6.24.11 conference presentation

1. Building the ArkansasVenture Ecosystem Jeff Amerine, PMP Technology Licensing Officer Adjunct Instructor, Entrepreneurship University of Arkansas Advisor, Innovate Arkansas jamerine@uark.edu

2. Introductions The Global Innovation Race What is Arkansas Doing to Win? Recap / Q&A Topics

4. MS, Operations Management – U of A

5. EdD (in-process), Workforce Development – U of A

6. US Air Force Officer 1984-1990

7. System engineer, product manager, VP, CEO, CTO

8. 7 startup ventures

9. 3 Fortune 500s

10. U of A Technology Licensing Officer & Adjunct Instructor, Entrepreneurship

11. Staff Advisor, Innovate Arkansas

12. Manager & Investor, Gravity Ventures ArkansasIntros

13. TLO Overview University of Arkansas Technology Licensing Office Access to 100+ technologies developed at the UA Team of business and intellectual property professionals Mission: Commercialize world-class research to build a lasting knowledge-based economy to benefit Arkansas and the world. http://www.uark.edu/ua/tlo/index.html

16. Facilitate partnerships between firms, universities and economic development organizations

17. Prepare firms to obtain early-stage capital

18. Provide expert assistance in technology, business, organizational management and marketing

19. Advise with legal and intellectual property matters6

21. Support for $49 million in capital raised in 2009-2010

22. IA process makes Arkansas companies “venture ready” 7

23. Why Do a Startup? “I shall be telling this with a sigh Somewhere ages and ages hence: Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the difference.” The Road Not Taken By: Robert Frost

24. Entrepreneur Lifecycle: Who Are These People? Crank Turners Growth Leaders Revenues Adrenaline Junkies $$ Expenses Seed Early Growth Mature / Expansion Time

25. Future “Economic Arms Race”: The Global Innovation Battleground Arkansas’ Challenge and Opportunity Innovation Section Topics

26. What’s at Stake? Innovative / entrepreneurial economies will prosper Innovation accelerates and product lifecycles shorten Capital and talent migrate toward innovative regions with high quality of life Institutional unemployment occurs in stagnate regions Government, business, and individuals compete globally based on their “innovation quotient (IQ)”* * Source: Mochari, I., (2002) The Innovation Factor: What's Your Innovation Quotient?, Inc. Magazine Online.

27. Innovation to Economic Growth Lifecycle Ideation Innovation Commercialization Economic Growth Time Sustained Economic Growth = Continuous Innovation Cycle

28. “Innovation Heat Map” Source: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company

30. Reliant on a few firms

31. Narrowly focusedSource: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company

32. Arkansas Challenges &Opportunity NWA Interactive “Innovation Heat Map” View: http://whatmatters.mckinseydigital.com/flash/innovation_clusters/ Source: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company

34. Significant Start-up Churn

35. Innovation Culture

36. Multiple Sectors/Clusters

37. Small, Fast Growing Hub

38. Reliant on a Few Firms

39. Narrowly FocusedSource: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company

41. Current Arkansas Situation University R&D Innovation Engine Entrepreneurial Culture Available Venture Finance

42. The Valley of Death Pre-Seed Funding & Skill Gaps = Commercialization Friction Points Innovate Arkansas UArk Pre-company Post-company Revenues Venture Capital $$ Angels Expenses Bootstrap Gov Grants Seed Early Growth Mature / Expansion Concept Basic Research Applied Research Market Launch Business Strategy Dev Validation – Mkt & Tech SBIR/STTR Proposal Dev Patent Application/Licensing Time

44. Events

45. Networking

47. NWA Entrepreneurship Alliance

48. Accelerators / Incubators

49. Contests / Competitions

51. Forum for entrepreneur networking Grew out of UA entrepreneurship club Now has 70+ members across the region Meets twice monthly Free to join, so join now! http://nwaea.net/blog/ NWA Entrepreneurship Alliance

52. Arkansas Green Accelerator Promotes company creation around green tech Proposal submitted to Dept of Commerce for $1M Joint UA/IA venture Award date: October 2011 Accelerators

53. The ARK Accelerator IT-focused and aimed at retail, supply chain, food clusters in NWA Modeled after Y-Combinator Joint Winrock / UA / NWACC Venture Seeking $2M in EDA/ETA funding Award date: late summer 2011 Accelerators

54. UAMS NW Healthcare Innovation Incubator Focused on applied healthcare technologies Housed at UAMS NW in Fayetteville Status: Planning stage New Incubators

55. “Gone in 60 Seconds” Elevator Pitch Contest Objective: startup networking Monthly competition First event: August Venue location: NWA (tentatively Buck Nekkid BBQ in Fayetteville) Contests / Competitions

56. Angels Venture Capital (VCs) Strategic investors Debt Mezzanine Public markets Other Financing Sources

57. Management Team Intellectual Property that can be a barrier to entry Customer traction – can the company execute? Physical proximity to the investors Other interested investors – nobody wants to be first Entrepreneur skin in the game Realistic valuation What Attracts the Money?

58. Angels High net worth individuals Early stage seed investments Can bring relevant domain knowledge Occasionally form “Angel Funds” Can include “friends, fools, and family” Angel Fund Examples: Fund for Arkansas’ Future Gravity Ventures Arkansas Angels

60. Largest concentration around R&D Universities

61. Desired returns: Typically a minimum of 10X

62. Examples: Kleiner-Perkins, Sevin-Rosen, NMP

63. Investment Preferences:

64. Proven management team

65. Intellectual property that creates high barriers

66. Customer tractionVenture Capital

67. VC Deal Flow Receive 1000s of Business Plans Read 1000s of Executive Summaries Invite 100s of Companies to Present Due Diligence on 20 Investments Invest in 10 1-2 Winners 10X Returns

68. Angel Fund for Arkansas’ Future $6M angel fund Up to $500K investments Gravity Ventures Arkansas <$1M angel fund $50K-100K investments 21 active members What’s Available in Arkansas?

71. Arkansas Economic Development Commission

72. Equity investment state tax credits – 33.3%

73. Can be monetized and transferred

74. ASTA

75. R&D state tax credits – 33%

76. Can be monetized and transferred

77. Arkansas Capital Corporation

78. New Market Investment tax credits

79. SBA Loan GuaranteesWhat’s Available in Arkansas?

80. The Road Less Traveled – new ventures are critical to our economic health and success! The team, the plan, and a good finance strategy are key A “startup culture” has to be nurtured Arkansas is taking steps to create the right environment!! Recap / Q&A

81. Thank You Supporting the Venture Ecosystem Jeff Amerine, PMP Technology Licensing Officer Adjunct Instructor, Entrepreneurship University of Arkansas Advisor, Innovate Arkansas jamerine@uark.edu“Techpreneurship Blog” http://blog.innovatearkansas.org