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“Virtual Incubation” Model for Start-up Companies

“Virtual Incubation” Model for Start-up Companies. Virtual company founded on optioned/ licensed UCI technology and pre-seed capital Initial non-dilutive funding can be acquired from SBIR, STTR and UC Discovery Grants – UCI can participate as a subcontractor and collaborator

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“Virtual Incubation” Model for Start-up Companies

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  1. “Virtual Incubation” Model for Start-up Companies • Virtual company founded on optioned/ licensed UCI technology and pre-seed capital • Initial non-dilutive funding can be acquired from SBIR, STTR and UC Discovery Grants – UCI can participate as a subcontractor and collaborator • Provides for early stage technology development, prototyping, animal studies and showing proof of principle, thus leveraging UCI resources • A web of agreements between the “virtual” company and UCI: • Sponsored/collaborative research, license/option, Matetial Transfer Agreements, Sales & Service, sublease, gifts, consulting • All standard terms with no exceptions to policy • Management and integration of agreements is key

  2. UCI At Risk Patent Filing ResearchLab Invention UCDG $ Future Rights from Research Future Rights from Research Research $ Research $ Option/License $ Sales & Service Agmt Proprietary Rights Matching Grant Proposal UC Discovery Grant $ NewCompanyVirtual RealCompanyPhysical Sublease FederalAgenciesSBIR STTR Business Plan Research Proposal Matching Grant Proposal $ UCDiscoveryGrant Funding Sources “Virtual Incubation” Model OTA $ Seed Funds

  3. “Virtual Incubation” Model (continued) Conflict of Interest Review • “Without conflict there is no interest” (Conflicts can exist but must be managed) • Review of financial interests (income, stock, board or management position) • Percent equity holding allowed for UC founder based on stage of financing and dilution • Board membership discouraged and no tolerance for management position – can serve on the Scientific Advisory Board but not as chair

  4. “Virtual Incubation” Model (continued) Sponsored Agreement Terms • Full UCI overhead • “Improvement inventions” rolled into license/option at no additional charge • New inventions in the “Field” added to license/option for one-time fee • First right to negotiate a license to new inventions outside the Field

  5. “Virtual Incubation” Model (continued) Move to Non-virtual Status • Company does strategic partnership with larger company including research funding, sublicense and co-development milestones • UCI receives “attributed income” share of company partnering revenue and liquidity events • Company raises next round of capital, moves out of virtual phase to own facilities & carries out product development, production & sales • UCI receives license revenue on milestones and net sales

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