Creative venturing creative funding v2 12 06-2013 for distribution

Creative Venturing:
Creative Funding, Dec 6 2013
Moderator: Fas Mosleh, SVP, IP M&A
Panelists:
Stefan Lindsay, Director Sales, Incident
Andre Gueziec, CEO, Beat the Traffic
Bill Jackson, Former Kodak Executive, CEO Sinovia
UNLOCKING THE VALUE OF YOUR IP

Rights to trademarks referenced
herein, other than Kanzatec
trademarks, belong to their
respective owners. We disclaim
proprietary interest in the marks
and names of others.

1

Agenda
•
•
•
•

Introduction
Panelist views
Prepared questions
Open session

Kanzatec is a leading Patent Research and Transaction
Advisory firm serving private and public high tech
companies to help drive greater business success
through high-performance patent strategies. Our senior
consultants combine operating company experience in
business management, information systems, patent
strategy and operations, with analysis and research
capabilities spanning many high tech segments. The
company collaborates with a wide range of high tech
companies, from startups to the Fortune 500.


2

Here it Comes


3

My Background - Fas Mosleh

– Global High Tech GM/Sales/Marketing/BD executive
• Spanned chip to software

– IP Monetization executive at Kanzatec IP Group (sell ‘000’s
patents/year)
• 100+ buy/sell transactions over $200M
• VP Global Acquisitions – Intellectual Ventures
• Executive Director Patent Sales Group – HP

– Manager, founder HP’s 1st Venture fund in 1998 ($2B+ M&A)

Experienced at building new businesses - Executive at venture funded
startups - Agiliti, Vernier Networks, Jamcracker
Executive at Hewlett-Packard, Eastman Kodak, Agilent, Avago
Technologies and Micron; IBM UK labs & sales management

Funding Examples- where I worked
$100M

$40M

>$30M

>$100M

$2B


5

Corporate Introduction

•

Founded in 2008 to focus on IT analysis and research – grew into IT product and
system research, prototyping for F500 for IP projects – IT systems heritage

•

Emerging, SMB & Fortune 500 companies in high tech – imaging, web, software,
enterprise datacenter, systems, semiconductors, mobile/wireless telecom

•

IP Brokerage Palo Alto, CA - Sales, Acquisitions, Valuation, Research/Analysis

•

Global team members and Subject Matter Expert network
–
–

Silicon Valley, NY, Kansas, San Diego, London, Netherlands, Korea, China
India, Europe, SMEs


6

What Kanzatec Does – R&R
IP M&A and Patent Sales

Drive greater business success through highperformance patent strategies

7

Example Industries We Serve

Social Web E-Commerce Software
Data Center

Semiconductor

Imaging
Cloud

Transport
Networking
Mobile

Energy


Medical

8

Raising funds
•
•
•
•
•
•
•

Patent sale, licensing, secured loan
Services/bootstrapping
FFF
Bank/credit/secured loan
VC/Angels
Crowdfunding
Government

9

Example 1 – IP Funding
• Situation
– Need another round of funding

• Challenges
– Business doing poorly
– New funding hard to get at reasonable valuation

• Action
– Divest patents with a license grant back

• Results
– Obtained $2M to extend runway another 18 months

10

Example 2 – IP Income
• Situation
– $1B+ revenues semi company

• Challenges
– Unnecessary IP found every year

• Action
– Create a regular revenue stream

• Results
– Sell $1M of patents every quarter garnering 75% margins
– Healthy, dynamic IP strategy


11

Example 3 – IP Boost
• Situation
– Seeking Funding/IPO

• Challenges
– Must maximize $$s
Equalizer

• Action
– Explore high return IP acquisition to boost valuation

• Results
– Bought ~$2M of patents = valuation boost of additional $3-5M


12

Comparing Standard vs. Syndicated

Source: Intellectual Asset Magazine November 2013 (Fas Mosleh)

13

Patent Based Monetization Approaches
Key:
PLoan=Patent Secured Loan
PSEI=Patent Secured Equity Investment
Sale=Patent Sale
SynSale=Syndicated Patent Sale
Licensing=Patent Licensing

Effort/Risk
Size of funds

License
>=$10M

Sale
~$5M

Loan/Equity

$1-2M

© Copyright Kanzatec LLC 2013

2 months

6 months

Time Taken
12-18 months
14

A Look at Crowdfunding


15

$5B Raised through CFP in 2013
Types:
Donation
Equity
Reward
Lending


16

10 Most Active Crowdfunding Categories
Top:
Hardware
Software
Games
Music


17

Factors To Consider
When assessing methods of fund raising
• Quality/Quantity
• Time to raise
• Difficulty to raise (resources needed)
• Constraints or conditions with money
• Smart vs. dumb money


18

Types of Funding by Ease & Speed
Hard (effort required by Owner)

IPO

Govt.

Bootstrapping
VC/Angel

Quick

Slow
Patents

Crowdfunding

FFF
Note: Positions above are exemplary, not necessarily accurate

Easy

19

Stefan Lindsay

Creative
Venturing

Upping Valuation
Creative Exits
Creative Funding

20

Making music easy and accessible with
technology


The gTar is the first App-Enabled
Smart Guitar

An Interactive and Socially Connected Music
Experience

Company Milestones
Launched through a Kickstarter Campaign at TC Disrupt NY 2012
• Won 2nd Place at TCDisrupt
• Reached $100K KS goal in 11 hours
* Grand total of ~$355K in a month
• Then, the real work began...

• Fall 2013 - Units shipping
• All Pre-order Fulfillment Complete
• Orders ship in under a week

• Appearances
•
•
•
•
•

CNN Money
NBC
TechToys 360
CCTV (China)
Discovery News

Wide Press Coverage:

TAM
Music Industry ($168B+)
•
•

User generated content
• Automated attribution
• Metrics / Analytics
Platform for innovative content
use cases

Entertainment ($70-80B)
• Casual
• Interactive
• Social

Education ($10-20B)
• Fun
• Quick
• Convenient

Competition
Entertainment
The gTar and Incident Platform
breathe unity into a fragmented
competitive landscape

Guitar Hero
Tapulous
Smule

Education

Garageband

Fretlight
Ovelin
Traditional*

Roland
Jamstik
Ableton

Music

*See education ROI analysis

Social Creation and Consumption

Creation
Collaboration
Consumption

Social Interaction / Content

Example: Education ROI Analysis

Value Prop

Cost

- Painful learning curve
$1000-1500*

- Most students quit after first year
- Expensive and inconvenient setup

- Immediate, out-of-the-box gratification
$400

- Positive reinforcement
- Applications and Content Platform


If you've ever picked up the guitar for the first time and tried to play a favorite
song, you know how discouraging it can be. The gTar completely changes that.
-Drew Houston, Dropbox co-founder and CEO

Andre Gueziec

Creative
Venturing

Upping Valuation
Creative Exits
Creative Funding

29

Triangle Software LLC d.b.a

Mission: To help drivers beat the Traffic®

12/9/2013

12/9/2013


1/16

Andre Gueziec, Founder and former CEO

Real-time data, analytics, prediction, multimedia platform

12/9/2013


2/16

Intuitive Presentation Interface
• Automated, animated
visualization
• Ease of use and
operation
• Auto-populates with
latest data
• Customized for each
affiliate

12/9/2013


3/16

60 TV stations and cable providers, radio stations in North
America

12/9/2013


5/16

Beat The Traffic App Presentation

12/9/2013


13/16

12/9/2013


14/16

12/9/2013

12/9/2013


15/16

Mobile traction

Community Data
• Valuable crowdsourced GPS data
• Monetization: ads
+premium
payments

• iPhone & iPad, Android,
BBerry apps
• >3 000 000 downloads
• Rated top 10 navigation
• approx. 500,000 active,
regular users

12/9/2013


6/16

Quality Data
• comparing
estimated
travel speeds
with leading
source

RMSE 5.3 mph

12/9/2013


11/16

Successful Exit in 2012

Strategic acquisition by The Weather Network in
Canada

12/9/2013


16/16

Bill Jackson

Creative
Venturing

Upping Valuation
Creative Exits
Creative Funding

40

Creative Venturing:
Creative Funding

Bill Jackson
Co-founder & CEO
Sinovia Technologies
bill@sinoviatech.com


41

Funding HW is REALLY HARD!
High development cost
High capital costs
Long time horizon

Find ways to minimize or remove these costs
VC: “We like software companies, they fail quickly and cheaply”

42

The adage that Align with business unit Series B is gone
you don’t talk to strategics until

Fit still think “seed” directionare too early,
w/ strategic companies
However: many
Watchthere impedance mismatch
for is activity at Series A

43

I’m from the Government and
I’m here to help you…
National/State/Local
Doesn’t pay for “all”
Reports/oversight/rules


44

Other Sources
NRE/JDA’s with potential
customers
Emerging HW incubators

License of technology
Friends, Family & Fools

45

Sinovia Tactics to Date
NSF Grants ~$1M
Outsourced Mfg
Partnerships
JDA, NRE & Samples


46

Thank you

47

Prepared Questions and Open Q&A

Creative
Venturing

Upping Valuation
Creative Exits
Creative Funding

48

Questions
• What is the most creative funding you ever put
together?
• How would you fund your next venture and why?
• What factors should be considered when funding
their venture?
• How do you price your company for a funding?
• How did you decide what was offered was the
right amount?


49

Thank You

Creative Venturing …2014

??
Negotiating a Term Sheet
Funding your Patent Ideas

Creative
Venturing

50

Three ‘Secrets’ of Successful Fundraising
1) People buy on emotion, and support the decision with logic.
Must make an emotional connection with investors.
E.g.
— Make them feel smart, enhance their reputation.
— Keep it simple. Complexity = headaches ; Governing equation for high-net-worth
types (and everyone else, too).
Use the five C’s: “Be concise, clear, consistent, compelling and compliant.”
2) Effective fundraising requires effective, marketing, replicable process
Don’t lose prospects during the marketing process. Hunting for capital demands the
same precision as your core business. One hiccup and the tenuous trust you’ve
built with prospects could evaporate.
3) People invest with people they know.
Referrals are critical - you never know which “intermediary” will lead to pay dirt.
Adapted from Source: Forbes, Bryan Johnson

51

What’s Your V?
VALUE

Customers
Employees
Shareholders
Investors

V

V


V

V
52

Most Popular CFPs
• Kickstarter
• Indiegogo
• Crowdtilt
• Angellist
• Razoo
• Petridish

Most Successful
• Pebble Watch
• Star Citizen
• Lets Build a Goddamn Tesla
Museum
• Recaptcha


53

Creative venturing creative funding v2 12 06-2013 for distribution

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (7)

Similar to Creative venturing creative funding v2 12 06-2013 for distribution

Similar to Creative venturing creative funding v2 12 06-2013 for distribution (20)

More from Fas (Feisal) Mosleh

More from Fas (Feisal) Mosleh (17)

Recently uploaded

Recently uploaded (20)

Creative venturing creative funding v2 12 06-2013 for distribution