Invention to Venture Workshop
Daniel Ayala
Dept. of Computer Science
Univ. of Illinois at Chicago
NSF-IGERT PI Annual Meeting
• Over 100 IGERT programs from across the
nation (including another from UIC) and from
many different academic disciplines.
• Presentations, poster sessions and roundtable
discussions about interdisciplinary research
and IGERT programs.
• Final Assessment: We have a GREAT IGERT
program!!
NSF-IGERT PI Annual Meeting
• Invention to Venture Workshop sponsored by
National Collegiate Inventors and Innovators
Alliance (NCIIA). The NCIIA provides faculty and
students with the funding, entrepreneurship
training, and recognition they need to advance
their technology innovation projects.
• From academic research to business venture.
• Exposure to opportunities of taking research
outside of academia and into industry.
Ecovative Design
• Create cost competitive
alternatives to synthetics like
foam and plastics.
• Started as a research project
in an undergraduate level
materials class at RPI.
• Went through technology
transfer process to creating a
business venture (SBIR and
other grants available for
startup businesses).
Intelligent Traveler Assistant (ITA)
• Compact portable device with the capability
to plan multi-modal routes for its user.
Outline
I. Technology Entrepreneurship
II. Idea Validation and Opportunity Assessment
III. Sales and Marketing
IV. Building the Venture Team
V. Intellectual Property and Licensing
VI. Communicating and Selling Your Idea
VII.Finding the Money
Entrepreneurship
• Identify and evaluate a market opportunity.
• Find or invent solutions to fulfill that
opportunity.
• Acquire necessary resources – money, people,
equipment – to make business a reality.
• Manage those resources from star-up to
survival and expansion.
• Manage the associated risks.
Sacrifices of a Successful Entrepreneur
• Uncertainty and stress.
• Very long hours, few vacations.
• The potential for harm to family/personal life/
career (“The man with a new idea is a
crank…until the idea succeeds”– Mark Twain).
• Financial/lifestyle sacrifices.
• Assume risk for a later reward.
Innovation/Commercialization Process
Idea Generation
• Individual, serendipitous occurrence or a
structured group process that takes place in a
research laboratory (ITA?).
• Technology Push – A technology in search of a
problem. An idea with no immediate,
present-day market opportunities.
• Market Pull – Recognizing a broad opportunity
first, and then designing or adapting
technology to meet it.
Opportunity Recognition
• Is there a need for the product? Will it be of
value to anyone? If not then there is no
venture.
• Process of finding markets for your idea:
– Recognize that an existing technology can be used
in a totally different way (e.g. microwave oven –
“What happened to my candy bar?”).
– Find applications for a brand new technology.
Development and Commercialization
•
•
•
•
Refinement of product.
Set up initial manufacturing facilities.
Prepare for commercialization.
This stage is where most likely costs start to
escalate. Marketing and fundraising become a
big part of what you do.
Preliminary Questions
• Does it provide significant benefit to specific
customers?
• Will it work under real world conditions?
• Is it financially feasible/sensible?
• Do you have the technical know-how (skills
and people) to make it work?
• Can you bring it to market? i.e. does your
team have the necessary marketing and sales
skills, or do you need partners?
Information Sources
• Talk about the idea with a lot of people with
different backgrounds. Especially with people
who will challenge your ideas and give you
creative suggestions.
• Tools and resources that are widely available
(entrepreneurial research centers, books).
• Get to know experienced entrepreneurs faceto-face and listen to their stories.
Sales and Marketing
• What are you selling? – knowledge/expertise,
product, service, system, solution
• To whom are you selling it? – individuals,
organizations
• Why will they buy it…from you? – beat the
competition
• How will you sell it? – pricing, channels (sales
staff, distributors, Original Equipment
Manufacturers)
• When will you sell it? – big tech events,
determined by budget cycle
Building the Venture Team
•
•
•
•
The Management Team
Board of Directors/Advisors
Mentors
Service Providers – attorneys, accountants,
consultants, partners
• Investors
Intellectual Property (IP)
• Creations of the mind: inventions, literary and artistic
works, names, images, designs used in commerce, etc.
• Protecting IP is essential. Without it you may not have
a business.
• Very broad subject (whole branch of law dedicated to
IP).
• Technology Transfer Office important in establishing IP
at the university (Office of Technology Management at
Chicago, http://www.otm.uic.edu/ ).
• Four main types of IP: Copyright, Trademarks, Patents,
Trade secrets
IP at UIC
• Office of Technology Management (OTM) sets
guidelines for determining when intellectual property
is owned by a student and when it is owned by the
University.
• Excluding certain exceptions, the University owns all
intellectual property developed by any University
employee or by anyone, including students, using any
University facilities, equipment or funds.
• Info found at:
http://www.otm.uic.edu/sites/otm133.otm.uiuc.edu/fi
les/student_ownership%20081009%20Chicago.pdf
IP at UIC: Exceptions
• Student Entrepreneurship Activities: Work that comes from
campus initiatives that support student created start up
activities by providing limited amounts of funding, space
and other resources.
• Student Class Projects: Only certain courses (such as
industrial arts design or engineering design) that allow
students to own their inventions made as part of the
course. This exception is applied on a course-by-course
basis.
• When a faculty or any other University employee plays a
significant role in generation of that intellectual property
that would qualify them as an inventor for such invention
under US patent law, the invention would be jointly owned
by the student and the University.
IP at UIC
• Works created independently and at the student’s own
initiative for traditional academic purposes are owned
by the student, but the University retains certain rights
to use such works.
• These include class notes, reports, papers, and works
prepared by the student as part of the requirements
for a University degree, such as a thesis or dissertation.
• Case-by-case basis as well. In any case, for anything
developed in the university close communication with
the technology transfer office is necessary.
Patents
• Grants the assignee the right to exclude others from
making, using, or selling the invention in the US, or
importing the invention into the US for as many as 20
years.
• US awards patents to “1st to invent” (rest of the world
goes by “1st to file”). Important to keep records with
date and time to prove “1st to invent”.
• If a paper is published, you have one year to file for the
patent.
• Does little good unless you have the resources to
defend it.
Trade Secrets
• Formula, pattern, physical device, idea,
process of compilation of information
• Provides owner with a competitive advantage
in the marketplace.
• Is treated in a way that can reasonably be
expected to keep the public or competitors
from learning about it.
• No term limit…as long as secret is kept.
Communicating and Selling Your Idea
• The need to sell your idea to potential
investors, customers or potential team
members will arise.
• Four essential documents for communicating
idea to these people:
1.
2.
3.
4.
Business Plan
Executive Summary
Slide Show
Elevator Speech
Business Plan
• 20 – 40 page document that serves as internal
roadmap for company and an external sales tool for
potential investors, customers, and partners.
• Nothing but the truth.
• Everyone on the team should know it and believe in it.
• Consists of:
– Executive Summary – 2 to 5 pages summarizes the plan’s
main points.
– Problem – should grab reader’s attention
– Solution – General statement of how problem is solved.
– Technology and IP – details of technology but intelligible
to a layman. Describe IP status.
Business Plan
• More components of Business Plan
–
–
–
–
Size of opportunity/market
Customers and how they’ll be reached
Competition
Business model – General outline of the way the
company will make a profit and how long will it take
to make the profit.
– Team
– Financial needs – How much? For what time frame?
– Exit Strategy – Details of how investors will get their
money back (hopefully with a healthy return) and exit
your company.
Presentations
• Slide Show
– Presentation given in front of investors.
– Brief (around 20 minutes)
– Tell story clearly and succinctly
• Elevator Speech
– Explaining your plan in 60 seconds or less
– Clear, simple, and concise description of the
problem your venture solves, how it solves it, and
the benefits involved.
Finding the Money
• No money, no venture.
• Various forms of capital
• Personal Debt – most ventures start with this
step. Potential of financial ruin. Maxing out
credit cards, eating Ramen noodles.
Equity
• Purchase of shares of stock in return for money
invested in the company.
• Upside – investors share your viewpoint because
they take risk with you.
• Downside – You give up a percentage of the
company’s ownership.
• People involved in an equity:
• Yourself – Invest your own money on the company.
Equity
• People involved in equities:
– Friends, Family, Fools (FFF) – early-stage and smaller
in amount. Generally invested out of friendship and is
based on less sophisticated, or no, due diligence.
– Angels – High net worth individuals who invest for fun
and profit (from $25K to $200K). Angel groups or
networks might invest up to $1 to $2M.
– Venture capitalists – They fund a very small
percentage of startups. Each VC group has its own
criteria in industry it invests in and at what stage it will
invest in. Usually invest significant dollars and are
looking for a 10x or more return on investment.
Grants
•
•
•
•
Inexpensive
No interest charged
No need to pay back
You don’t need to give up equity.
SBIR and STTR
• Small Business Innovation Research Program
(SBIR) for companies and Small Business
Technology Transfer (STTR) for universities.
• Distributed in two major phases:
1. Up to $100K for a proof of concept.
2. Up to $1M for development
• Solicitations are once a year and workshops
across the country provide information on
applying for the grants.
• http://grants.nih.gov/grants/funding/sbirsttr_pr
ograms.htm
Other Grants
• Cooperative Research And Development
Agreement (CRADA) – used mainly for
development or testing. Government lab works
with company in testing and development. No
money provided but good way to obtain skills and
equipment for testing.
• Private Grants – Numerous foundations and
organizations provide funds for technology
entrepreneurs
(http://www.foundationcenter.org/ )
Business Plan Competitions
• Schools run a business plan competition with prize money
for winner.
• UIC has a yearly business plan competition,
Concept2Venture (C2V).
• C2V 2009 will be held Tuesday December 15, 2009 at
Student Center East. Prizes total up to $17,000 cash.
• A distinguished panel of experts including entrepreneurs,
venture capitalists, investors, and service providers will
judge the entries and provide valuable feedback.
• Teams will be evaluated based on written business plans
and 15-minute oral presentations.
• http://www.concept2venture.org/index.html
Bank Loans
• Rarely a source of capital until a company has
revenue and profits, or at least significant
physical assets that could be used as collateral for
a loan.
• Upside – No dilution of ownership.
• Downside – If company doesn’t make payments it
loses collateral (land, equipment, patents).
• When you don’t need the money banks are
happy to lend it to you. If your need is great,
your ability to pay back probably isn’t so good
and so they’re less likely to lend to you.
Revenues and Profits
• Holy Grail of financing.
• Use your own profits to fund your company.
• Profits can be invested back in to the company
to grow and prosper.
What will investors look for?
• Management team is proven.
• Market is big for the product or service.
Urgent need.
• You demonstrate you can beat the
competition.
• Is the product difficult to replicate? IP is
strong.
• Ability to forecast realistic results.
Conclusion
• Discussed the Invention to Business Venture
process.
• Applicability to ITA??
• Possibility of transferring research to business.
• The materials from the workshop are available
(through me).
THANK YOU.