Pre-Seed Fund Presentation 05-04-09

3,432 views

Published on

Details on the Michigan Pre-Seed Capital Fund presented by Skip Simms, Managing Director, Business Acceleration/Manager, MI of Ann Arbor SPARK.

Published in: Business, Economy & Finance
1 Comment
3 Likes
Statistics
Notes
  • Quite well made presentation, congratulations!
    http://www.bathroomsinkconsoles.net/
    http://www.bathroomsinkconsoles.net/category/bathroom-sink-consoles/
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Views
Total views
3,432
On SlideShare
0
From Embeds
0
Number of Embeds
29
Actions
Shares
0
Downloads
175
Comments
1
Likes
3
Embeds 0
No embeds

No notes for slide

Pre-Seed Fund Presentation 05-04-09

  1. 1. MICHIGAN PRE-SEED CAPITAL FUND A collaborative effort of the Michigan SmartZones
  2. 2. Michigan SmartZones 1.Ann Arbor SPARK 2.Automation Alley 3.Rochester Hills/Oakland University Incubator 4.Battle Creek Aviation 5.Detroit/Woodward Technology Corridor – TechTown 6.Grand Rapids 7.Houghton/Michigan Tech Enterprise 8.Kalamazoo 9.Lansing Regional 10.Mt. Pleasant/Center for Applied Research & Technology 11.Muskegon Lakeshore 12. Sault Ste Marie 7 5 2 1 3 11 6 9 8 4 10 12
  3. 3. Michigan Pre-Seed Capital Fund <ul><li>The mission of this fund is to support high-tech start-up companies throughout Michigan as they near commercial viability. </li></ul><ul><li>The focus is on companies that are creating the newest technologies in the following competitive areas: </li></ul><ul><li>Advanced Automotive, Manufacturing, or Materials </li></ul><ul><li>Alternative Energy </li></ul><ul><li>Homeland Security and Defense </li></ul><ul><li>Life Sciences </li></ul>
  4. 4. Funding Amount <ul><li>The Pre-Seed Fund will invest </li></ul><ul><li>$50,000 to $250,000 </li></ul><ul><li>per company </li></ul><ul><li>alongside an investment partner </li></ul><ul><li>who will provide a minimum 0.5:1 match. </li></ul>New Micro Loan Fund will provide loans between $10,000 and $50,000 per company. No match requirement.
  5. 5. Accelerate Through Company Development Start-up Company ------------------------------------------------------------- Successful Business Product or Service Product or Service? Technology validation risk reduction relative to customer needs Prototype product risk reduction Production scale-up manufacturing risk reduction Full production or distribution Business Business and product concept Critical analysis and business modeling Robust business plan w/marketing, competitive, financial Full production or distribution plan People Core Technologist and/or Champion Core Tech Team and initial Business Leaders Expand to full management and production team covering all disciplines Funding $ 0 – $100K $100K – $1M $1M and Up Stage Concept Validation Pre-Seed Seed Early Stage Expansion Later Stage (Series A and Above) Funding Source SBIR/STTR, MUCI Grants, Business Accelerators Pre-Seed Funds Angel Investors Venture Capital
  6. 6. Criteria/Eligibility for Pre-seed Investment <ul><li>Companies must meet the following criteria: </li></ul><ul><ul><li>located in or moving to Michigan </li></ul></ul><ul><ul><li>company must have the rights (ownership or license) to innovative technology </li></ul></ul><ul><ul><li>must be a small business (per the SBA) </li></ul></ul><ul><ul><li>cannot be a publicly held company, but may be a spin-out as a new private entity </li></ul></ul><ul><ul><li>have a plan for attracting additional funding or become cash flow positive </li></ul></ul><ul><ul><li>pass the due diligence review of a SmartZone </li></ul></ul><ul><ul><li>submit their match term sheet or grant approval </li></ul></ul><ul><li>The match must be new money into the company. </li></ul><ul><li>The following do not qualify as matching funds: </li></ul><ul><ul><ul><li>Other State monies such as MTTC/21CJF/MUCI </li></ul></ul></ul><ul><ul><ul><li>Anticipated or current company revenues </li></ul></ul></ul><ul><ul><ul><li>In-kind salary deferrals </li></ul></ul></ul><ul><ul><ul><li>Other trade partner exchanges or trades </li></ul></ul></ul>
  7. 7. Other Investment Matters <ul><li>Use of funds could include but are not limited to: </li></ul><ul><ul><li>intellectual property investigation and protection </li></ul></ul><ul><ul><li>market and technology assessments </li></ul></ul><ul><ul><li>partnership relations </li></ul></ul><ul><ul><li>first/next customer attraction </li></ul></ul><ul><ul><li>building out management team </li></ul></ul><ul><li>Background checks will be made on founder(s)/CEO paid by fund administrator. </li></ul><ul><li>A company can only be approved for funding once. </li></ul><ul><li>A company may reapply once. </li></ul><ul><li>A convertible note will be the default investment instrument for companies without a term sheet. </li></ul>
  8. 8. Application <ul><li>The submission package must include: </li></ul><ul><li>Executive summary (maximum 3 pages) </li></ul><ul><li>Business plan (maximum 30 pages counting financial pages) </li></ul><ul><ul><li>Company overview </li></ul></ul><ul><ul><li>Market information </li></ul></ul><ul><ul><li>Operations </li></ul></ul><ul><ul><li>Product description </li></ul></ul><ul><ul><li>Management </li></ul></ul><ul><ul><li>Financial history and projections </li></ul></ul><ul><ul><ul><li>Amount of cash and in-kind invested to-date </li></ul></ul></ul><ul><ul><ul><li>Financial statements </li></ul></ul></ul><ul><ul><ul><li>Use of funds </li></ul></ul></ul><ul><li>Strategy for follow-on funding </li></ul><ul><li>Matching source Term Sheet or proposal </li></ul><ul><li>Certificate of Good Standing with the State of Michigan </li></ul>
  9. 9. Investment Review <ul><li>The Pre-Seed Fund has an Investment Review Board (IRB) made up of experienced investment professionals from around the state. </li></ul><ul><li>The IRB will review deal submissions continuously and provide constructive feedback to applicants whether or not they recommend funding. </li></ul><ul><li>The IRB will look for the best opportunity to fund. </li></ul><ul><ul><li>from any community in the state </li></ul></ul><ul><ul><li>any of the 4 technology sectors </li></ul></ul><ul><ul><li>no quotas </li></ul></ul><ul><li>The review criteria will assess the Company’s potential to be: </li></ul><ul><ul><li>self sustaining </li></ul></ul><ul><ul><li>create jobs in Michigan </li></ul></ul><ul><ul><li>ultimately repay the investment </li></ul></ul>
  10. 10. Deal Acceptance <ul><li>The Investment Review Board will accept the deal in whole or not at all. </li></ul><ul><li>The co-investing organization or angel terms and investment instrument will be used. </li></ul><ul><li>The following information will be required of each successful company, in addition to any specific milestone information required by the matching investor: </li></ul><ul><ul><li>Number of new patents, copyrights, trademarks applied for and issued </li></ul></ul><ul><ul><li>Annual sales/revenues </li></ul></ul><ul><ul><li>Number of new jobs, existing jobs, and projected new job growth </li></ul></ul><ul><ul><li>Follow-on investment figures and other metrics to gauge the positive effect on Michigan's progress toward building a competitive edge technology economy </li></ul></ul>
  11. 11. Timeline <ul><li>The Pre-Seed Fund will accept applications at any time. </li></ul><ul><li>Applications are screened for completeness, then forwarded to the IRB for review. </li></ul><ul><li>Reviews will be concluded and sent to the Fund Administrator within two months. </li></ul><ul><li>The Fund Administrator will summarize the IRB comments and scores, forwarding to the Smart Zone and company upon decision. </li></ul><ul><li>Documentation execution and funding will be conducted on the matching fund source schedule. </li></ul>
  12. 12. Criteria/Eligibility for Micro Loan <ul><li>Companies must meet the following criteria: </li></ul><ul><ul><li>located in or moving to Michigan </li></ul></ul><ul><ul><li>company must have the rights (ownership or license) to innovative technology </li></ul></ul><ul><ul><li>must be a small business (per the SBA) </li></ul></ul><ul><ul><li>cannot be a publicly held company, but may be a spin-out as a new private entity </li></ul></ul><ul><ul><li>have a plan for attracting additional funding or become cash flow positive </li></ul></ul><ul><ul><li>pass the due diligence review of a SmartZone </li></ul></ul>
  13. 13. Other Loan Matters <ul><li>Use of funds could include but are not limited to: </li></ul><ul><ul><li>intellectual property investigation and protection, but not patent application </li></ul></ul><ul><ul><li>market and technology assessments </li></ul></ul><ul><ul><li>partnership relations </li></ul></ul><ul><ul><li>first/next customer attraction </li></ul></ul><ul><li>Background checks will be made on founder(s)/CEO. </li></ul><ul><li>A company can only be approved for funding once. </li></ul><ul><li>A company may reapply once. </li></ul>
  14. 14. Other Loan Matters <ul><li>Subordinated Note is posted on the web site www.annarborusa.org/start-ups/preseedfund / </li></ul><ul><li>Interest rate is 12% </li></ul><ul><li>Term is 3 years </li></ul><ul><li>Note subordinate to all other debt holders </li></ul><ul><li>Default provisions: </li></ul><ul><ul><li>Failure to pay when due </li></ul></ul><ul><ul><li>Violation of any covenant, agreement or condition in the note </li></ul></ul><ul><ul><li>Bankruptcy or dissolution of the company </li></ul></ul><ul><ul><li>Fewer than a majority of employees in Michigan </li></ul></ul><ul><li>Reporting for five years </li></ul><ul><ul><li>Quarterly financial statements </li></ul></ul><ul><ul><li>Number of employees and new hires </li></ul></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>New IP </li></ul></ul><ul><ul><li>Grants and investments received </li></ul></ul>
  15. 15. Other Loan Matters <ul><li>Loans may be made in two tranches </li></ul><ul><ul><li>Reviewers may recommend a lower amount to loan </li></ul></ul><ul><ul><li>Reviewers may recommend the loan be paid per commercialization step accomplishments </li></ul></ul><ul><ul><li>Second tranche payment based on intermediate milestone achievement, but not guaranteed </li></ul></ul>
  16. 16. Application <ul><li>The submission package must include: </li></ul><ul><li>Business plan (maximum 10 pages counting financial pages) </li></ul><ul><ul><li>Company overview </li></ul></ul><ul><ul><li>Market information </li></ul></ul><ul><ul><li>Operations </li></ul></ul><ul><ul><li>Product description </li></ul></ul><ul><ul><li>Summary of management talent </li></ul></ul><ul><ul><li>Financial history and projections </li></ul></ul><ul><ul><li>Use of funds </li></ul></ul><ul><li>Strategy for follow-on funding </li></ul><ul><li>Certificate of Good Standing with the State of Michigan </li></ul>
  17. 17. Timeline <ul><li>The Fund will accept applications at any time. </li></ul><ul><li>Applications are screened for completeness by the SmartZone and Administrator, then forwarded to the reviewers. </li></ul><ul><li>Reviews will be concluded and sent to the Fund Administrator within two months. </li></ul><ul><li>The Fund Administrator will forward to the Smart Zone and company with the recommendation plus scoring sheet with comments. </li></ul><ul><li>Loan documentation execution and funding will be completed following successful background check. </li></ul>

×