Evolving Your State s Science Enterprise into Marketplace Successes Jonathan Goldman Principal, GA Tech VentureLab Entrepreneur-In-Residence, Georgia Research Alliance
The Business of Commercialization Scientists/Students/Academic Innovators: Entrepreneurs
Technology Commercialization: Turning Science Into Business Entrepreneur Valley of Death Academia Technology Readiness Level
Definition of a Startup
Startups SEARCH; Companies EXECUTE
Entrepreneurial Ecosystem Proof of Concept Company Launch Company Scale-up Technology opportunity identification and evaluation Business strategy and model Company formation, technology licensing Company scaleup incubation Venture capital funded University Partners University representatives Technology Transfer Incubators (e.g. ATDC, BioBusiness Center) Community Resources Start-up team Stage-appropriate management Investors, other fund sources GRA Ventures GRA Venture Fund Phase 1 funds Phase 2 funds Phase 3 loan GRA designated consultants Investment Funding GRA Ventures functions
Background: Who is the GRA? Public-private partnership; now in 27th year Annual allocation - State of Georgia Goal: stimulate innovation-based economic development Board of business & academic leaders Coalition of major research universities Three programs: Eminent Scholars Infrastructure Development GRA Ventures
GRA Venture Fund, LLC Early stage venture fund focused on companies emerging from the GRA Ventures program $45 million under management 11 investments to date with several follow-on investments and one exit Robust portfolio of candidate companies
GRA Ventures process Phase 1 Phase 2 Phase 3 Phase 4 $50K ($25K Φ1A/ $25K Φ1B) $100K ($50K Φ2A/ $50K Φ2B) Up to $250K ($100K Φ3A/ $150K Φ3B) $200K - $2.5m (Seed & Series A) Grant to univ. Grant to univ. Loan to NewCo Equity in NewCo Feasibility Proof-of-concept Customer Discovery Regulatory Risk IP Prior Art Does it make sense to form a company? Market dynamics Supply chain map Production costs First proto /MVP / Customer Validation Animal model demo 1:1 matching $$$ License to NewCo Mentor attached Production beta First customers Customer Creation (First real revenues) Management in place Corp. governance Start IND-enabled studies Shipping product Customer Growth Fill out BoD/BoA
The VentureLab Way
Categorization
I-Corps Alignment
GRA Ventures Program Alignment
Results to date: State of GA Over 450 awards to 305 companies/projects Awards and loans total over $30 Million More than 170 active projects and companies Over 1,500 jobs created Greater than $1 billion in equity investment More than $660 million in company revenue
Backup
10 Yrs - Lessons Learned Percentage Run out of funds Cash mismanagement ability Unable to attract follow-on funds Adverse funding market conditions 6 Poor business model Model inconsistent with market structure Inappropriate pricing model 10 Start-up failure modes Technology fails Management dysfunction Development takes too long Failure in trials Non-reproducible product Poor start-up team chemistry Incomplete or non-complementary skill set of team 29 27 Failed IP protection Misjudgment during due diligence Insufficient claims awarded 3 Market related issues Misjudged market dimensions or dynamics Stolen market (i.e., new competitor) Adverse market dynamics 20 Relocation Faculty member relocates Company moves out of state 5
Observations from 10 years of experience Factors for success Active sourcing of technologies is critical to find the strongest commercialization opportunities Hiring experienced, fundable entrepreneurs must occur in concert with active technology sourcing and scale-up Investing in connectivity and networking is required, despite seemingly ambiguous benefits Patience is necessary when assessing performance, since university-based projects take time to show job creation results Rationale Prudent scale-up depends on finding more strong ideas, not simply funding a higher percentage of applicants These actions are self-reinforcing and address multiple bottlenecks Benefits of critical mass generally occur through interconnections in the ecosystem Typical time to market for a bioscience start-up can easily exceed 5-7 years