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Tom Nastas presentation at Rusnano international conference, Moscow, Russia

Tom Nastas presentation at Rusnano international conference, Moscow, Russia

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    IVI Presentation At Rusnano Conference IVI Presentation At Rusnano Conference Presentation Transcript

    • Mgt & Organization for New Business Formation Presentation at 2nd Rusnano Int’l Conference Moscow, Russia, 7 October 2009 Innovative Ventures Inc. Haslett, MI. USA Moscow, Russia Thomas Nastas Founder Tom@IVIpe.com www.IVIpe.com 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Today’s Message Focus of this Presentation Rusnano Request: What are the strategies in Tech Transfer, used by leading American Universities My Subject: New Business Formation Dept. Message is for Institutes, Universities, Technoparks, etc. Only have 15 minutes, will outline reasons why take this action, ideas to accomplish Specific Actions to Improve Your Chances of Success 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • IVI History-Direct Invest & Advisory Canada (1992) Europe (1992/94) C$100MM-Canadian Bus. Dev. Bank TP Fund, $10MM- EU, $-Financière St Dominique, Paris USA (1986) Russia (1997) The Michigan Product Dev. Fund ($5MM) HP LP, $30MM-EBRD & USAID Africa (1993/96) E. Africa $5MM, Sub- Saharan, $200MM, South Africa,$30MM, IFC/WB 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • About Me • Founder of IVI,1986. In Russia since 1997 • Moscow Bank, Member, Board of Directors, 2007 Ассоциация независимых • Member, Board of Directors, 2008 директоров • Moscow IT/VC, Member, Investment Committee, 2009 • Los Angeles, CA, Member, Global Advisory Committee, 2009 • Moscow, Co-Founder, 2009 • Russian operations, Tata Coffee Board of Directors, 2009 • Moscow MBA Program, Prof of VC & Marketing, 2002/9 07 October 2009 • Moscow, MBA Advising, 2001 www.IVIpe.com Info@IVIpe.com
    • Typical Tech Transfer Unit Office of the VP for Research • 7-20 individuals Executive Director Licensing Legal Support Agreements & IP Protection Administrative Services Accounting Marketing Data Support . 07 October 2009 www.IVIpe.com . Info@IVIpe.com 5
    • Models for Academic Business Development an ce di ng g ies ist nt un ns in io t ns ol ic lan As P t s T ale g F era t en ice ve P ss en ru it ur in Op tion es tm eL si e m c Se c s nv i bl es sin lop Re es ipa in ic tI lex ms gr Bu eve elp in us a rt c F er Pro D H A id B P D ire T Hands-in-Pockets Hands-Off UM Hands-On* Up-to-Elbows** Policies Form the Licensee Operational Role * Sometimes Bus Dev Group is quasi-external to the U ** Often exclusive arrangement with Bus Dev Group that is external to the Univ Source: MIT, AUTM, MRUN, U Michigan et al 07 October 2009 www.IVIpe.com Info@IVIpe.com 6
    • 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Creation: New Business Formation Unit in Tech Transfer Office of the VP for Research • 23 individuals Executive Director Ken Nisbet Licensing Business Development Legal Support Agreements & IP Protection New Venture Formation Robin Rasor Created, 2006 Rick Brandon Andrew McColm Administrative Services Accounting Marketing Data Support . 07 October 2009 www.IVIpe.com . Info@IVIpe.com 9
    • Models for Academic Business Development an ce di ng g ies ist nt un ns in io t ns ol ic lan As P t s T ale g F era t en ice ve P ss en ru it ur in Op tion es tm eL si e m c Se c s nv i bl es sin lop Re es ipa in ic tI lex ms gr Bu eve elp in us a rt c F er Pro D H A id B P D ire T Hands-in-Pockets Hands-Off UM Hands-On* Up-to-Elbows** Policies Form the Licensee Operational Role * Sometimes Bus Dev Group is quasi-external to the U ** Often exclusive arrangement with Bus Dev Group that is external to the Univ Source: MIT, AUTM, MRUN, U Michigan et al 07 October 2009 www.IVIpe.com Info@IVIpe.com 10
    • Why Be Proactive? Why ‘Hands-On?’ Most States (in US) have: Incubators & Technoparks University, State, Federal & Corporate R&D Venture Capital $$, Seed-Expansion/Growth R&D Grant, Seed & Start-up Programs Support Services in Accounting, Legal, Consultants. Marketing, Advertising, etc. Venture Capital Networks, Infrastructure & Eco-system What’s Happening Qualitatively to Explain? 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Qualitative Differences: Silicon Valley/Boston & Rest of USA 1. Serial Entrepreneurs & Entrepreneurship 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Qualitative Differences: Silicon Valley/Boston & Rest of USA 2. Amount & Velocity of VC Investment Attitude to Risk Influences Risk Taking-#1 Acceptance: Lack of Certainty-#2 Brand & Reputation Effects- #3 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Qualitative Differences: Silicon Valley/Boston & Rest of USA 3. Nature of the Deal Flow Parallels/Similarities: Rest of USA & Russia 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • UM Technology Transfer Process Research UM Bus Dev gets involved (initiates a Project) at/or before Pre-Disclosure this point if: - the disclosure is related to an existing BD Project Disclosure - assessment or marketing activities reveals that a start-up may be the best Assessment commercialization path - the inventor is interested in a start-up Protection - accelerator or investor is interested in a start-up Find or Form a Licensee Existing Company Marketing Business Concept Planning Find Form Developing the License Business Formation Components Licensing Relationships, Revenue, 07 October 2009 Reinvestment www.IVIpe.com Info@IVIpe.com 15
    • Jargon Research Pre-Disclosure Disclosure Assessment Protection Bus Dev Project possible Option Agreement Find or Form a Licensee Existing Company Marketing Bus Concept Planning Find Form Developing the License Business Formation Components Licensing Launched Start-up Relationships, Revenue, 07 October 2009 Reinvestment www.IVIpe.com Info@IVIpe.com 16
    • Three-step Bus Dev Process Research Pre-Disclosure Disclosure Assessment Protection Find or Form a Licensee 1) Evaluation Existing Company Marketing Find Form Bus Concept Planning 2) Emerging . Developing the License Business Formation Components 3) Business Formation Licensing Relationships, Revenue, Reinvestment 07 October 2009 www.IVIpe.com Info@IVIpe.com 17
    • Bus Dev Group within Tech Transfer • Distinct from, but team with, Patent/Licensing and Legal Professionals • Focused on business formation consulting – Specialize somewhat by industry – Broad expertise – product development, market/industry trends, project management, finance, UM policies, counseling, investment strategy… • 3 FTEs with part-time admin support • External relationship champions 07 October 2009 www.IVIpe.com Info@IVIpe.com 18
    • Business Creation Experts: Proactively Assist as Needed & Desired • Project Planning and Management – Act as communication “hub” (esp. early in a Project) • Serve as mentor, guide, and instructor – Engage in review of choices & expectations – Help the inexperienced understand what they need to know – Advise relative to business plans and investor materials – Navigate thru university systems/procedures – Counsel re: effective utilization/selection of resources, programs, & partners http://www.techtransfer.umich.edu/entrepreneurs/startups.html 07 October 2009 www.IVIpe.com Info@IVIpe.com 19
    • Business Creation Experts: Proactively Assist as Needed & Desired • Identify, locate and engage needed resources – Access to market information resources – Hire outside experts for critical path activities (Tech Transfer funds – leverage/utilize other programs as possible) – Targeted partnering with outside entrepreneurial resources – Provide team formation assistance • Help create and execute funding strategy (including introductions) • External Relationship Champions http://www.techtransfer.umich.edu/entrepreneurs/startups.html 07 October 2009 www.IVIpe.com Info@IVIpe.com 20
    • Bus Dev Project: Step Descriptions (Staged Gates) Evaluation Start-up Feasibility and Inventor Considerations Potential to solve unmet need. Industry dynamics, market trends & competitive landscape show possibility of new business to attract needed funding & resources. Inventor comfortable with required time, effort & flexibility to champion start-up. Emerging Fully Defined Product/Service Satisfies Customer Need with potential for Sustaining Revenues. Competitive with alternatives. Sufficient Tech Development complete. Initial IP evaluation. Business Formation Business Plan Team Financing Includes operational Structure, Diverse & Experienced Access Funding Competitive Positioning, Product To Manage the Business For company to reach Development, Strategy and Finances. and Execute the Plan meaningful milestone Determine Business Model. or revenues Satisfies definition of viable licensee 07 October 2009 www.IVIpe.com Info@IVIpe.com 21
    • Product/Service Selection & Definition: Emerging With primary and secondary research: • Verify industry dynamics • Determine if tech development (proof-of-principle) sufficient to demonstrate solution to identified customer problem • Strategically define lead product/service from multiple alternatives • Create product development plan (estimates) • Verify competitive advantage • Estimate if needed development resources appropriate for desired return • Reassess IP protection and access (not just UM’s) 07 October 2009 www.IVIpe.com Info@IVIpe.com 22
    • Business Formation: Business Plan  Revisions staged with company growth  starting with proposed activities moving into implementation  “Blueprint or Playbook” for the team  should be formulated/influenced by the team  act of writing facilitates comprehensive planning by identifying gaps  Often highlights initially the need for business talent on the team  Multiple Audiences  self/team  investors/granting agencies  provides depth to investment/funding solicitations  prospective employees 07 October 2009 www.IVIpe.com Info@IVIpe.com 23
    • Business Formation: Team • Minimally need business AND technical expertise – Unlikely to be one person – Relevant experience is highly valued – Unlikely for faculty member to take an operational role in the start-up • Staged additions to Team – dependent on company development status • “Chemistry” (compatibility) is critical • Shared Vision Critical – Helps relieve inventor concerns over “giving up control” 07 October 2009 www.IVIpe.com Info@IVIpe.com 24
    • Business Formation: Financing Avoid pitching the Right Deal to the Wrong Investor • Determine the needs of start-up based on Milestone Achievement • Profile funding source requirements, expectations, & limitations – All sources have “strings attached” • Formulate a deliberate strategy for seeking funding based upon BOTH of the above • Prepare appropriate materials for soliciting funding – be prepared for next steps (e.g. due diligence) 07 October 2009 www.IVIpe.com Info@IVIpe.com 25
    • Project Planning Create and Communicate a “roadmap” Multiple simultaneous & sequential steps w/varying dependencies Requires experience with process, business culture/norms, etc. Select Critical Path and Identify Gating Items For the inventor and team:  to create common vision  to describe holes, timeframes, resources required  to identify gating and critical path items  to find “show stoppers” ASAP  to facilitate progress 07 October 2009 www.IVIpe.com Info@IVIpe.com 26
    • Concluding Remarks Staffing Hire Business people, not lawyers, academics or university personnel 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • UM Start-Ups – Recent Years 07 October 2009 www.IVIpe.com Info@IVIpe.com 75 Start-ups * Denotes a presence in MI 28
    • 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Ex: How Much Value (Added)? Where’s the Technology? 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Technology In Many Places! Just Look & Define Slaughter Raising Genetic Engineering & Breeding Butcher Distribution, Storage & Retail Locations Processing- Ham, Kielbasa Delivery 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Download at www.IVIpe.com News 2007 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Thomas D. Nastas Tom@IVIpe.com www.IVIpe.com Moscow Tel. 7.985.923.47.27 US Tel. 1.517.899.1432 Innovative Ventures Inc. Moscow, Russia Haslett, MI USA 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Decision: Start-up Feasibility Evaluation  Dynamic R&D for the industry shifting to the entrepreneurial sector?  Development, Manufacturing and Distribution - do any require lg partners?  Is there potential to solve an unmet need w/ competitive advantages?  Are multiple products/services possible with technology?  Does using the technology require a paradigm shift? Or provide an incremental improvement? Satisfy a low-end underserved market?  Is the potential benefit in line with the anticipated costs?  Do the start-up scenario realities match desires of the inventors?  Is there sufficient IP protection and access (not just UM’s)?  Are there economic, social, political and technology context issues that must be considered? 07 October 2009 www.IVIpe.com Info@IVIpe.com 34
    • Inventor Considerations  Required commitment of time and energy  Not all technologies are appropriate for start-ups  Anticipated financial reward (personal, lab, etc.) – amount – timing  Requirements for flexible planning & shared responsibility/control  Acknowledgment of cultural difference between business & academia  Inventor’s role relative to the start-up post-launch (start-up needs business skills and experience)  Impact on academic research activities (COI, potential sponsors) 07 October 2009 www.IVIpe.com Info@IVIpe.com 35
    • Additional Slides 07 October 2009 www.IVIpe.com Info@IVIpe.com 36
    • Funding Helps Get the Other Void-Fillers (management, knowledge, information) d “The Capital Gap encompasses a great deal ce et en ent more than simply obtaining capital for a eri em n rk p Ex nag Pla Ma start-up. It refers to the comprehensive set IP & s Ma m try ip of tasks necessary to develop a business T ea d us onsh In lati concept to a point where it obtains the first Miles Re tone round of ‘deep pocket’ professional venture Deve -base lop’t d Plan capital.” from Journal of BioLaw and Business “The Market nding Development of Entrepreneurial infrastructures Understa Across The United States” by Thomas Dickerson Reduc ed vol 6 #4 pgs 14-19 2003 Techni cal Investment by Risk Technology Traditional $$ VC’s 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Engagement of Outside Resources Other Than Investors  Why engage them? – Lack of internal knowledge and/or experience – Need to develop support for the start-up – Catalytic effect on start-up formation  When/How to use them? – Critical path gating items of project plan (clearly defined objectives/deliverables) – Start-up Evaluation; Product/Service Definition; Business Concept/Plan • How to find them? – Targeted networking – Indexing your rolodex • What Roles could they take? – Specialized expert paid consultants/talent • Continuity post-consulting engagement – Pro-bono advisors 07 October 2009 www.IVIpe.com Info@IVIpe.com 38
    • Develop Milestones Linked to Company Funding Year 1 Year 2 Year 3 Milestone Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 1. (demonstrates market, business, or product development) 2. (demonstrates market, business, or product development) 3. (completion represents significant risk reduction) 4. (refine and develop product) 5. (validation studies) 6. (pilot production) 7. (select & secure commercial partners) 8. (product launch) 07 October 2009 Seed $K First Rd $M www.IVIpe.com Second Rd $M Third Rd $M Info@IVIpe.com 39
    • Believe in Yourself/Accept Rejection  Oldest VC Firm, investing since 1911  Deals Rejected: Apollo Computer (acquired by Hewlett Packard) BVP's Felda Hardymon was offered a small position in the company's last private round, and rejected it: too small a position, he thought, at too high a price. In less than a year it was worth 17x more. 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Believe in Yourself/Accept Rejection  Deal Rejected: Check Point In 1994, Gil Schwed pitched his idea to BVP's David Cowan, who said that Gil would never get distribution in the US. The next year, Check Point got a huge Sun OEM deal and sold $25M of firewall 07 October 2009 software. www.IVIpe.com Info@IVIpe.com
    • Believe in Yourself/Accept Rejection  Deal Rejected: eBay "Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass." 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Believe in Yourself/Accept Rejection  Deal Rejected: Federal Express Incredibly, BVP declined on Federal Express seven times. 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Believe in Yourself/Accept Rejection  Deal Rejected: Google Cowan’s college friend rented her garage to Sergey & Larry their 1st year. In 1999 and 2000 she introduced Cowan to “these two really smart Stanford students writing a search engine.” Students? A new search engine? In the most important moment ever for a Bessemer rejection, Cowan asked her, “How can I get out of this house without going near your garage?” 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Believe in Yourself/Accept Rejection  Deal Rejected: Paypal David Cowan declined on the Series A round. Young & unproven team, regulatory problems, and, 4 years later, a $1.5 billion acquisition by eBay. 07 October 2009 www.IVIpe.com Info@IVIpe.com
    • Believe in Yourself/Accept Rejection  Deal Rejected: StrataCom (acquired by Cisco) Felda Hardymon: "[Sierra's] Pete Wendell asked if I'd like to invest in Stratacom, which was doing a 'fast packet switch.' I gave him a blank stare." 07 October 2009 www.IVIpe.com Info@IVIpe.com