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Technology Commercialization at Georgia Tech

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An overview of the Enterprise Innovation Institute at Georgia Tech, with special attention given to startups/spinouts.

An overview of the Enterprise Innovation Institute at Georgia Tech, with special attention given to startups/spinouts.

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  • 1. Technology Commercialization at Georgia Tech Stephen Fleming Chief Commercialization Officer <fleming@gatech.edu> © 2008, Georgia Institute of Technology
  • 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. 7/14/08 Technology Commercialization at Georgia Tech 2
  • 3. Organization Chart 7/14/08 Technology Commercialization at Georgia Tech 3
  • 4. 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 7/14/08 Technology Commercialization at Georgia Tech 4
  • 5. “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 7/14/08 Technology Commercialization at Georgia Tech 5
  • 6. Building an Ecosystem Signs of Life Nutrients Natural Selection Renewal Incubation Growth 7/14/08 Technology Commercialization at Georgia Tech 41 6
  • 7. National Rankings U.S. News & World Report, America’s Best Engineering Graduate Schools 2008 1. 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 7/14/08 Technology Commercialization at Georgia Tech 7
  • 8. 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 8
  • 9. GT Research Distribution Approx. half a billion dollars total R&D on campus for FY2008! College of Computing Other Research Centers College of Sciences College of Engineering GTRI 7/14/08 Technology Commercialization at Georgia Tech 9
  • 10. Nutrients • Recruiting research talent—worldwide • Georgia Research Alliance (GRA) –Eminent Scholars –Facilities/equipment • Reinventing academic disciplines –College of Computing –Emory/GT Biomedical Engineering Dept. 7/14/08 Technology Commercialization at Georgia Tech 10
  • 11. 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 7/14/08 Technology Commercialization at Georgia Tech 11
  • 12. Patent Ranking U.S. Patent & Trademark Office, Calendar Year 2005 (last year available) # patents 1 390 University of California (system) 2 136 Massachusetts Institute of Technology 3 101 California Institute of Technology 4 90 Stanford University tie 90 University of Texas 5 77 University of Wisconsin 6 71 John Hopkins University tie 71 University of Michigan 7 64 University of Florida 8 57 Columbia University 9 43 Georgia Institute of Technology tie 43 University of Pennsylvania 10 41 Cornell University 7/14/08 Technology Commercialization at Georgia Tech 12
  • 13. Natural Selection • Intellectual property protection (OTL) • VentureLab –Business plan –Management –Money • GRA Phase I and II awards • GT Edison Fund • SBIR Assistance Commercialization Services 7/14/08 Technology Commercialization at Georgia Tech 13
  • 14. 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 7/14/08 Technology Commercialization at Georgia Tech 14
  • 15. Income Distribution 100% Georgia Tech Research Corp. 66% Academic Unit(s) 33% First $2500 Inventor(s) 0% $2,500 $500K $1M+ 7/14/08 Technology Commercialization at Georgia Tech 15
  • 16. 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. 7/14/08 Technology Commercialization at Georgia Tech 16
  • 17. IP Mgmt./Evaluation Invention Screens Disclosures Export Control Need more information / development Industrial Contracts Technology Technology Evaluation Analysis Dept. Chairs / Protect Rights to $ Faculty? Deans / GTRI IP? Initiate IP Prot. $ External $ Patent Counsel Application Market Market Evaluation Responsibility Analysis GTRC EI2 / CS Path? ...continued 7/14/08 Technology Commercialization at Georgia Tech 17
  • 18. IP Business Development Standard Templates Consulting Rights to Path? Faculty? Georgia Research $ Startup / Spinout Industrial License COI Review Alliance Conflict of Business Marketing Interest Plan Plan VentureLab Tech. Marketing White Paper Rights to Funding Rights to Faculty? Licensee? Faculty? & CEO? Term Sheet Negotiation Standard Templates Responsibility GTRC Compliance License Review Negotiation External Counsel EI2 / CS ...continued 7/14/08 Technology Commercialization at Georgia Tech 18
  • 19. IP Licensing/Compliance License Responsibility Negotiation GTRC Startup / Spinout Industrial License EI2 / CS Startup Formed License ATDC or EmTech Bio Incubator? Royalty Collection Successful Industrial Monitoring Startup Partner Compliance / Litigation Patent Maint. & Defense Equity Royalties & etc. Inventor(s) Portfolio Distribution $ Academic Department(s) LIquidation of Payments GTRC 7/14/08 Technology Commercialization at Georgia Tech 19
  • 20. IP Business Development Standard Templates Consulting Rights to Path? Faculty? Georgia Research $ Startup / Spinout Industrial License COI Review Alliance Conflict of Business Marketing Interest Plan Plan VentureLab Tech. Marketing White Paper Rights to Funding Rights to Faculty? Licensee? Faculty? & CEO? Term Sheet Negotiation Standard Templates Responsibility GTRC Compliance License Review Negotiation External Counsel EI2 / CS ...continued 7/14/08 Technology Commercialization at Georgia Tech 20
  • 21. 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 7/14/08 Technology Commercialization at Georgia Tech 21
  • 22. VentureLab Market Milestones Meetings Management Money 7/14/08 Technology Commercialization at Georgia Tech 22
  • 23. 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? 7/14/08 Technology Commercialization at Georgia Tech 23
  • 24. 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? 7/14/08 Technology Commercialization at Georgia Tech 24
  • 25. Meetings • Launching a startup company is a team sport! • VentureLab can introduce you to: Angel investors Bankers Venture capitalists Accountants Government grantors Corporate lawyers Business advisors Patent lawyers Potential employees Recruiters Beta customers Marketers Corporate partners Consultants Regulatory experts and more... 7/14/08 Technology Commercialization at Georgia Tech 25
  • 26. Management 7/14/08 Technology Commercialization at Georgia Tech 26
  • 27. 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. 7/14/08 Technology Commercialization at Georgia Tech 27
  • 28. Money 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. 7/14/08 Technology Commercialization at Georgia Tech 28
  • 29. 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 available across two phases of development 7/14/08 Technology Commercialization at Georgia Tech 29
  • 30. 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) 7/14/08 Technology Commercialization at Georgia Tech 30
  • 31. 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 $100K matching investment grant to univ. Phase III $250K loan Total $100K $400K 7/14/08 Technology Commercialization at Georgia Tech 31
  • 32. 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. 7/14/08 Technology Commercialization at Georgia Tech 32
  • 33. 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). 7/14/08 Technology Commercialization at Georgia Tech 33
  • 34. VentureLab ✓ Market Milestones Meetings Management Money 7/14/08 Technology Commercialization at Georgia Tech 34
  • 35. VentureLab Projects (current) http:// www.gtventurelab.com 7/14/08 Technology Commercialization at Georgia Tech 35
  • 36. VentureLab Graduates May 2008 7/14/08 Technology Commercialization at Georgia Tech 36
  • 37. 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 7/14/08 Technology Commercialization at Georgia Tech 37
  • 38. 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. 7/14/08 Technology Commercialization at Georgia Tech 38
  • 39. 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 7/14/08 Technology Commercialization at Georgia Tech 39
  • 40. Thriving Community 7/14/08 Technology Commercialization at Georgia Tech 40
  • 41. Technology in Southeast Multiple technology centers. Anchored by: Atlanta, Research Triangle, Florida. Pockets of innovation: Universities, Federal Biggest challenge: R&D centers. Lack of local venture capital. 7/14/08 Technology Commercialization at Georgia Tech 41
  • 42. Attractive Targets in SE • Local startups have demonstrated consistent potential to attract investment dollars. Silicon Valley Other New England Midwest Texas NY Metro SoCal Source: MoneyTree Survey, Southeast 1998-2003 8% 7/14/08 Technology Commercialization at Georgia Tech 42
  • 43. VC in the Southeast Venture capital investments in the U.S., by quarter 30 Quarterly VC Investment ($Billions) 25 Total Venture Capital Investment Investment in the Southeast U.S. 20 15 10 5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: PWC MoneyTree 7/14/08 Technology Commercialization at Georgia Tech 43
  • 44. VC in the Southeast Southeast: steady state of less than $500M/quarter 10 Quarterly VC Investment ($Billions) — off scale — Total Venture Capital Investment Investment in the Southeast U.S. 5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: PWC MoneyTree 7/14/08 Technology Commercialization at Georgia Tech 44
  • 45. Regional Capitalization • Local venture firms do not offer adequate leverage for local R&D. 45 21 × 40 9 × 35 30 Substantial 25 room for 20 improvement! 15 10 1.6 × 5 University R&D ($B) Venture Investment ($B) 0 Source: Venture Economics and the Bay Area Northeast Southeast Center for R&D 7/14/08 Technology Commercialization at Georgia Tech 45
  • 46. 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 7/14/08 Technology Commercialization at Georgia Tech 46
  • 47. 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 7/14/08 Technology Commercialization at Georgia Tech 47
  • 48. 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 Community Policy & Research –Sustainability Services 7/14/08 Technology Commercialization at Georgia Tech 48
  • 49. 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 7/14/08 Technology Commercialization at Georgia Tech 49
  • 50. 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. 7/14/08 Technology Commercialization at Georgia Tech 50
  • 51. Building an Ecosystem Signs of Life Nutrients Natural Selection Renewal Incubation Growth 7/14/08 Technology Commercialization at Georgia Tech 51
  • 52. For Further Information Stephen Fleming Chief Commercialization Officer Georgia Institute of Technology Personal blog: <http://www.academicvc.com> <fleming@gatech.edu> <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> 7/14/08 Technology Commercialization at Georgia Tech 52