1 / 32

Creating a University Based Venture Fund

Creating a University Based Venture Fund. Brian Cummings Technology Commercialization Office University of Utah. The Opportunity. US research Universities are an economic engine conduct >2/3 of all basic research are primary source of technology produce >400 start-ups per yr

tallys
Download Presentation

Creating a University Based Venture Fund

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Creating a University Based Venture Fund Brian Cummings Technology Commercialization Office University of Utah

  2. The Opportunity US research Universities are an economic engine conduct >2/3 of all basic research are primary source of technology produce >400 start-ups per yr Universities vary dramatically in their ability to convert research into results. Majority of Tech Offices can’t hit break even Pressure is mounting to produce results from Feds to State sponsored economic development Companies and VC’s still find it difficult to engage Universities in innovation development

  3. Research Initiatives: Nationwide 2000-2005 State Support of Economic Development $32.5 billion Buildings, university research, high-tech economic development 32 states are currently investing in university research for economic development (Now 41)

  4. The Numbers – an Uphill Challenge • $32.5 Billion bent on building technology ecosystems from US Universities with broken infrastructure • $116 million in annual patent costs • 70% of patents will go unlicensed • 60% of TTO’s aren’t even at breakeven • Ave revenue of ~$460,000 per office • Ave of 2.8 start-ups per year • 80% of venture funding targeted to 12 metro areas Source: University Inc. 2006

  5. Strategies for secondary cities: • Strengthen Clusters and Networks – Use local groups and virtual organizations to bring together investors, entrepreneurs, researchers and other parties to establish formal and informal relationships. • Encourage a Continuum of Capital – Support local angel capital investors who can nurture early-stage companies Increasing • Investment Creativity – Seek out alternative models of investment • Enhance Accessibility – Create policies and programs to support entrepreneurship The 10 highest-performing secondary cities in the U.S. (ranked by number of private equity deals per city) are (1) Boulder, Colo., (2) Salt Lake City, (3) Westborough, Mass., (4) Ann Arbor, Mich., (5) Norwalk, Conn., (6) Providence, R.I., (7) Southborough, Mass., (8) Stamford, Conn., (9) Melbourne, Fla., and (10) New Haven, Conn. Source: www.icic.org - 2007

  6. The Shift • Can Universities drive economic development? • Can they effectively serve their communities? • Can you build a model that can be replicated? • Can you stimulate continued innovation? • Can you build business in the confines of a non-profit? • Can you generate a long term equity structure?

  7. Most Challenging aspects for TCO’s

  8. Creating an Ecosystem

  9. Where do we Start? • Involve Everyone • Restructure Organization • Shift Toward Customer Service Business • Add Value in Every Transaction • Support all Phases of Start-Up Development • Streamline Processes • Identify High Value Collaborative Research

  10. Supporting Early Stage Technology Driving Innovation +Venture Bench +Entrep.in Res

  11. The Best of Angel – Venture - Ecosystem

  12. The University of Utah IssueChallenges

  13. Start-up Activity

  14. Number Start-ups: US Universities - 2007 Source: AUTM 2007

  15. Start-up Activity (by industry sector)

  16. Start-up Activity FY ’06-’08 (Funding Status)

  17. Stage Pre-Seed Seed/Start-Up Funding Gap between $100,000 and $2,000,000 Early Later Source Founders, Friends and Family Individual Angels Venture Funds Investment $25,000 to $100,000 $50,000 to $150,000 $2,000,000/$5,000,000 and up Strong need for a new model Opportunity For Alignment

  18. Decreasing Capital Source: Venture Source, NASVF

  19. Reasons For An Angel Organization • Quality deal flow • Greater investment clout from combined dollars • Collective due diligence • Education: formal and informal • Group social benefits

  20. Member-Managed Vs. Manager-Managed Investment Process Legal Structure Financial Resources Membership Angel Organization - Decision Matrix

  21. Angel Organizations: Investment Statistics: • 70% of angel groups leave investment decisions up to the individual members • 23% of the angel groups invest by majority group decision • Of those that invest by majority decision, 90% are structured as LLCs, supporting previous discussions that the LLC legal structure appears to be the preferred group investment vehicle • 7% of angel groups invest through investment committee decision • No responding angel group required unanimous decision for investment Source: Center for Venture Research, University of New Hampshire 2005 Angel Organization Survey

  22. Equity Capital Markets Large, Complementary Mostly later stage 3,813 deals $29.4B Early Stage Late $26.0B 57,000 deals Mostly early stage 995 Early Stage 415 Seed 2007 Angel Investment source: UNH CVR 2007 VC Investment source: NVCA/PWC/VE

  23. New Company FormationSource of Equity Funds – Typical Year

  24. WASHINGTON NORTH MAINE MONTANA MINNESOTA DAKOTA VT OREGON NH WISCONSIN MASS SOUTH IDAHO DAKOTA NEW YORK MICHIGAN WYOMING RI CONN IOWA PENN NEW NEBRASKA JERSEY NEVADA OHIO DELAWARE INDIANA UTAH ILLINOIS COLORADO MARYLAND WV KANSAS VIRGINIA MISSOURI KENTUCKY CALIFORNIA NORTH CAROLINA TENNESSEE ARIZONA ARKANSAS OKLAHOMA SOUTH CAROLINA NEW MEXICO MISS GEORGIA ALABAMA >100 deals 25-100 deals < 25 deals < 10 deals TEXAS FLORIDA LOUISIANA ALASKA HAWAII VC Deals by State – The added Value 2006

  25. Why a Venture - Seed model is critical • A great investment committee can: • See around the corner • Has the follow-on funding available • Works full time – fund manager • Help sober up an entrepreneur – art to saying “no” • Provide necessary Board and mentor roles • Provide some unrestricted capital • Encourage entrepreneurship * Training at BYU, UU, USU

  26. The Initial Wants • Build a community based fund • Engage the local VC’s • Venture vs Angel • Have the follow-in funders at the table • Clog the pipeline • Closed vs Open

  27. Lessons Learned • Can’t please everyone • No good deed goes left unpunished • Pick a lead • Keep it open – the market knows • Don’t focus on the Univ. needs • Full time commitment • Consider the economics

  28. Next Steps

  29. Commercializing Interventional Medical Technologies An Entirely New Strategy Investor Presentation

  30. ENERGENCE Accelerating Energy Innovation with Early Stage Capital & Commercialization Expertise

  31. The Technology Commercialization Service Alignment Talent Automation

  32. Creating a University Based Venture Fund Brian Cummings Technology Commercialization Office University of Utah bcummings@tco.utah.edu 801-581-7792

More Related