Start Up Boot Camp for University TTO Professionals and Inventors

1. Presents: Start Up Boot Camp for University TTO Professionals and Inventors Session 1: Early Decision-Making and Team Building 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. 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. www.technologytransfertactics.com - 877-729-0959

4. Your Panel of Presenters Legal Team: Charles Cella, Patent Attorney and Co-Founder of GTC, is a recognized thought leader and leading practitioner in the patent and licensing fields. He provides patent strategy, licensing and technology-transaction services to a broad range of clients, from industry-leading software companies to single-inventor start-ups. Prior to GTC, Charles founded and was CEO of BountyQuest, an Internet marketplace for information relevant to the strength, validity or applicability of patents and for which he recruited investments from Jeff Bezos and Tim O’Reilly, among others. Previously, Charles was the first patent attorney at Foley Hoag LLP, where he grew the practice to twenty-five people and advised high-tech and biotech firms of all sizes on building IP portfolios and negotiating technology transactions. Paul E. Rauch, PhD, founder, Evan Law Group LLC, has prosecuted numerous patent applications in a broad spectrum of technologies, including biotechnology, pharmaceuticals, polymers, materials, semiconductors, microfluidics, software, business methods, electronics, telecommunications, manufacturing simulation and analysis, and consumer products. He was a postdoctoral research associate at the Max-Planck Institute in Stuttgart, Germany, and at Harvard University. Dr. Rauch counsels clients on maximizing the value of their intellectual property, including developing prosecution strategies and patent portfolios, as well as preparing validity, infringement, and freedom to operate opinions directed to a variety of products and devices, including pharmaceutical compounds covered by FDA “Orange Book” patents. He has counseled domestic and foreign companies on freedom to manufacture, import and market their products in the United States. His biotechnology practice includes cases involving the diagnosis and treatment of many different disease states, stem cell therapeutic reagents and methods, pharmaceuticals, and drug delivery systems. Dr. Rauch has impressive experience in prosecution of patents, including reexamination and appeals to the Board of Appeals and Interferences, often personally presenting cases directly to patent examiners. Prior to founding Evan Law Group LLC, Dr. Rauch was a Partner at SonnenscheinNath & Rosenthal, at Brinks Hofer Gilson & Lione, as well as Oblon, Spivak, McClelland, Maier and Neustadt. Adam Klotz, Managing Partner, GTC heads the firm'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. in English Literature 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

5. Benefits and Drawbacks to Start-Ups • Start-up versus license • Considering the university vision/mission • Aligning stakeholders: Inventor, University, Entrepreneur www.technologytransfertactics.com - 877-729-0959

6. Service Providers Who is Required for Success? ALIGNMENT ALIGNMENT

7. Driving Economic Development?

8. Economic Development Expectations Source: AUTM 2008

9. Challenges in Driving Economic Dev

10. Technology Value Curve Spinoff ValueGeneration Services • Prototype • Incorporation • Logo/website • Corporate Secretary • CFO Solutions • Umbrella Insurance • Market research • Grants programs Where Universities Traditionally Add Value IDEA PROOF OF CONCEPT PROTOTYPE COMMERCIAL LAUNCH MARKET EXPANSION Commercialization Stage

11. Adding Value through Commercialization Invention needs: Market analysis Product refinement/design Distribution Financing Every step closer to customer sell increases the value derived from a technology Funded by retained earnings (25%)

12. Tech Ventures Team $86 million Investment Funds • KickStart • UpStart • Lineagen • Vendice • Energence • 7 Revs • Software • UVF Glenn PrestwichPresidential ProfessorPresidential Special Assistant Entrepreneurial Faculty Assoc Community of Faculty Entrepreneurs Tom Kennedy, MDFaculty Entrepreneur Faculty Outreach 5-8 faculty case load 280 faculty10% total faculty Val AntzakNPS General CounselAttorney Entrepreneur in Residence Troy D’AmbrosioSeasoned Entrepreneur Raised Capital Director of Education Programs > 100 business people > 1100 students Brian Cummings Genetic Scientist/IT Entrepreneur Technology Commercialization/Commercial Research Research $300 millionfederal research 300 “Inventions” 70 Potential Licenses30 Potential Companies Commercialization Company

13. Venture Bench • Spanning Valley of Death • The Gully of Inconvenience • Cafeteria plan of services to keep company focused on product development • Leverages investor dollars • Opportunities for students • Engage community through Entrepreneurs in Residence

14. Returns from Commercialization • Dollars are in • Equity and royalties • Research back to the University • Donations and other support • University of Utah receivedover $20 million in gifts tosupport commercialization • Commercial-sponsored researchyields more in returned overheadthan University’s share of licenseincome

15. Enriches Research • Translation processgenerates questions • Faculty engaged to findanswers • Involves students • Entrepreneurial teaching • Creates new fundingopportunities • Commercial sponsors tendto be repeat customers • Less grant writing is more time for research • Many faculty with opt out, and this is okay • Work with faculty who want to be involved • Faculty success generates interest

16. Total Mission Integration • Educational programs > 1100 students • Work of great value • Defining educational experience • Student involvement hugepositive for faculty • Donor gifts over $20 million • Lassonde Center $13.25 million • Sorenson Discovery Center $6 million • Annual sponsorships over $400,000 • Investment dollars • University Venture Fund manages $18.5 million

17. Assessment • Feasibility analysisManufacturing and distribution • Develop your patents in the countries where you manufacture (producers) or where you distribute (consumers) • Commodities / economy of scale - U.S. only? • Examples: biotech, semiconductors, exercise equipment • Scale- up factors • Assessing patentability, patent claim breadth • Three functions • Prevent copying - minimum function of patent • Prevent competition – stopping any viable competitor • Extract all value from invention / idea - typically only accessible through law suits • Beware of empty breadth Competition, market trends, market size andlikely penetration, likely partners www.technologytransfertactics.com - 877-729-0959

18. Bootstrapping Issues • Pre-launch funding • Getting started: - Space - Corporate documents - Compliance - Tax issues --Special taxation of Intellectual Property requires legal assistance --It’s important that the budgets you assign are appropriate for the time, level of risk, and stage of development - Technology-linked financing--Be aware of the tax credits that are available • Starting lean and mean www.technologytransfertactics.com - 877-729-0959

19. Team Building and Dynamics • Partnering • Advisory board recruitment/make-up • Leadership • University interest/role • Conflict of interest • Other legal issues www.technologytransfertactics.com - 877-729-0959

20. Money Matters and Inventor Buy-In • Value versus equity • Leadership incentives/options/employment agreements • Early-stage valuation • The investor perspective -- deal-breakers • Managing inventor expectations www.technologytransfertactics.com - 877-729-0959

21. Service Providers Who is Required for Success? ALIGNMENT ALIGNMENT

22. COMMUNITY Bus Entrep. VC’s Students Govt. Univ #1 #94 REORG – ENGAGE – SERVE – ADD VALUE - EXECUTE Engage Partner Talent Support Funds $70 7RV KS UEC MBA EIR Ex $16 $50 Lass Ven $50 P.D. Law EFA Seat JV SDC SB TT $10 VB Acc STRUCTURE

23. COMMUNITY #1 #94 REORG – ENGAGE – SERVE – ADD VALUE - EXECUTE STRUCTURE

24. COMMUNITY Bus Entrep. VC’s Students Govt. Univ #1 #94 REORG – ENGAGE – SERVE – ADD VALUE - EXECUTE STRUCTURE

25. COMMUNITY Bus Entrep. VC’s Students Govt. Univ #1 #94 REORG – ENGAGE – SERVE – ADD VALUE - EXECUTE Engage Partner Talent Support Funds STRUCTURE

26. COMMUNITY Bus Entrep. VC’s Students Govt. Univ #1 #94 REORG – ENGAGE – SERVE – ADD VALUE - EXECUTE Engage Partner Talent Support Funds $70 7RV KS UEC MBA EIR Ex $16 $50 Lass Ven $50 P.D. Law EFA Seat JV SDC SB TT $10 VB Acc STRUCTURE

27. The Best of Angel – Venture -Ecosystem

28. Metrics Start-up Activity FY ’06-’10 (Funding Status)

29. Tools • Patent exchange • NCS • Marketing • Research/new product dev • Deal flow • Patent bundling • Patent donations 2 3 IP Evaluation Module Industry Module Connectivity 1 TCO Office Inventor Module • Tech assessment • NCS • Licensing • Marketing 4 Legal Module Module • Pre-set legal contracts • Set fee structure • Litigation • Audit • Contingency structures Start-up Financing Module • Angel / VC’s • Nail-it – Scale-it • CEO network 5

30. Performance • In FY 2009 we worked with 87% of campus academic units. • > 1100 students participated in student programs • 23 new companies formed • Utah tied MIT #1 in 2008 AUTM Survey • Utah ranks #1 in revenue generated per research dollar among major research universities • Booked over $50 million in commercial research

31. Economic Results 2005-2009: 89 companies created, 5 failed 8 out of area (2 California, 1 Germany, 1 China, 1 Korea, 1 Netherlands, 1 Norway, 1 Belgium) 76 companies in Utah raised $272 million in financing with 25% operating from sales Employ over 400 directly with payroll over $34,225,000 (state income taxes $1,713,000) 144 Utah companies employing over 7,500, payroll over $525,000,000 (income taxes $26,250,000) Total with indirect employment is over 28,000 employees, payroll over $1.48 billion, & over $74 million income taxes

32. What we think is different Changed from cost recovery to investment Cost recovery is inevitably a failure Investment logic produced tangible economic impact Changed the nature of our work to the positive Commercial sponsored research gave us a sustainable business model Total mission integration given us central role Programs mitigate early stage risk Provide leverage for investors Encouraged capital formation

33. Economic Impact • Value is generated in the jobs created • High quality jobs for graduates = alumni • High growth companies create jobs as they grow • Value in contributions to community • Pay taxes and employees pay taxes • Contribute to University and community • Fund further research at the U • Help retain faculty • Faculty help retain companies

34. Introduction to Session Two (June 10, 2010) • Money MattersThe realities: Playing in the Investor’s SandboxAngels versus VCsValuation issuesEquity allocationsOption pools and other equity dilutionsInvestment schedules/tranchesMilestonesAlternativesThe University Stake www.technologytransfertactics.com - 877-729-0959