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Rising Above the Gathering Storm in the OC: Business Incubation Initiatives Presented to:

Rising Above the Gathering Storm in the OC: Business Incubation Initiatives Presented to: Licensing executive Society, Orange County By David Schetter Assistant Vice Chancellor for Research UCI Office of Technology Alliances Greg Ruehle, CEO Orange Coast Medical ventures

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Rising Above the Gathering Storm in the OC: Business Incubation Initiatives Presented to:

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  1. Rising Above the Gathering Storm in the OC: Business Incubation Initiatives Presented to: Licensing executive Society, Orange County By David Schetter Assistant Vice Chancellor for Research UCI Office of Technology Alliances Greg Ruehle, CEO Orange Coast Medical ventures Jeff Greenberg, CEO Tech Coast Works October 18, 2007

  2. National Academy of Sciences Convocation, Fall 2006 Theme: U.S. global competitivenss Focus: “Rising Above the Gathering Storm” report Challenge to participants: Recommend one action your community could take within the next six months that would address the issues in the Report Attendees: VP level executives from Orange County industrial firms, civic leaders, UC Irvine executives, community members, California Governor’s Office Rep Primary Recommendation: Orange County needs more business incubation

  3. OCBIN Task Force Membership • Allergan • Aubrey Group • Boeing Space Exploration • Coronis Medical Ventures • Cresa Partners • Edwards Life Sciences • Fish & Associates • Infologic, Inc. • Irvine Chamber of Commerce • National Genecular, Inc. • Northrop Grumman Space Technology • OCTANe • Orange County Business Council • Orange County Treasurer • Pacific Ridge Capital • Research Corporation Technologies, Inc. • Southern California Edison • UCI Paul Merage School of Business • University of California, Irvine • Versant Ventures

  4. Orange County Business Incubation Network (OCBIN) Enhancing economic growth in Orange County: • New business incubation • Collaborative R&D • Leveraging investment capital, services and business resources

  5. OCBIN-Connections • Secure communications for matching vetted start-ups with VCs and qualified service providers (screening process) • Start-ups access “best in class” on most favorable terms • Sponsorships by OCBIN-Connections members with visibility on www.OCBIN.org

  6. Business Incubation Resources • Accounting and Financial • Business Development • Economic Development/Assistance • Educational Institutions in SoCal • Facilities & Lab Equipment • Funding (Angel, VC, Government) • Human Resources • Incubators and Centers • Legal Resources • Real Estate • Research, Development, CROs • Technology Licensing • Trade Associations

  7. OCBIN Corporate Partners • Technology scouting • Incubating new company technologies • Collaborative R&D • Accessing UCI and the UC system resources

  8. Tech Coast Works • Second OCBIN Incubator:Information & Computer Science • LLC formed • CEO Jeff Greenberg • One company in operation • Three additional companies being evaluated

  9. Sponsors Service Providers Investors Corporate Partners Economic Development The Incubation Ecosystem Tech Coast Works Portfolio Company

  10. The Incubation Process • Pre-Incubation • Identification of Incubation Prospects • Vetting of Incubation Prospects • Incubation • Seed Capital Provided by Incubator Fund • Mentoring by Incubator Staff and Advisors • Support from Service Providers • Transition from Technology to Product • Series A funding as needed • Post Incubation • Continued Growth • Pursuit of Exit Strategy

  11. Incubation Business Models License-in/ Acquire Technology Sub-License Technology to Customers Improve Technology Productize Technology Open-Source: Provide Services Sub-License Technology to Customers Sell Products via Channel or Direct

  12. Advantages of Incubation • Inventors Retain Control of Technology • UCI and Inventors Increase Revenue Share • Inventors Can Focus on Technology • Mentors Provide Guidance • Additional Assistance from Service Providers • Funding Provided as Needed • Economic Development Stays Local

  13. UCI Technology Accelerator Model for Start-up Companies • Company founded on optioned/ licensed UCI technology and pre-seed capital • Initial non-dilutive funding SBIR, STTR and UC Discovery Grants • Provides for early stage technology development, leveraging UCI resources • A web of agreements between the start-up company and UCI: • Sponsored/collaborative research, license/option, Material Transfer Agreements, Sales & Service, sublease, gifts, consulting, subleases • All standard terms with no exceptions to policy • Management and integration of agreements is key

  14. 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 Technology Accelerator Model OTA $ Seed Funds

  15. Technology Accelerator 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

  16. Technology Accelerator 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

  17. Technology Accelerator 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

  18. Follow-up Actions • Refer possible start-ups for the incubators • Request to be listed as an OCBIN resource • Apply to become an OCBIN preferred service provider and sponsor • Join the OCBIN Corporate Partners Program

  19. Thank you for attending!! www.ocbin.org

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