Presentation at NRI-Conference 2014, Day 2 Ways to finance innovators' relieve of present duties in the clinic

1. Presentation at NRI-Conference 2014, Day 2Ways to finance innovators' relieve of present duties in the clinic Dag Finne Senior Business Developer Bergen Teknologioverføring AS www.bergento.no

2. Agenda CV BTO Differentinterests and difficulties BTO and themodelenvisaged Agreements and associatedduties Compatibility withtheexpectations Introduction Case Solution Elements ofthesolution Conclusions

3. CV Bergen Teknologioverføring (BTO) Technology transfer office (TTO) that supports 8 research institutions in commercialising research results and handling all intellectual property aspects. Owned by the University of Bergen, Haukeland University Hospital and the Institute of Marine Research Engineer Marine Tech, Master in Management at NTNU, BI StyrekompetanseEstablished 8 startupsExperience as CEO, Chairman and Board Member in software companiesExperience from ICT industry since 1993 in development and salesJoined BTO in April 2006 as the Senior Business Developer Focus on ICT projects and early stage funding Responsible for 5 startups Dag Finne

4. Case; Ways to financeinnovators' relieveof present duties in theclinic Different interests have to be accounted for Innovators Wish to continue as academicemployees Wanta 50-50 position (can be any) Department Positive, butafraidofbeingdepleted Start-up Needstheinnovators for 12-24 monthsmore (basedonneeds, can be any) Has limited cash Be awareofthe limits of soft funding (ESA) 4

5. IPO, M&A 25M+ VC 2M-50M PE, Project Financing 2M-50M Funding Development Grants Early Stage VC 500k-2M Friends, Family, Founders 5-50k Angel Investors 50k-500k Research Grants Net positive CF ‘Valley ofdeath’ Production Prototypes Net negative CF Engineering Prototypes Product Introduction Distribution Contracts Applied Research Proofof Concept Basic Research Working Prototypes Target Market Stage of Venture Development Revenue Growth Supplier Contracts Founding Team Business Plan Source: Adopted from UCDAVIS Center for Entrepreneurship 5

6. Problem formulated How to facilitate research based innovation and optimize growth of start-ups without compromising obligations of clinical duties How to avoid infringement of ESA’s rules restricting public subsidies to private entities These are apparently conflicting obligations set by national legislation and EU regulations (soft funding limited to 200,000 EUR) 6

7. Solution ExtraFunding University Hospital Department University Hospital Relatedparties Agreement 2 Utilizationof personnel AccountsReceivable Agreements Payment Framework agreement Funding BTO Agreement 1 Utilizationof personnel Payment Payment Invoice Buy-outagreement Start-up 7

8. ExtraFunding University Hospital Department University Hospital Agreement 2 Utilizationof personnel AccountsReceivable Payment Framework agreement BTO Agreement 1 Utilizationof personnel Payment Invoice Buy-outagreement Start-up 8

9. Framework agreement The university hospital in Bergen acknowledges the obligationof and a wish to promote research based innovation at the hospital to the benefit of society and the inventors. The hospital has committed to lay down guidelines to allow innovators to dedicate time to work at their innovation project (the start-up). The hospital will allocate an additional budget for the purpose of co-funding innovation generated by the hospital employees, in accordance with underlying agreements. University Hospital Framework agreement BTO 9

10. ExtraFunding University Hospital Department University Hospital Agreement 2 Utilizationof personnel AccountsReceivable Payment Framework agreement BTO Agreement 1 Utilizationof personnel Payment Invoice Buy-outagreement Start-up 10

11. Agreement - utilization of personnel Agreement 2 Utilizationof personnel University Hospital University Hospital Department This agreement is subject to the Framework agreement. BTO will make a draft and present this to the university hospital and the department for signature. Sets terms and conditions for allocating innovators (medical doctors) to perform work task to further develop their start-up. Each innovator will be able to spend up to 50 % of their regular work hours at the university hospital department. Agreement 1 Utilizationof personnel BTO 11

12. Agreement - utilization of personnel, cont’ The department shall maintain responsibility for payment of salary, social costs, insurance and other duties of the employer. The department will be granted funding from the hospital in order to cover additional costs, such as employment of subsidiary personnel for a limited time period. BTO is responsible for managing this arrangement on behalf of the hospital. 12

13. ExtraFunding University Hospital Department University Hospital Agreement 2 Utilizationof personnel AccountsReceivable Payment Framework agreement BTO Agreement 1 Utilizationof personnel Payment Invoice Buy-outagreement Start-up 13

14. Buy-out agreement Governed by the framework agreement and reflect the terms and conditions as agreed by the arrangement of drafting of personnel. BTO shall invoice the start-up an amount equal to regular salary for the innovators/doctors plus associated interest. The start-up will be responsible for payment of the total invoice as well as the value added in accordance with regulations. The accounts receivable from the start-up shall be handled by BTO on behalf of the university hospital. The hospital will take the risk of non-refundable costs. In case of non-repayment, the costs will be converted to shares or, in case of bankruptcy, written-off. BTO Buy-outagreement Start-up 14

15. Conclusions The medical doctors/innovators will be able to stay in their positions and at the same time performR&D activities to benefit the start-up The hospital department will not suffer financially by these agreements The start-up keeps competent personnel to enable growth The ESA terms of minor financial support are met No financial benefits or risks are claimed by the tech transfer office from those agreements – role of facilitator. Return is based on the exit/selling shares of the start-up 15

16. Thankyou for yourattentionQ&A Dag.Finne@bergento.no