA, DOD, DOE, NIH, EPA, etc.

• Grants, not loans or equity!• For help with SBIR and STTR process, visit <http://www.innovate.gatech.edu/sbir>.

• Up to $850K availableacross two phases ofdevelopment

29

http://www.innovate.gatech.edu/sbir

http://www.innovate.gatech.edu/sbir


Georgia Research Alliance

• Recruiting Eminent Scholars from all over the world to Georgia

• Investing in university capital equipment–Over $600 million in last 15 years

• Innovation grant program–Phase 1: up to $50K to university R&D–Phase 2: up to $100K to university (must be

matched—equity, SBIR, sale of services, etc.)–Phase 3: up to $250K loan to company (must be

repaid upon success or leaving Georgia)

30


GRA Matching Funds

•Provides up to 4:1 non-dilutive leverage for initial outside investment:

Equity, Other Grants, etc.

Phase I $50K grant to university

Phase II $100K validation investment

$100K matching grant to univ.

Phase III $250K loan

Total $100K $400K


GRA Venture Fund

• Approved by Georgia legislature in April ’08.• State invests $7.5M as anchor to $30M+

early-stage venture fund.• State tax credit established as incentive to

private (3:1) investors.• Can invest in equity or debt in VentureLab

graduate companies.–University intellectual property–VentureLab business discipline

• Target: $1M+ per deal.

32


GT Edison Fund

• Newly-launched program to encourage invention and innovation.

• Funded by charitable gifts from GT alumni, foundations, friends of the university.

• Early-stage equity prior to angel or venture capital investments.

• Still primarily in fundraising mode, but has made a single initial investment (4Q2007).

33

✓7/14/08 Technology Commercialization at Georgia Tech

VentureLab

MarketMilestonesMeetingsManagementMoney

34


VentureLab Projects (current)

http://www.gtventurelab.com






VentureLab Graduates

May 2008


Incubation

• Advanced Technology Development Center (ATDC)

• GRA Phase III loans• Ga. Seed Capital Fund• Minority Business

Enterprise Center

• National VC attention• Centers of Innovation

–Statewide tech areas

Entrepreneur Services


ATDC Member Profile

• Protecting the brand by being selective in admitting new members.

• Historically, only 1 out of every 9 applicants is accepted.

• Early stage company with unique technology differentiator.

• Product-based (no service companies).• Demonstrate a competitive advantage and high

growth potential.• Attractive to external financing.• Coachable, community-oriented founders.


ATDC Offerings

Consulting –Strategic business advice

Community–Interaction with other entrepreneurs

Connections–Connections to people and resources

Centre –Facilities designed for startups

Credibility –Instant recognition


Thriving Community

Multiple technology centers.

Anchored by: Atlanta, Research Triangle, Florida.

Pockets of innovation: Universities, Federal R&D centers.


Technology in Southeast

Biggest challenge: Lack of local venture capital.


Attractive Targets in SE

Silicon Valley

NewEngland

NY Metro

Southeast8%

Texas

SoCal

Midwest

Other

Source: MoneyTree Survey, 1998-2003

• Local startups have demonstrated consistent potential to attract investment dollars.


VC in the Southeast

1995 1996 1997 1998 1999 2000 2001 2002 2003

Source: PWC MoneyTree

Quar

terly

VC I

nve

stm

ent

($Bill

ions)

Venture capital investments in the U.S., by quarter

2004 2005 2006 2007

5

10

15

20

25

30

Total Venture Capital Investment

Investment in the Southeast U.S.


VC in the Southeast

1995 1996 1997 1998 1999 2000 2001 2002 2003

Source: PWC MoneyTree

Quar

terly

VC I

nve

stm

ent

($Bill

ions)

2004 2005 2006 2007

5

10

— off scale — Total Venture Capital Investment

Investment in the Southeast U.S.

Southeast: steady state of less than $500M/quarter


Regional Capitalization

• Local venture firms do not offer adequate leverage for local R&D.

0

5

10

15

20

25

30

35

40

45

Bay Area Northeast Southeast

University R&D ($B)

Venture Investment ($B)

1.6 ×

9 ×

21 ×

Substantial room for improvement!

Source: Venture Economics and the Center for R&D


Growth: Industries

• Industry Services–Business consulting for

competitiveness, quality, lean mfg, etc.

–Environmental, energy–Gov’t procurement–Strategic business

services & analysis• Designed to help

Georgia companies compete in the global marketplace

Industry Services


Helping Mature Industries

Simplex Nail

…with Ga Tech Ind. Services:

• Cut inventory costs by 52%

• Resumed production in all of its product lines

• “We are alive because of it. Our cash flow all around has improved and our production is more efficient.” – Plant Manager Jeff Kurtz


Growth: Communities

• Community Policy & Research Services

• Bringing innovation to local and state government entities

• Technology-based research and policy projects –Local economic

development–Balanced growth–SustainabilityCommunity Policy & Research

Services


Cycle of Renewal

• Serves as a bridge to Georgia Tech services and resources–Expand interaction with

key local, state, national and international corporations

–Seminars, workshops & technology briefings

–Access to test beds, research labs

Strategic Partners Office


Cycle of Renewal

• Successful companies–Sponsoring research–Hiring GT graduates–Spinning off new

companies

• Successful graduates–Charitable giving–Angel investment–Mentoring

• More nutrients for the ecosystem!

Klaus Advanced Computing Bldg.


Building an Ecosystem

Nutrients

Signs of Life

GrowthIncubation

Renewal

NaturalSelection


For Further Information

Stephen FlemingChief Commercialization OfficerGeorgia Institute of Technology

Personal blog: <http://www.academicvc.com>

<[email protected]>

<http://innovate.gatech.edu/commercial/>

Project database and staff blog: <http://www.gtventurelab.com>

(404) 385-2360

Download this file at <http://www.gtventurelab.com>

http://academicvc.blogspot.com




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