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Creative venturing creative funding v2 12 06-2013 for distribution

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As part of the Kanzatec Creative Venturing Series, we held Part 3 - Creative Funding in Silicon Valley

Did you know that there are many creative ways to fund your company that don't need Venture
Capital or Angel Investments. Join us to learn what other sources are available to you and how to
take advantages of these resources, such as government loans, leveraging your intellectual property and crowdsourcing.

Published in: Technology, Business
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Creative venturing creative funding v2 12 06-2013 for distribution

  1. 1. 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
  2. 2. 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. UNLOCKING THE VALUE OF YOUR IP 2
  3. 3. Here it Comes UNLOCKING THE VALUE OF YOUR IP 3
  4. 4. 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 UNLOCKING THE VALUE OF YOUR IP
  5. 5. Funding Examples- where I worked $100M $40M >$30M >$100M $2B UNLOCKING THE VALUE OF YOUR IP 5
  6. 6. 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 UNLOCKING THE VALUE OF YOUR IP 6
  7. 7. What Kanzatec Does – R&R IP M&A and Patent Sales Drive greater business success through highperformance patent strategies UNLOCKING THE VALUE OF YOUR IP 7
  8. 8. Example Industries We Serve Social Web E-Commerce Software Data Center Semiconductor Imaging Cloud Transport Networking Mobile Energy UNLOCKING THE VALUE OF YOUR IP Medical 8
  9. 9. Raising funds • • • • • • • Patent sale, licensing, secured loan Services/bootstrapping FFF Bank/credit/secured loan VC/Angels Crowdfunding Government UNLOCKING THE VALUE OF YOUR IP 9
  10. 10. 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 UNLOCKING THE VALUE OF YOUR IP 10
  11. 11. 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 UNLOCKING THE VALUE OF YOUR IP 11
  12. 12. 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 UNLOCKING THE VALUE OF YOUR IP 12
  13. 13. Comparing Standard vs. Syndicated Source: Intellectual Asset Magazine November 2013 (Fas Mosleh) UNLOCKING THE VALUE OF YOUR IP 13
  14. 14. 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 UNLOCKING THE VALUE OF YOUR IP Time Taken 12-18 months 14
  15. 15. A Look at Crowdfunding UNLOCKING THE VALUE OF YOUR IP 15
  16. 16. $5B Raised through CFP in 2013 Types: Donation Equity Reward Lending UNLOCKING THE VALUE OF YOUR IP 16
  17. 17. 10 Most Active Crowdfunding Categories Top: Hardware Software Games Music UNLOCKING THE VALUE OF YOUR IP 17
  18. 18. 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 UNLOCKING THE VALUE OF YOUR IP 18
  19. 19. 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 © Copyright Kanzatec LLC 2013 Easy UNLOCKING THE VALUE OF YOUR IP 19
  20. 20. Stefan Lindsay Creative Venturing UNLOCKING THE VALUE OF YOUR IP Upping Valuation Creative Exits Creative Funding 20
  21. 21. Making music easy and accessible with technology UNLOCKING THE VALUE OF YOUR IP
  22. 22. The gTar is the first App-Enabled Smart Guitar An Interactive and Socially Connected Music Experience UNLOCKING THE VALUE OF YOUR IP
  23. 23. 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 UNLOCKING THE VALUE OF YOUR IP Wide Press Coverage:
  24. 24. 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 UNLOCKING THE VALUE OF YOUR IP
  25. 25. 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 UNLOCKING THE VALUE OF YOUR IP *See education ROI analysis
  26. 26. Social Creation and Consumption Creation Collaboration Consumption Social Interaction / Content UNLOCKING THE VALUE OF YOUR IP
  27. 27. 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 UNLOCKING THE VALUE OF YOUR IP
  28. 28. 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 UNLOCKING THE VALUE OF YOUR IP
  29. 29. Andre Gueziec Creative Venturing UNLOCKING THE VALUE OF YOUR IP Upping Valuation Creative Exits Creative Funding 29
  30. 30. Triangle Software LLC d.b.a Mission: To help drivers beat the Traffic® 12/9/2013 12/9/2013 UNLOCKING THE VALUE OF YOUR IP 1/16
  31. 31. Andre Gueziec, Founder and former CEO Real-time data, analytics, prediction, multimedia platform 12/9/2013 UNLOCKING THE VALUE OF YOUR IP 2/16
  32. 32. Intuitive Presentation Interface • Automated, animated visualization • Ease of use and operation • Auto-populates with latest data • Customized for each affiliate 12/9/2013 UNLOCKING THE VALUE OF YOUR IP 3/16
  33. 33. 60 TV stations and cable providers, radio stations in North America 12/9/2013 UNLOCKING THE VALUE OF YOUR IP 5/16
  34. 34. Beat The Traffic App Presentation 12/9/2013 UNLOCKING THE VALUE OF YOUR IP 13/16
  35. 35. 12/9/2013 UNLOCKING THE VALUE OF YOUR IP 14/16
  36. 36. 12/9/2013 12/9/2013 UNLOCKING THE VALUE OF YOUR IP 15/16
  37. 37. 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 UNLOCKING THE VALUE OF YOUR IP 6/16
  38. 38. Quality Data • comparing estimated travel speeds with leading source RMSE 5.3 mph 12/9/2013 UNLOCKING THE VALUE OF YOUR IP 11/16
  39. 39. Successful Exit in 2012 Strategic acquisition by The Weather Network in Canada 12/9/2013 UNLOCKING THE VALUE OF YOUR IP 16/16
  40. 40. Bill Jackson Creative Venturing UNLOCKING THE VALUE OF YOUR IP Upping Valuation Creative Exits Creative Funding 40
  41. 41. Creative Venturing: Creative Funding Bill Jackson Co-founder & CEO Sinovia Technologies bill@sinoviatech.com UNLOCKING THE VALUE OF YOUR IP 41
  42. 42. 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” UNLOCKING THE VALUE OF YOUR IP 42
  43. 43. 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 UNLOCKING THE VALUE OF YOUR IP 43
  44. 44. I’m from the Government and I’m here to help you… National/State/Local Doesn’t pay for “all” Reports/oversight/rules UNLOCKING THE VALUE OF YOUR IP 44
  45. 45. Other Sources NRE/JDA’s with potential customers Emerging HW incubators License of technology Friends, Family & Fools UNLOCKING THE VALUE OF YOUR IP 45
  46. 46. Sinovia Tactics to Date NSF Grants ~$1M Outsourced Mfg Partnerships JDA, NRE & Samples UNLOCKING THE VALUE OF YOUR IP 46
  47. 47. Thank you UNLOCKING THE VALUE OF YOUR IP 47
  48. 48. Prepared Questions and Open Q&A Creative Venturing UNLOCKING THE VALUE OF YOUR IP Upping Valuation Creative Exits Creative Funding 48
  49. 49. 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? UNLOCKING THE VALUE OF YOUR IP 49
  50. 50. Thank You Creative Venturing …2014 ?? Negotiating a Term Sheet Funding your Patent Ideas Creative Venturing UNLOCKING THE VALUE OF YOUR IP 50
  51. 51. 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 UNLOCKING THE VALUE OF YOUR IP 51
  52. 52. What’s Your V? VALUE Customers Employees Shareholders Investors V V © Copyright Kanzatec LLC 2013 UNLOCKING THE VALUE OF YOUR IP V V 52
  53. 53. Most Popular CFPs • Kickstarter • Indiegogo • Crowdtilt • Angellist • Razoo • Petridish Most Successful • Pebble Watch • Star Citizen • Lets Build a Goddamn Tesla Museum • Recaptcha UNLOCKING THE VALUE OF YOUR IP 53

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