Presents:
Start Up Boot Camp
for University TTO Professionals
and Inventors
Session 6:
Gauging Economic Impact and Outcomes
www.technologytransfertactics.com - 877-729-0959
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In Partnership With:
www.technologytransfertactics.com - 877-729-0959
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Your Panel of Presenters
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.
John Casey is the Director of the Mason Small Business Development Center program,
Director of Mason Venture Mentors, and Entrepreneur-in-Residence at George Mason
University's School of Public Policy. As a lifelong entrepreneur, John has served as CEO of
Caucus Systems Inc., Vice President of Baranof Software, Director of Advanced Systems at
Phoenix Systems Inc., Director of Sales and Marketing for Coyne Kalajian Inc., and Cofounder of Sushi Software LLC. During his 30 years in the information technology industry,
John has led activities that include venture capital financing, mergers and acquisitions,
strategic alliances, business development and international sales. John holds a Master of
Science in Information Technology from George Washington University and a Bachelor of
Arts from Colgate University. John is a member of the Northern Virginia Technology
Council, the MIT Enterprise Forum, the Association of University Technology Managers, and
the Business Alliance of George Mason University.
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Your Panel of Presenters
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.
Ed Nortrup is a patent strategy and execution specialist with a broad range of industry experience. A prolific inventor,
with 72 patents issued in his name worldwide, he has served in key legal and engineering positions ranging
from director of a research and development group to in-house IP Counsel and, most recently, General Counsel. Ed
focuses on patent strategy, application drafting, prosecution and licensing, and has written and prosecuted patent
applications in a wide range of technologies including software, hardware, optics, electronics, business methods and
uses. Ed holds a B.S. in Electrical Engineering from Northeastern University, an M.S. in Manufacturing Management
from the University of Massachusetts, and a J.D. from Massachusetts School of Law.
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. Prior to founding Evan Law Group LLC, Dr. Rauch was a Partner at Sonnenschein Nath & Rosenthal, at Brinks
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Hofer Gilson & Lione, as well as Oblon, Spivak, McClelland, Maier and Neustadt.
Series Recap
Early Decision Making
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Benefits and drawback to start-ups
Assessment
Bootstrapping issues
Team building and dynamics
Money Matters
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Angels versus VCs
Equity allocations
The University Stake
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Valuation issues
Option pools and other equity dilutions
Investment schedules/tranches
Creating a Solid Business Plan
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Managing:
- Market Risk
- Execution/Team Risk
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- Technology/Product Risk
- Financial Risk
Problem & Solution Statement
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Series Recap
Funding Options and Opportunities
A. Attracting and/or seeking out the right investor(s)
B. Structuring the investment
C. Common terms and pitfalls to avoid
D. Investor turn-ons and turn-offs
E. Current investment landscape and forecast for 2011
F. Understanding and living with dilution
Pitching Techniques: Get What You Want
A. Preparation strategies - Timing, NDA, confidentiality agreements, trade secrets, etc.
B. Content
C. How venue should impact the pitch
D. What investors are looking for
E. Key topics, words, and phrases – and common blunders
F. Delivery techniques
G. Striking the right balance between too much information, and too little
H. Getting results – closing and follow-up
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Today’s Agenda
Growth Strategies
Growth issues
Marketing strategies
Freedom to operate
Stakeholder outreach
Later-stage funding
Exit Strategies and Issues
When and how to seek a buyer
Considering an IPO (Initial Public Offering)
Case studies of successful exits and war stories
Legal issues related to exit strategies
Economic Impact and Outcomes
The Context: “Evolving Priorities”
Current Models
An Alternative Approach
How To Collect & What to Collect?
Do’s: How to Use What You Collect
Don’ts: Pitfalls to Avoid
The Path Forward
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Growth Strategies
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Marketing
Growth issues
Freedom to operate
Stakeholder outreach
Later-stage funding
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Marketing Issues
Infringement of Others’ Patents
Freedom To Operate
• Earlier decisions to defer FTO analysis must be revisited as revenues grow
Risk profiling and risk management become more critical as revenues grow
Offers For Sale
• Damage to patent rights if it occurs before an application is filed
• U.S. 1-year grace period
Foreign Rights
• Non-confidential disclosure
• Reverse engineerable
Risk Management
• Inbound licensing
• IP acquisitions
• Operational design guidance
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Growth Issues
Employee Turnover - Hiring & Loss
– Protection of trade secrets
– Customer lists
– Supplier lists
Protection of Data – CFAA
Preserving Margins During Growth
– Patent enforcement in the startup and emerging environment
• Establishing a “war chest”
• Establishing credibility
– Patent licensing as an alternative to enforcement
• Using licensing to manage competition
• Avoiding unfavorable precedents
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Stakeholder Outreach
Who are your stakeholders?
— Investors
— Key customers
— Office of Technology Transfer
Regular communication, no surprises
Talk about your successes
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Later-Stage Funding
High impact intellectual property diligence issues in private equity
and late stage VC transactions
– Ownership/Chain of title
– Asset quality
– Emerging focus on FTO
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Exit Strategies and Issues
•
•
•
•
When and how to seek a buyer
Considering an IPO (Initial Public Offering)
Legal issues related to exit strategies
Case studies of successful exits and war
stories
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When and How to Seek a Buyer
Who drives the decision
– Investors or management?
Decision factors
– Competition
– Company lifecycle
– Market conditions…
Preparation
– Tax planning
– Positioning
– Management and employees…
Seeking a buyer
– Brokers
– Targets and pitching
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Freedom To Operate Opinion
Freedom-to-Operate Opinion – One for Each Country
– FTO search (about $10,000) – discover patents
– FTO analysis of each patent ($30,000 - $100,000 each)
Timing of FTO Opinion – Time to Market
– New patents may issue
– Changes in product design or business strategy, selection of markets
Addressing FTO Risk
– Patent portfolio, licensing – long term strategies
– Business insurance
– Avoid “willful” infringement (opinion of counsel)
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Considering an IPO
High impact patent issues during IPO process
– Validation and support for statements about technology and product
differentiation
– Risk factors related to freedom to operate
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Legal Issues: Exit Strategies
High Impact intellectual property diligence issues in M&A transactions
– Ownership/Chain of title
• Right to use (inbound and outbound software licenses, including open source)
• Shared ownership (such as with customers)
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Non-competition obligations that could constrain the acquirer
Trade secret (fear of “infection” of the acquirer’s business)
Asset quality
Impact on any asserted claims on the acquirer
• Legal opinions
– FTO for the acquirer
•
Note that risk-oriented intellectual property due diligence may be much more
intense for M&A transactions than at any other time in a company’s growth
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Case Studies of Successful Exits
IP can play a significant strategic role in a successful exit
Industry examples:
– Lighting
– Software
– Navigation
– E-Commerce
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Case Studies of “Problem” Exits
IP issues that we have seen kill or greatly delay M&A
transactions
– Open source software
– Patent litigation
– Trade secret
– Ownership
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Tracking Local Job Creation
and Economic Impact
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The Context: “Evolving Priorities”
Current Models
An Alternative Approach
How To Collect & What to Collect?
Do’s: How to Use What You Collect
Don’ts: Pitfalls to Avoid
The Path Forward
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Evolving Priorities
Importance of Small Business To U.S. Economy
Importance of Regional Economic Development to Public
Universities
Importance of New Venture Creation to Regional Economic
Development
New Challenges for University Tech Transfer
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Current Models
Current Models
– AUTM’s Metrics
– University of British Columbia Example
– K.I.S.S. Approach
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An Alternative Approach
SBA’s Small Business Development Center Program
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Overview
Economic Impact
Other Impact
Advocacy
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How to Collect Data
How To Collect?
– Challenges
– Techniques
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USPS
Email
Web-Survey
In-Person
– Automated vs. Labor Intensive
– Business Intelligence
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What Data to Collect
What To Collect?
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What Data to Collect
(cont.)
Was your business in operation at any time during the calendar year 2009?
_____ YES ______ NO (please go on to Question 4)
If yes, please provide the following information about the activities of your
business during 2009.
Total sales of your business in 2009 $_____________
Total number of employees as of December 31, 2009 _____________
Dollar value of personal investments in your business during 2009 $_____
Dollar value of loans received by your business during 2009 $_____________
Dollar value of those loans that were guaranteed by the SBA $_____________
Number of new jobs created in 2009
_____________
Number of jobs retained (not moved out of state) in 2009
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How to Use the Data
How to Use What You Collect
– Achieve clarity around goals
– Maintain visibility on resource allocation (ROI)
– Observe results of service offering improvements
– Engage your stakeholders
Next: Two Examples
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How to Use the Data
(cont.)
Virginia SBDC Economic Impact Report
“The long-term clients of the SBDC generated a
total of approximately $7.2 billion in sales and
73,377 new full time equivalent jobs as a result
of the assistance received.
Based on clients’ assessments, we estimate that
an additional $8.8 billion in sales and 93,449
jobs were saved due to SBDC counseling. “
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How to Use the Data
(cont.)
University of Utah
“Total with indirect employment is over 28,000
employees, payroll over $1.48 Bn and over
$74M income taxes."
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The Path Forward
Context is evolving
Labels are changing:
• “Entrepreneurial Tech Transfer”
Challenges are increasing
Keep it simple and streamlined
Get the word out about your successes
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Zen & The Art
Of
Economic
Impact
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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.
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Recap of Start Up Boot Camp Series
Session 1:
Session 2:
Session 3:
Session 4:
Session 5:
Session 6:
Early Decision-Making and Team Building
Money Matters
Creating a Solid Business Plan
Funding Options and Opportunities
Pitching Techniques to Get The Funding You Want
Impact and Outcomes
 Now available as a 6-DVD set, streaming video or PDF transcripts
Visit www.technologytransfertactics.com for more information.
Thank you for your attendance
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