Intro to Tech Companies & Business Creation

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Speaker: Raphael Ronen, Commercialization Manager, The Innovations Group (TIG)

Within universities and research institutions there are no shortage of good ideas; but not all of those ideas make commercial sense. In this lecture, we explore what makes a technology worthwhile commercializing. We also touch on some of the lessons we can take from the university setting and apply to any start-up technology.

Part of the CIBC Presents Entrepreneurship 101 lecture series: http://www.marsdd.com/ent101

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  • The Innovations Group is located in the MaRS Centre, 101 College Street. MaRS is where science, business and technology converge. The centre is occupied by researchers, investors, industry representatives, business advisors, start-up companies, and those who specialize in connecting individuals from these different groups. The overall aim of MaRS is to accelerate the commercialization of Canadian innovation.
  • Intro to Tech Companies & Business Creation

    1. 1. Follow or Tweet:#ent101
    2. 2. Introduction to technology ` commercialization Presented by: Raphael Ronen Commercialization Manager -The Innovations Group University of Toronto raphael.ronen@utoronto.ca 16 October 2009
    3. 3. “At TIG, we bring together researchers and businesses to capitalize on the ideas developed at the University of Toronto and the hospitals affiliated with the university, where more than $2 million worth of research is conducted daily. . .” -Tim McTiernan
    4. 4. Research or ?? Idea Commercial Potential? Development Development Technology Business Value established -financing -licensing
    5. 5. Tech Transfer •  Assess Commercial Potential? •  Protect (patent) Business •  Funding Development •  Business Plan •  Marketing Value established -financing •  License / Start-up -licensing
    6. 6. Outline •  Assessment –  Understand your product/company’s strengths/limitations •  Lessons learned from commercializing from an academic armchair –  Start-up versus License –  Funding/Financing –  Ownership
    7. 7. Technology Commercialization Evaluation •  Intellectual Property Factors •  Technology Factors •  Market Factors •  Team Factors •  Impact
    8. 8. Intellectual Property Background •  Patents . . . also copyright, trade secrets, trademarks •  Principle: –  Reward to disclose – 20 year monopoly where right to exclude everyone else –  Greater good: Everyone can practice afterwards
    9. 9. Why Patent •  Development Costs Competitive –  Pharma: $500M-$1.2B Advantage –  Device: $50M-$160M •  Development Time Invest in R&D –  Therapeutic: 8-15 years –  Device: 3-6 years –  Recoup costs R&D / Approvals Revenue Patent First Sale Patent expiry
    10. 10. Patent Factor Evaluation •  Invention has protectable IP –  Novelty (i.e. new and not disclosed) –  Non-obviousness –  Utility •  There is freedom to practice the IP •  IP is defensible and infringement detectable
    11. 11. Patent costs and timelines Office $10-12k US Actions $25k $$ PCT 18 months CAN EP Issuance 1 yr JP +$50k Provisional Patent $2-4k Abandon
    12. 12. Technology Commercialization Evaluation •  Intellectual Property Factors •  Technology Factors •  Market Factors •  Team Factors •  Impact
    13. 13. Technology Factors •  Scientific basis understood •  Scientific data is thorough •  Technology is well developed •  Team has product development capabilities IS IT REAL – WILL IT WORK? Value in developed technology
    14. 14. Micro-CT System •  Scientific basis understood •  Scientific data is thorough •  Technology is well developed •  Team has product development capabilities
    15. 15. Technology Commercialization Evaluation •  Intellectual Property Factors •  Technology Factors •  Market Factors •  Team Factors •  Impact
    16. 16. Market Factors •  Need is well defined •  Product addresses the need •  Market is large and growing •  Competition and barriers are low •  Time to market is short •  Profit margin of product is high •  Market receptors can be easily identified •  Investment or funding can be easily obtained
    17. 17. Example •  Need is well defined Technology Commercialization •  Product addresses the need Evaluation Market is large and •  growing  Intellectual Property Factors •  •  Competition and barriers  Technology Factors •  are low •  Time to market is short  Market Factors •  •  Profit margin of product •  Team Factors is high •  Market receptors can be •  Impact easily identified •  Investment or funding can be easily obtained
    18. 18.  Need is well defined ? Product addresses the need Technology Commercialization  Market is large and growing Evaluation  Competition and barriers  Intellectual Property Factors •  are low  Technology Factors to market is short •   Time Market Factors  high margin of product is •  Multi-element Transducer Profit •  Team Factors  Market receptors can be Bladder Urethra easily identified Heating Pattern  Investment or funding can •  Impact Thermal Damage Boundary be easily obtained Rectal Wall Cooling Balloon
    19. 19. Technology Commercialization Evaluation •  Intellectual Property Factors •  Technology Factors •  Market Factors •  Team Factors •  Impact
    20. 20. Team Factors •  Team has product development capabilities •  Team has time and is willing to support •  Team has realistic expectations •  Team has commercialization experience
    21. 21. Team Factors •  Team has product development capabilities •  Team has time and is willing to support •  Team has realistic expectations •  Team has commercialization experience •  Team is reasonable, ethical, can work well together and deliver
    22. 22. Technology Commercialization Evaluation Idea •  Intellectual Property Factors •  Technology Factors Commercial •  Market Factors Potential? •  Team Factors Understand your strengths, understand your weaknesses and plan accordingly
    23. 23. License versus Spin-Off
    24. 24. License •  “Sell” technology to an established company •  Return: –  royalty paid based upon sales attributable to IP (a percentage of net sales) –  Repayment of patent costs –  Milestones – if license is exclusive then minimum royalties typically apply as well as development milestones (especially in drug development.)
    25. 25. Spin-Off Create a new company •  Build: •  Return: –  Team –  IPO –  Product –  Acquired –  Sales –  Dividends –  Financing
    26. 26. Licensing Considerations •  Good Licensee fit: Can Leverage development, sales and marketing capabilities of an established company •  Add-on technology •  Time and risk constrictions •  Willing to pass control (and responsibility) of your technology
    27. 27. Spin-Off Considerations •  Lack of suitable receptor capacity (licensee) for IP •  Platform technology with solid IP potential for additional synergistic IP •  Potential to be a multi-million dollar public company •  Committed team with long term perspective •  Funding and management can be attracted (team) •  Potential return
    28. 28. Spin-off Company •  Belief that you can advance the technology better than another company •  Spin-Off’s are time consuming, risky, and take up a lot of time that may or may not, be better spent on licensing the IP •  Have potential for big upside under right circumstances. •  Decision to do spin-off needs careful consideration and commitment from all parties involved.
    29. 29. Industry Need •  Some companies and sectors not well suited to generating new lines of business and divisions; others have sophisticated in-licensing experience •  Large companies sometimes look to M&A (Mergers and Acquisitions) as an alternative. •  Companies will pay premium for small companies that are synergistic with their business mission.
    30. 30. It takes 10 times more time to manage a spin-off than it does a licensing transaction
    31. 31. License vs. Start-up Summary License Start-Up Good fit with company Platform technology Add on No good licensee  Less effort  Under your control  In hands of  Higher potential experienced people returns  Chance of success  Lesscontrol  Time consuming  Lower potential returns  Risk of failure
    32. 32. Early stage funding •  Government (Check with your TTO) –  NSERC I2I –  CIHR POP –  OCE market readiness –  HTX –  Accelerator Funds –  IRAP –  Next Generation of Jobs (MRI) •  3 F’s (friends, family and fools) •  Angel / VC funds
    33. 33. Returns to the financiers •  Government •  Money –  Job creation •  Tax credits GIFT –  Training of HQP –  Return to region •  Angel / VC •  Money –  Multiples of their investment (5-10x) •  Guidance NEGOTIATION –  Tangible exit •  Contacts
    34. 34. Ownership and rewards Who owns the intellectual property? •  If you work for a company  Company –  Might get a reward recognition-$1000 per patent •  If you just left a company/university  Be careful –  Developed (or appeared to be developed) from work done while Clear ownership is needed before at the company  ~company owns –  Agreements (confidentiality, will fund! investors non-competition) •  If you work for a university  varied –  You own / University owns / Jointly own (talk to your TTO) –  Reward: 33%-75% of the revenue •  If you work for a university on research funded by a company  company probably has some rights
    35. 35. What TTOs do •  Pay to Protect IP – patents, trademarks, copyrights. •  Assist in the developing of Business Plans and commercialization strategy. •  Assist in getting additional grant funding to further develop IP (sometimes mandatory that the technology transfer office is involved NSERC –I2I). •  Create start-up company when appropriate vehicle for commercialization. •  Assist in raising financing for company. •  Negotiate agreements with licensees.
    36. 36. Recurring Pitfalls and Themes •  Overestimating the science/technology and one’s capabilities –  Lack of realism regarding the actual stage of development of the science/technology (“the next Google”) –  Someone else is probably developing the same technology in their basement •  Poor understanding of the customer and his/her value chain –  Proactive ignorance of challenges involved in developing and realizing value •  Disconnect between business and the science –  Underweighting of importance of demonstrating progressive commercial achievement
    37. 37. Questions

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