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Brad Bertoch Wayne Brown Institute

Life After Federal Funding Going from a Research Project to a Successful Business. Brad Bertoch Wayne Brown Institute. Accelerating Emerging Technology Company Success. TechEnterprise 2006 June 14, 2006. Special Thanks to: High Technology Development Corp. (HTDC)

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Brad Bertoch Wayne Brown Institute

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  1. Life After Federal Funding Going from a Research Project to a Successful Business Brad BertochWayne Brown Institute Accelerating Emerging Technology Company Success TechEnterprise 2006 June 14, 2006

  2. Special Thanks to: High Technology Development Corp. (HTDC) Hawaii Strategic Development Corp. (HSDC) High Technology Development Venture (HTDV)

  3. The Fate of the Unsophisticated Entrepreneur

  4. Wayne Brown Institute Improving the Human Condition Through Technical Entrepreneurship Over $1.7 Billion in Private Equity Over 30,000 High Tech Jobs The Vast Majority were Companies with Less than $1 Million in Revenue. 1/2 are Minority, Women or Disadvantaged Entrepreneurs

  5. 2005 Results - PwC MoneyTree Wayne Brown Institute Utah Alumni Companies Raised: $98,000,000 Alumni Companies Accounted for: 40% of Deals Translates into 2000 Jobs in Utah

  6. Wayne Brown Institute in Hawaii 2005 Four Deals Raising $25 million+ in Venture Capital One IPO Raising $25 million

  7. WBI Alumni

  8. Is There Life After Federal Funding? Only if You Think BIG! Realities in Financing Your Business

  9. There is No Such Thing as a Small High Technology Business… They are Large Businesses in Their Early Stages.

  10. If you want a High Tech Lifestyle Business… Buy a Bed & Breakfast that has Wireless Internet.

  11. Cashtration (n.): The act of starting a business, which renders the subject financially impotent for an indefinite period.

  12. Fundraising 101 Know Your Customer

  13. National Venture Capital Trends $B

  14. Seed as a Percent of all Venture Capital * Money Tree, Courtesy PricewaterhouseCoopers / Thomson Venture Economics/ National Venture Capital Association

  15. 2004 Institutional Venture Capital

  16. Established by the Legislature in 1990, HSDC has been catalyst for Hawaii VC industry Real estate economy: no venture capital Indirect investment policy: fund of funds Private sector investment management Venture Capital in Hawaii

  17. Goals: Develop VC industry, support tech sector, achieve return on investment $16 million committed to 9 vc funds $500M leveraged with private co-investment 60+ companies funded 3 IPOs, 4 acquisitions Networks created with vc’s, entrepreneurs, support groups: e.g. HTDC, HTDV, WBI Complements Act 221/215 HSDC Results

  18. Venture Capital is Rebounding More Angel Groups Exist VC Moving Away from Early-Stage Valuations Rebounding Investment Climate Similar to Mid to late ‘90’s Networking is Key Hawaii Venture Capital is Lacking Money Raising Realities Lack of Venture Quality Deal Flow

  19. Fundraising 101 Attracting Investment

  20. Funding Realities • < 1 in 10 Start-ups obtain angel financing • < 1 in 1000 Start-ups are VC-financed • < 1 in 10,000 new companies go public • < 1 in 10 angel deals see VC funding • < 1 in 100 angel-funded companies go public • via IPOs • = 1 million start-ups each year, 100 IPOs • Source: Kauffman Foundation

  21. Know What You Want Investors Fund Things that Generate Revenue! (Harvest Opportunity) Companies Fund Products Governments and 5 Fs Fund Technology (Create Opportunity). You Fund Your Education & Experience

  22. Strategies for Success • Finish Your Technology • Be a Company • Create IP - Yesterday, Today and Tomorrow • Make Products not Promises • Sell Great Stuff to a Lot of Needy Customers

  23. Fundraising 101 Chase the Right Money

  24. BUSINESS LIFE CYCLE FINANCING STAGE: SEED EARLY GROWTH LATER MATURE $25---250K $500K------$2M $8M--------$15M $40------$200M FUNDING SOURCES: VENTURE CAPITAL MEZZANINE IPO BANK DEBT 5 F’s RESEARCH GRANTS NON-BANK DEBT CREDIT CARDS ANGELS STRATEGIC PARTNERS

  25. Investment Risks • Technical - • SBIR, Founders, Angels, HTDV, Grants • Market • Angels, Early-Stage VC, Strategic Partner • Execution • VC, Strategic Partner

  26. Fundraising 101 If you want to be a Duck. You need to Walk, Quack and Look Like a Duck

  27. High Margins Strong IP Sustainable Competitive Advantage Confirmation of Interest Ability to Bootstrap Sales Large Rapidly Growing Market Venturing Expertise The Ideal Deal HTDV/SBIR Angels Venture Capital Market Pull vs. Technology Push

  28. Answer These Questions Venture Funding • Your “Pain” proposition? • Large, growing market? • Sustainable competitive advantage? • Sales? • Prior investment? • Platinum management team? • You want? I get? and When?

  29.  The failure to Innovate  The failure to Create Value  The failure to Persist Over Time  The failure to Maintain Economic Scarcity  The failure to Prevent the Appropriation of Created Value  The failure to Maintain Flexibility (in the face of uncertainty and ambiguity) Reasons Deals Fail

  30. WBI’s Approach to Business Evaluation Is It a Business? Can You Keep It? Can You Do It?

  31. Utilized Market Imperfection • - Scientific • - Circumstantial Is there a New Combination? • Identified Market Imperfection • Resulting Profit Opportunity

  32. 4 Types of Entrepreneurial Discovery Types Ways of Occurring • New Good or New Quality • New Method of Production • New Market • New Source of Raw Materials/Components • Reorganization of an Industry

  33. 4 Types of Entrepreneurial Discovery Ford Assembly Line Post-it Notes Hydro Power

  34. Does the Business Model Make Sense?

  35. Entrepreneurial Script and the Entrepreneur CONSCIOUSNESS vs INTUITION with respect to the entrepreneurial script; EAGERNESS vs RELUCTANCE to "enter" the new venture success script; ABILITY vs LIMITATION to execute the requirements of the script; DISCERNMENT vs GUESSING to determine whether a new venture is "on" or "off” course.

  36. Fundraising 101 Raising Money is a Contact Sport Not a Spectator Sport

  37. Networking in Hawaii High Technology Development Corp. (HTDC) Hawaii Strategic Development Corp. (HSDC) High Technology Development Venture (HTDV) Hawaii Venture Capital Assn. (HVCA) University of Hawaii Angels (UH Angels) Wayne Brown Institute (WBI) Enterprise Honolulu (EH) Hawaii Technology Trade Assn. (HTTA) Hawaii Life Sciences Council (HLSC) Hawaii Small Business Development Center (HSBDC) Office of Technology Transfer and Economic Development (OTTED) Cyber Pizza Maui Tech Ohana

  38. Active: UH Angels HMS International Venture Fund I PacifiCap Hawaii Advantage Capital (Washington, DC) Garage Technology Ventures Menlo Ventures Lava Ventures In Formation: UH Angels: HEAVEN Interested: Sanderling Wasatch Ventures Ventana/ Hamilton Bio Ventures Hawaii Investment Funds

  39. Hoku Scientific Hoana Medical Blue Lava Wireless Titan Key AssistGuide STI Nanopoint Hawaii Biotech FireTide Recent Hawaii Success Stories

  40. Useful Websites http://www.angelcapitalassociation.org http://www.angelscorner.com http://activecapital.org http://www.key.com/html/I-6.8.html http://www.eVenturing.org http://www.uhangels.hawaii.edu http://www.pictr.org

  41. For More Information http://www.venturecapital.org Submit Today!

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