Start Up Boot Camp for University TTO Professionals and Inventors

1. Presents: Start Up Boot Camp for University TTO Professionals and Inventors Session 2: Money Matters www.technologytransfertactics.com - 877-729-0959

2. In Partnership With: www.technologytransfertactics.com - 877-729-0959

3. Your Panel of Presenters Moderator: Gerard Eldering is Founder and President of InnovateTech Ventures, specializing in venture creation based on inventions licensed from universities and research institutions. Since the company’s founding in 2007, InnovateTech has supported numerous mid-Atlantic universities and co-founded three start-up companies including AlphaDetect and Trilumen. Gerard has been working in the technology transfer community for more than a decade and is passionate about the creation of professionally managed and funded start-up companies. Prior to launching InnovateTech, he founded and served as Director of the Technology Transfer Office at The MITRE Corporation. He is an MBA and a registered patent agent. www.technologytransfertactics.com - 877-729-0959

4. Your Panel of Presenters Brian Cummings is the Executive Director of the Technology Commercialization Office at the University of Utah and Assistant Vice President for Technology Ventures. In the two and a half years that he has been in this role, the office has produced record revenues and successfully started 51 new technology-based companies, 80% of which have received initial funding and beyond. Brian has started three companies in his entrepreneurial career, and his latest endeavor is a technology based start-up utilizing RFID. He is also President of a university-based personalized medicine company. Previously, Brian led the life science commercialization efforts at the University of Texas and prior to that was the Director of Business Development at Micro-Bac International.Jack Brittain is the University of Utah’s Vice President of Technology Venture Development. He received his Ph.D. in Business from the University of California, Berkeley. A professor for 15 years before becoming Dean of the David Eccles School of Business (1999-2009), he published numerous studies of strategic change in dynamic environments, research recognized by the Academy of Management with two outstanding paper awards. Professor Brittain is the recipient of five teaching awards, including the University of Texas Chancellor’s Council Outstanding Professor Award. In 2005 he received the Best of State Award in Education for the David Eccles School’s innovative entrepreneurship and non-profit consulting programs. In 2006 and 2007 he was selected as one of the v|100 by Utah’s leading venture capitalists, an award that recognizes Utah’s most successful entrepreneurs, and was featured as one of Utah’s “25 most influential business people” in 2006 and 2007 by Connect, and was named one of “Utah’s 100 Most Influential People” in 2008 by Utah Business. In 2008 he was named the first recipient of the Pierre Lassonde Presidential Chair in Entrepreneurship by the University of Utah. He serves on the boards of Junior Achievement, the Governor’s Office of Economic Development, the University Venture Fund, the Lassonde New Venture Development Center, the Sorenson Innovation Center, and the University of Utah Research Foundation. Troy D'Ambrosio is the co-founder of multiple start-up companies which have attracted over $500 million in capital. Some of his earliest successes include founding Transworld Telecommunications which was sold to Sprint in 1998 and Convergence Communications which was sold to Lockheed Martin in 2005. He was co-owner and President of D’Ambrosio Chrysler Jeep (sold 2007). He served as the VP of Investor Relations and Corporate Communication for American Stores Company and the Director of Mutual Fund Operations for Wasatch Advisors. Mr. D'Ambrosio is currently the Director of the Pierre Lassonde Entrepreneur Center and Lassonde New Venture Development Center where he has been mentoring students for the past eight years. He graduated from the University of Utah in 1982 and was named the Ernst & Young Entrepreneur of the Year in 2000, a v100 Technology leader in 2008 and Best in State Educational Program Administrator in 2009. www.technologytransfertactics.com - 877-729-0959

5. Your Panel of Presenters Legal Expertise Provided by: Adam Klotz, heads GTC Law Group’s Los Angeles affiliate office (formerly Lenard & Klotz LLP) and specializes in business transactions, with a particular focus on mergers and acquisitions, venture capital and private equity financings and the structuring, formation and financing of complex joint ventures, partnerships and limited liability companies. He has extensive experience handling these and other types of complex transactions for entertainment and technology clients. Previously, Adam practiced at Riordan & McKinzie (now Bingham McCutcheon LLP) and Paul, Hastings, Janofsky & Walker LLP. Adam holds a B.A. from Columbia College in the City of New York and a J.D. from the University of Virginia School of Law. www.technologytransfertactics.com - 877-729-0959

6. The Realities… • The knowledge and skills that are required to build a company to exploit new technologies and products often are very different from those that were required to invent them. • The typical inventor can therefore benefit from having a strong team of advisors to select the appropriate commercialization team, partners and financing. www.technologytransfertactics.com - 877-729-0959

7. 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 Money Matters: Access to Capital US Venture Capital Concentrated 2007

8. MoneyMatters:Access to Capital • Myths: • Avoid the VC’s like the Plague • No such thing as free money • Non-dilutive capital is out there • SBIR, Foundation, State, U Grants, Debt • Angels are better than VC’s • Start-ups can’t be financed with debt. • Debt is more common than equity – 53% • It takes a lot of money to finance a start-up • Not true. The typical start-up requires about $25,000 to get going www.technologytransfertactics.com - 877-729-0959

9. Angelvs VC • In the current economy, institutional investors (venture capital funds) are increasingly seeking companies that have already demonstrated significant traction (e.g., customers, contracts or even revenues) and wanting to invest only large amounts ($3 million or more). • Angel investors, whether individuals or organized funds, can be a good source of seed capital. www.technologytransfertactics.com - 877-729-0959

10. Alternatives • Many professional firms (accounting, law, consulting, engineering) will contribute services on a contingent and/or deferred fee basis and/or for equity in order to help start-ups, both for potential economic rewards and to build new clients. www.technologytransfertactics.com - 877-729-0959

11. ValuationIssues • Valuation of a pre-revenue company is a negotiation, not a science. • The process fundamentally depends upon the investor’s belief in the company’s potential and whether it has alternatives. www.technologytransfertactics.com - 877-729-0959

12. EquityAllocations • Founders often focus too much on the capitalization (“cap”) table. • It is much better to own a smaller percentage of a huge enterprise than 100% of a non-operational entity. The key is to focus on the size of the pie, not just the slice you own. • Savvy investors are concerned not only with return on their investment, but also with ensuring that capital structure creates proper incentives. www.technologytransfertactics.com - 877-729-0959

13. Option Pools and Other Equity Dilutions • The typical VC term sheet will reserve 10-20% of the unissued equity for future issuances to management and other service providers. • This impacts valuation and needs to be taken into account in comparing various offers. www.technologytransfertactics.com - 877-729-0959

14. InvestmentSchedules/Tranches • Investments may be staged over time or conditioned upon the achievement of milestones. www.technologytransfertactics.com - 877-729-0959

15. Milestones • Crucial to make certain that: • Milestones are achievable • Funding amounts match needs • Appropriate penalties exist for investor breaches www.technologytransfertactics.com - 877-729-0959

16. TheUniversityStake www.technologytransfertactics.com - 877-729-0959

17. TheUniversityStake • Negotiation points: • Preferred vs Common • University negotiation • Inventor negotiation • Equity vs Royalties • Valuation • Options and warrants in the license • Participation in future rounds • Fair market value www.technologytransfertactics.com - 877-729-0959

18. InventorStake • Inventors should think about: • The critical role they play • But only to a degree – Executive team • Conflict of interest • Double dipping? • Role in Company • Board, SAB, Founder, Employee • How much equity is enough? • Don’t be greedy www.technologytransfertactics.com - 877-729-0959

19. Walk-Through of Sample VC Term Sheet www.technologytransfertactics.com - 877-729-0959

20. Q&A Utilize the chat box to the bottom left of your screen to submit a question to the panel. Please address your question to a specific presenter. Or Press * 1 on your touchtone phone and this will place you into the phone queue. www.technologytransfertactics.com - 877-729-0959

21. Introduction to Session Three (June 17, 2010) • Creating A Solid Business PlanManaging risk • Audience, market, product • Executive team, financial, etc. Problem and solution statement Mistakes to avoid www.technologytransfertactics.com - 877-729-0959