From Innovation to Industry Hosted by: School of Biological Sciences Office of Technology Alliances GSM Center for Entrepr...
Thank You to Our Sponsors:
All Conference Attendees  Will Receive this CD: Introduction Program Speakers Presentations Sponsors Resources for Start-U...
FOUR REASONS TO BE OPTIMISTIC ABOUT START-UPS  AT UCI
OPTIMISM FOR START-UPS #1 Venture investing is coming back
Biotechnology and Medical Device  Venture Investing in 2003 *  Data from the PricewaterhouseCoopers - Thomson Venture Econ...
OPTIMISM FOR START-UPS #2 Big Pharmas  must  fill their pipelines
Top Ten Selling Drugs in 2003 <ul><li>Total 2003 Sales - $ 40 Bn  </li></ul><ul><li>Percent of Sales off Patent by 2010 – ...
Substantial Revenues at Risk Due to Patent Expiry 2009-2013 2003-2008 % % % % % %
OPTIMISM FOR START-UPS #3 The rewards for success can be great
Eyetech Pharmaceuticals:  A Successful Deal with Pfizer <ul><li>Since its inception in 2000, Eyetech Pharmaceuticals has: ...
OPTIMISM FOR START-UPS #4 UCI has the experience and the capability to help start companies
 
UCI Start-Up Company Activity <ul><li>30 companies created, 23 still active  </li></ul><ul><li>242 jobs created, 202 of wh...
New Drug Discovery Center Under Early-Stage Development Mission is two-fold:  1.  To promote transdisciplinary efforts in ...
Start-Up Companies, the University  & the Faculty Entrepreneur <ul><li>An Overview Larry Cohn, Partner Stradling Yocca Car...
OVERVIEW <ul><li>What Technology is Suitable for a Start-Up? </li></ul><ul><li>Alternatives to Forming a Start-Up </li></u...
What Technology is Suitable for a Start-Up?   <ul><li>A great invention does not necessarily make a successful business  <...
Alternatives to Forming a Start-Up  <ul><li>Publish and put in the public domain  </li></ul><ul><li>Out-license through th...
Faculty Considerations <ul><li>Why commercialize your invention? </li></ul><ul><ul><li>Professional recognition  </li></ul...
Faculty Considerations:   (continued) <ul><li>Impacts on the individual inventors and founders </li></ul><ul><ul><li>Do yo...
Faculty Considerations:   (continued) <ul><li>Impacts on the individual inventors and founders (continued) </li></ul><ul><...
Cost <ul><li>Time and lots of it companies eat up as much time as is available…. </li></ul><ul><li>ATAD Airline travel add...
Academics v Biotech <ul><li>No evident reason that research productivity should suffer. </li></ul><ul><ul><li>more outside...
Academics v Biotech <ul><li>The major balance problem arises from having two lifestyles. </li></ul><ul><ul><li>Many, perha...
Disclosing and Assigning Inventions  <ul><li>Signing Patent Acknowledgement is a condition of UC employment  </li></ul><ul...
Disclosing and Assigning Inventions (Continued)   <ul><li>University will seek to commercialize inventions while protectin...
Starting and Developing the Company
Shaping and Selling the Idea “…. Truth! What is truth ? ….”   P. Pilate ( 0030 AD) <ul><li>Change your mindset </li></ul><...
Who is to be involved?  <ul><li>Academic colleagues do not always make the best business partners  </li></ul><ul><li>Busin...
The Leonardo Principle <ul><li>Common Business solution: hire a few da Vinci’s </li></ul><ul><li>Tech solution: buy a stat...
The Business Plan <ul><li>Technology hurdles  </li></ul><ul><li>Regulatory hurdles  </li></ul><ul><li>Competitive landscap...
Securing Intellectual Property Rights  <ul><li>In life sciences, patent rights are essential.  </li></ul><ul><li>Invention...
<ul><li>Stage 1: Option to acquire license – useful to “lock-up” rights while organizing and seeking financing </li></ul><...
<ul><li>Stage 2:  After organizing and concurrently with seeking initial financing, finalize license from the university <...
The Start-up Landscape Early Stage Company License Rights Up Fronts, Milestones, Royalties Invention Information Financial...
The Inherent Tensions <ul><li>UNIVERSITY </li></ul><ul><li>Create and propagate knowledge for the public good </li></ul><u...
UCI/Start-Up Collaborative Research <ul><li>Implemented through a research contract </li></ul><ul><li>High leverage for th...
A”Win-Win-Win” Strategy  for Industry/UC Partnering & Overhead - Royalty Shares UNIVERSITY PRINCIPAL INVESTIGATOR SPONSOR/...
Finding Initial Backers <ul><li>ACTIONS </li></ul><ul><li>PATENTS…. shape the idea before bringing it to the university le...
Economist articles >> Defense companies >> VCs >> Meno Corp >> Synaptics The Press Is a Whimsical But  Sometimes  Useful C...
New York Press Really Counts Because That’s Where the Money Is   The New York Times Prompts the Formation of a Second Comp...
But Be Careful: The Press can Turn On You In a Flash The LA Times several years later.
Finding Initial Backers <ul><li>ATTITUDES </li></ul><ul><li>Be warned: Raising money is probabilistic …….chance and histor...
Financing the Start-up  <ul><li>Develop the business model and reflect it in a well drafted business plan  </li></ul><ul><...
Financing the Start-up:   Financing Sources <ul><li>Boot-strap with personal internal resources  </li></ul><ul><ul><li>Max...
<ul><li>Government grants </li></ul><ul><ul><li>Give up little control </li></ul></ul><ul><ul><li>Spend a lot of time writ...
Financing the Start-up:   Financing Sources <ul><li>Incubators </li></ul><ul><ul><li>Short-term solution only  </li></ul><...
Financing the Start-up:   Financing Sources <ul><li>Corporate venture capital/strategic alliance </li></ul><ul><ul><li>Wid...
Setting Up the Company <ul><li>1st strategy: build the company and the products will follow </li></ul><ul><ul><li>IPO abou...
Setting Up the Company <ul><li>2nd strategy: build the product (1 or 2) and the company will follow </li></ul><ul><ul><li>...
Setting up and Operating the Start-up  <ul><li>Academic or professional management.  </li></ul><ul><li>Relationships with ...
Exits <ul><li>Acquisition  </li></ul><ul><ul><li>Role of the faculty entrepreneur in selling the company  </li></ul></ul><...
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Transcript of "Start-Up Companies, the University "

  1. 1. From Innovation to Industry Hosted by: School of Biological Sciences Office of Technology Alliances GSM Center for Entrepreneurship & Innovation June 11, 2004
  2. 2. Thank You to Our Sponsors:
  3. 3. All Conference Attendees Will Receive this CD: Introduction Program Speakers Presentations Sponsors Resources for Start-Ups Hosted by : School of Biological Sciences Office of Technology Alliances Center for Entrepreneurship & Innovation Reports : Start-Up Companies Founded on UCI Technologies Faculty/Industry Partnerships Faculty Handbook UCI Technologies Available for Licensing
  4. 4. FOUR REASONS TO BE OPTIMISTIC ABOUT START-UPS AT UCI
  5. 5. OPTIMISM FOR START-UPS #1 Venture investing is coming back
  6. 6. Biotechnology and Medical Device Venture Investing in 2003 * Data from the PricewaterhouseCoopers - Thomson Venture Economics – National Venture Capital Association Moneytree Study
  7. 7. OPTIMISM FOR START-UPS #2 Big Pharmas must fill their pipelines
  8. 8. Top Ten Selling Drugs in 2003 <ul><li>Total 2003 Sales - $ 40 Bn </li></ul><ul><li>Percent of Sales off Patent by 2010 – 82% </li></ul>2008 $ 2.6 Bn Wyeth Effexor 10 2007 $ 2.7 Bn Merck Fosamax 9 2006 $ 2.8 Bn BMS Pravachol 8 2013 $ 2.9 Bn J&J Procrit 7 2006 $ 3.0 Bn Pfizer Zoloft 6 2006 $ 3.5 Bn Glaxo Paxil 5 2011 $ 4.2 Bn Eli Lilly Zyprexa 4 2007 $ 4.2 Bn Pfizer Norvasc 3 2006 $ 4.9 Bn Merck Zocor 2 2010 $ 9.2 Bn Pfizer Lipitor 1 Year off Patent 2003 Sales Company Drug
  9. 9. Substantial Revenues at Risk Due to Patent Expiry 2009-2013 2003-2008 % % % % % %
  10. 10. OPTIMISM FOR START-UPS #3 The rewards for success can be great
  11. 11. Eyetech Pharmaceuticals: A Successful Deal with Pfizer <ul><li>Since its inception in 2000, Eyetech Pharmaceuticals has: </li></ul><ul><ul><li>Raised $150M of private equity </li></ul></ul><ul><ul><li>Completed IPO (ticker: EYET) raising $146M at $21/share </li></ul></ul><ul><ul><li>Employed over 150 people in 3 states (Boston home office) </li></ul></ul><ul><ul><li>Eyetech recently negotiated a landmark deal with Pfizer: </li></ul></ul><ul><ul><li>Develop & commercialize Macugen™ in all ophthalmic indications, including Age-elated Macular Degeneration and Diabetic Macular Edema. (Phase 3) </li></ul></ul><ul><ul><li>Entails US co-promotion, profit-sharing, R&D funding, ex-US royalties and equity investments of $770M </li></ul></ul>
  12. 12. OPTIMISM FOR START-UPS #4 UCI has the experience and the capability to help start companies
  13. 14. UCI Start-Up Company Activity <ul><li>30 companies created, 23 still active </li></ul><ul><li>242 jobs created, 202 of which are in Orange County and 240 are in California. </li></ul><ul><li>License/option agreements with active start-ups transferred rights to: </li></ul><ul><ul><li>40 issued patents </li></ul></ul><ul><ul><li>84 patent applications </li></ul></ul><ul><ul><li>10 copyrighted works </li></ul></ul><ul><li>UCI Start-Ups have contributed over $30M to UCI : </li></ul><ul><ul><li>$21M in research funding </li></ul></ul><ul><ul><li>$2.8M in patent costs to protect UC-owned inventions </li></ul></ul><ul><ul><li>$5.2M in royalties and fees </li></ul></ul>
  14. 15. New Drug Discovery Center Under Early-Stage Development Mission is two-fold: 1. To promote transdisciplinary efforts in basic drug discovery research 2. To facilitate the validation, optimization and commercialization of potential new drugs discovered through these efforts Champion: Dr. Daniele Piomelli Department of Pharmacology
  15. 16. Start-Up Companies, the University & the Faculty Entrepreneur <ul><li>An Overview Larry Cohn, Partner Stradling Yocca Carlson & Rauth </li></ul><ul><li>The University Perspective David Schetter, Assistant Vice Chancellor Research & Technology Alliances, UC Irvine </li></ul><ul><li>The Faculty Entrepreneur Perspective Gary Lynch, Ph.D., Professor Psychiatry & Human Behavior, College of Medicine, UC Irvine </li></ul>
  16. 17. OVERVIEW <ul><li>What Technology is Suitable for a Start-Up? </li></ul><ul><li>Alternatives to Forming a Start-Up </li></ul><ul><li>Faculty Considerations: Why Commercialize? What Impacts? </li></ul><ul><li>Academics vs Biotech </li></ul><ul><li>Disclosing and Assigning Inventions </li></ul><ul><li>Starting and Developing the Company </li></ul><ul><li>Financing the Start-up </li></ul><ul><li>Operating the Start-up </li></ul><ul><li>Exits </li></ul>
  17. 18. What Technology is Suitable for a Start-Up? <ul><li>A great invention does not necessarily make a successful business </li></ul><ul><li>Two classes of inventions </li></ul><ul><ul><li>Incremental improvements </li></ul></ul><ul><ul><li>Breakthrough or a platform technology </li></ul></ul><ul><li>Start-ups with multiple products/services are more likely to be successful </li></ul>
  18. 19. Alternatives to Forming a Start-Up <ul><li>Publish and put in the public domain </li></ul><ul><li>Out-license through the Office of Technology Alliances </li></ul><ul><li>UCI releases invention – individual out-licenses to an entity </li></ul>
  19. 20. Faculty Considerations <ul><li>Why commercialize your invention? </li></ul><ul><ul><li>Professional recognition </li></ul></ul><ul><ul><li>Doing good for mankind </li></ul></ul><ul><ul><li>Part of the University’s mission as a public research institution </li></ul></ul><ul><ul><li>Financial rewards New area of intellectual pursuit – business </li></ul></ul>
  20. 21. Faculty Considerations: (continued) <ul><li>Impacts on the individual inventors and founders </li></ul><ul><ul><li>Do you want to be a professor or an entrepreneur? </li></ul></ul><ul><ul><li>Inventor’s role in company </li></ul></ul><ul><ul><ul><li>Technology founder - equity interest </li></ul></ul></ul><ul><ul><ul><li>Consultant </li></ul></ul></ul><ul><ul><ul><li>Scientific Advisory Board member </li></ul></ul></ul><ul><ul><ul><li>Management – full-time or part-time </li></ul></ul></ul><ul><ul><ul><li>Board of Directors – member or Chair </li></ul></ul></ul>
  21. 22. Faculty Considerations: (continued) <ul><li>Impacts on the individual inventors and founders (continued) </li></ul><ul><ul><li>Significant drain on time for: </li></ul></ul><ul><ul><ul><li>Research and teaching </li></ul></ul></ul><ul><ul><ul><li>Family and friends </li></ul></ul></ul><ul><ul><ul><li>University and department administration </li></ul></ul></ul><ul><ul><li>Interferes with academic relationships </li></ul></ul><ul><ul><li>Financial interest in the start-up creates conflicts of interest and conflicts of commitment </li></ul></ul>
  22. 23. Cost <ul><li>Time and lots of it companies eat up as much time as is available…. </li></ul><ul><li>ATAD Airline travel addiction disorder (ATAD) is the number one psychiatric disorder in contemporary US corporations. Incidence in white, male executives over age 45 is nearly 100%. Victims are characterized by an irresistible urge to take a flight when they have been home for more than 2 weeks. This leads to a constant nagging to go on useless trips. This will not be a problem for any of the growing number of academics who already suffer from ATAD. But if this does not include you, then remember that ATAD, at best a nuisance, is contagious and at present untreatable. </li></ul>
  23. 24. Academics v Biotech <ul><li>No evident reason that research productivity should suffer. </li></ul><ul><ul><li>more outside activity but gain in collaboration and point of view </li></ul></ul><ul><ul><li>new standards for evaluating work can be healthy </li></ul></ul><ul><ul><li>large increase in the amount of money being spent on the project generally results in much greater progress than otherwise would be possible. </li></ul></ul>
  24. 25. Academics v Biotech <ul><li>The major balance problem arises from having two lifestyles. </li></ul><ul><ul><li>Many, perhaps most, founders coming from universities find themselves slowly distancing themselves from their old lives or slowly returning to it. </li></ul></ul>
  25. 26. Disclosing and Assigning Inventions <ul><li>Signing Patent Acknowledgement is a condition of UC employment </li></ul><ul><li>Disclosure of all patentable inventions is required as is assignment of those within scope of employment or when UCI resources are involved </li></ul><ul><li>Administered at UCI by the Office of Technology Alliances </li></ul><ul><li>University may release rights back to the inventor (or to federal government if federally funded) if not commercializable </li></ul>
  26. 27. Disclosing and Assigning Inventions (Continued) <ul><li>University will seek to commercialize inventions while protecting the University’s rights </li></ul><ul><li>Competing interests: Fairness of Opportunity vs. Economic Development. </li></ul><ul><li>UCI announces opportunity via publications and Web-avoid “Pipelining” </li></ul><ul><li>Inventor(s) share in proceeds of University out-licensing </li></ul>
  27. 28. Starting and Developing the Company
  28. 29. Shaping and Selling the Idea “…. Truth! What is truth ? ….” P. Pilate ( 0030 AD) <ul><li>Change your mindset </li></ul><ul><li>You have been trained to present things in NIH language </li></ul><ul><li>The NIH et al process is weird; e.g., no performance review; degree of expected exaggeration </li></ul><ul><li>To the world at large, your current way of shaping and presenting ideas is bound to seem odd. </li></ul><ul><li>The above probably has more to do with the failure of academic scientists to communicate with entrepreneurs than anything to do with the complexity of the material being presented. </li></ul>
  29. 30. Who is to be involved? <ul><li>Academic colleagues do not always make the best business partners </li></ul><ul><li>Business consultants – the world is full of new business “consultants” who would like to assist you. Proceed with caution. </li></ul><ul><li>Professional advisors – attorneys, accountants, FDA regulatory professionals </li></ul>
  30. 31. The Leonardo Principle <ul><li>Common Business solution: hire a few da Vinci’s </li></ul><ul><li>Tech solution: buy a statue. there is only one da Vinci….don’t waste your money on cheap imitations </li></ul><ul><li>On the other hand, the blimp sized Ego commonly found in academic science can throw a start-up completely out of balance. </li></ul>Many tech problems do not have a business solution e.g., Need a Mona Lisa for the new palazzo
  31. 32. The Business Plan <ul><li>Technology hurdles </li></ul><ul><li>Regulatory hurdles </li></ul><ul><li>Competitive landscape </li></ul><ul><li>Market realities – cost of products/service </li></ul>
  32. 33. Securing Intellectual Property Rights <ul><li>In life sciences, patent rights are essential. </li></ul><ul><li>Inventions disclosed to and patents prosecuted by the University. </li></ul><ul><li>Start-up needs to secure rights from the University, through OTA </li></ul>
  33. 34. <ul><li>Stage 1: Option to acquire license – useful to “lock-up” rights while organizing and seeking financing </li></ul><ul><ul><li>Term of option approximately one year </li></ul></ul><ul><ul><li>Low up-front cost </li></ul></ul><ul><ul><li>Must cover patent prosecution costs during option period </li></ul></ul>Acquiring property rights – A two-stage process…
  34. 35. <ul><li>Stage 2: After organizing and concurrently with seeking initial financing, finalize license from the university </li></ul><ul><ul><li>The entire business may live or die with this license agreement. </li></ul></ul><ul><ul><li>Inventor/entrepreneur’s conflict of interest in the license relationship </li></ul></ul><ul><ul><li>University will require diligent commercialization </li></ul></ul><ul><ul><li>Payments to the University. </li></ul></ul><ul><ul><ul><li>Cash – patent expenses, upfront fees, milestones, royalties </li></ul></ul></ul><ul><ul><ul><li>Equity (stock) in start-up company </li></ul></ul></ul><ul><ul><ul><li>University sharing with inventor – cash/stock. </li></ul></ul></ul>Acquiring property rights – A two-stage process…
  35. 36. The Start-up Landscape Early Stage Company License Rights Up Fronts, Milestones, Royalties Invention Information Financial Split Consulting Consulting Fees Academic Inventor Technology Transfer Office Family Colleagues Department Public/Media University Admin. Competitors, Investors Corporate Partners
  36. 37. The Inherent Tensions <ul><li>UNIVERSITY </li></ul><ul><li>Create and propagate knowledge for the public good </li></ul><ul><li>Narrow Scope of License </li></ul><ul><li>Revenue </li></ul><ul><li>Academic Freedom </li></ul><ul><li>Control of Intellectual Property </li></ul><ul><li>Diligent Development </li></ul><ul><li>START-UP </li></ul><ul><li>Financial return to investors, founders and employees using knowledge </li></ul><ul><li>License </li></ul><ul><li>Expense </li></ul><ul><li>Confidentiality </li></ul><ul><li>Control of Intellectual Property </li></ul><ul><li>Commercial Flexibility and Uncertainty </li></ul>
  37. 38. UCI/Start-Up Collaborative Research <ul><li>Implemented through a research contract </li></ul><ul><li>High leverage for the start-up (use of labs, equipment, instrumentation) </li></ul><ul><li>Payment of full overhead required </li></ul><ul><li>Conflicts of interest need to be disclosed and managed </li></ul><ul><li>Provides access to improvement inventions & new inventions in the field </li></ul><ul><li>Fulfills early-stage diligence requirements </li></ul>
  38. 39. A”Win-Win-Win” Strategy for Industry/UC Partnering & Overhead - Royalty Shares UNIVERSITY PRINCIPAL INVESTIGATOR SPONSOR/ LICENSEE OFFICE OF TECHNOLOGY ALLIANCES Direct Cost Revenue Revenue from Fees, Royalties Salary/Facilities Intellectual Property New Knowledge/Diligence Commercial Rights
  39. 40. Finding Initial Backers <ul><li>ACTIONS </li></ul><ul><li>PATENTS…. shape the idea before bringing it to the university let alone to initial backers. </li></ul><ul><li>PUBLICATIONS…. play a much larger role than is generally recognized. </li></ul><ul><li>PRESS…. let the university press office open the doors. </li></ul>
  40. 41. Economist articles >> Defense companies >> VCs >> Meno Corp >> Synaptics The Press Is a Whimsical But Sometimes Useful Creature 5 July Two successive but unrelated articles in a major magazine prompt a startup 16 August
  41. 42. New York Press Really Counts Because That’s Where the Money Is The New York Times Prompts the Formation of a Second Company The New York Times >> New York Investment Bank >> Cortex >> IPO 2 years later One year later….
  42. 43. But Be Careful: The Press can Turn On You In a Flash The LA Times several years later.
  43. 44. Finding Initial Backers <ul><li>ATTITUDES </li></ul><ul><li>Be warned: Raising money is probabilistic …….chance and historical accident play a huge role. </li></ul><ul><li>The law for finding initial backers: “Use a big N to compensate for a low p“. </li></ul>
  44. 45. Financing the Start-up <ul><li>Develop the business model and reflect it in a well drafted business plan </li></ul><ul><li>Be realistic in financing needs </li></ul><ul><ul><li>Development always takes longer and costs more than planned </li></ul></ul><ul><ul><li>Do not develop a Maybach when a Toyota is what will sell </li></ul></ul>
  45. 46. Financing the Start-up: Financing Sources <ul><li>Boot-strap with personal internal resources </li></ul><ul><ul><li>Maximum control </li></ul></ul><ul><ul><li>High personal financial risk </li></ul></ul><ul><ul><li>Limited funds may slow development </li></ul></ul><ul><li>Friends and family financing </li></ul><ul><ul><li>Give up less control </li></ul></ul><ul><ul><li>Relationship issues </li></ul></ul><ul><ul><li>Limited funds may slow development </li></ul></ul><ul><ul><li>No “deep pocket” </li></ul></ul>
  46. 47. <ul><li>Government grants </li></ul><ul><ul><li>Give up little control </li></ul></ul><ul><ul><li>Spend a lot of time writing grant proposals </li></ul></ul><ul><ul><li>Slow funding </li></ul></ul><ul><ul><li>Limited funds may slow development </li></ul></ul><ul><li>Business angels </li></ul><ul><ul><li>Give up more control </li></ul></ul><ul><ul><li>Often a hit-or-miss proposition </li></ul></ul><ul><ul><li>May or may not find “deep pocket” </li></ul></ul><ul><ul><li>Investors may have unrealistic expectations </li></ul></ul>Financing the Start-up: Financing Sources
  47. 48. Financing the Start-up: Financing Sources <ul><li>Incubators </li></ul><ul><ul><li>Short-term solution only </li></ul></ul><ul><ul><li>Expensive early stage assistance </li></ul></ul><ul><li>Venture capital </li></ul><ul><ul><li>Ultimately you will likely relinquish control </li></ul></ul><ul><ul><li>Will press hardest on valuation – expensive funding </li></ul></ul><ul><ul><li>Bring hands-on expertise </li></ul></ul><ul><ul><li>Bring wide network of industry and financial contacts </li></ul></ul><ul><ul><li>If company is progressing, additional funds are available </li></ul></ul>
  48. 49. Financing the Start-up: Financing Sources <ul><li>Corporate venture capital/strategic alliance </li></ul><ul><ul><li>Wide variety of forms – for example: </li></ul></ul><ul><ul><ul><li>Up-front cash for distribution right when product is developed </li></ul></ul></ul><ul><ul><ul><li>Straight equity investment </li></ul></ul></ul><ul><ul><ul><li>Collaborative development with funded R&D costs. </li></ul></ul></ul><ul><ul><li>Beware of entangling alliances which restrict future operations or exits </li></ul></ul>
  49. 50. Setting Up the Company <ul><li>1st strategy: build the company and the products will follow </li></ul><ul><ul><li>IPO about 2 years after starting the company </li></ul></ul><ul><ul><li>Second round financing (15MM) about 4 years later Large building, full scale laboratories, senior scientists, senior business people </li></ul></ul>The law of irresistible consumption : if you have it, you will probably spend it.
  50. 51. Setting Up the Company <ul><li>2nd strategy: build the product (1 or 2) and the company will follow </li></ul><ul><ul><li>Series A for $3.5MM. Build and test a system for classifying human brain waves. Secure IP for an in vitro model of human brain aging. </li></ul></ul><ul><ul><li>Series B for $4MM. Multi-center testing. Launch 1st product 2002. First partnership. No sunk costs, university partners, minimal staff. </li></ul></ul>The law of irresistible consumption : if you have it, you will probably spend it.
  51. 52. Setting up and Operating the Start-up <ul><li>Academic or professional management. </li></ul><ul><li>Relationships with Management and the Board of Directors </li></ul><ul><li>Protecting intellectual property </li></ul><ul><li>Segregating duties as a consultant/officer from those of a professor – avoiding conflicts of interest. </li></ul><ul><li>Incentives – Returns to the Founder-Scientist </li></ul>
  52. 53. Exits <ul><li>Acquisition </li></ul><ul><ul><li>Role of the faculty entrepreneur in selling the company </li></ul></ul><ul><ul><ul><li>Risk allocation between founders and investors </li></ul></ul></ul><ul><ul><ul><li>Post-closing consulting, non-competition. </li></ul></ul></ul><ul><ul><li>Structures </li></ul></ul><ul><ul><ul><li>Tax consequences </li></ul></ul></ul><ul><ul><ul><li>Liquidity </li></ul></ul></ul><ul><li>IPO </li></ul><ul><ul><li>Risks of being officer or director of a public company </li></ul></ul>
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