An overview of the Enterprise Innovation Institute at Georgia Tech, with special attention given to startups/spinouts.

1. Technology
Commercialization
at Georgia Tech
Stephen Fleming
Chief Commercialization Officer
<fleming@gatech.edu>
© 2008, Georgia Institute of Technology

2. Stephen Fleming
• 13+ years venture capital investment
experience.
–General Partner, Alliance
Technology Ventures.
–18 investments as lead
investor, 15 exits to date.
• BS, Physics, Ga. Tech (Highest Honors).
• 15 years operational experience at AT&T Bell Labs,
Nortel, LICOM (venture-backed startup).
–Supervised startups developing first ADSL modem and one of the
first cablemodems in early 1990s.
• Multiple advisory boards at Georgia Tech; endowed chair
in telecomm; occasional instructor in MBA
entrepreneurship program.
• Strong regional technology leader.
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3. Organization Chart
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4. U.S. Economic Challenges
• Globalization, “Flattening of the world” means the
U.S. can’t compete as in the past.
• Innovation is essential to creating revolutionary
products & processes
• 2005 Georgia Manufacturing Survey
underscored importance of innovation.
• Companies competing on innovation:
–Reported return on sales 50% higher than
others
–Paid wages 30% higher than others
–Were 40% less likely to lose work to
outsourcing than others
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5. “Innovation U.” Report
“Virtually every combination of industry relationship or
economic development activity can be found at Georgia
Tech, and in a very real sense, the university is an operating
partner with Georgia state government in the
implementation and management of a variety of
technology-focused initiatives. Perhaps more than any
other research university in North America,
economic development is an integral, critical
component of the mission of the Georgia Institute
of Technology, and this has been true from its
very inception.”
–Southern Growth Policies Board, 2002
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6. Building an Ecosystem
Signs
of Life
Nutrients
Natural
Selection
Renewal
Incubation
Growth
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6

7. National Rankings
U.S. News & World Report, America’s
Best Engineering Graduate Schools 2008
1. Massachusetts Institute of Technology
2. Stanford University
3. University of California — Berkeley
4. Georgia Institute of Technology
5. University of Illinois — Urbana-Champaign
6. California Institute of Technology (CalTech)
7. Carnegie Mellon University
8. University of Southern California (USC)
9. Cornell University
tie University of Michigan — Ann Arbor
http://grad-schools.usnews.rankingsandreviews.com/grad/eng/search
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8. National Rankings
U.S. News & World Report, America’s
Best Engineering Graduate Schools 2008
Strength across the board!
Aerospace #4
Biomedical #2
Chemical #13 Industrial #1 17
years!
Civil #6 Materials #8
Computer #7 Mechanical #7
Electrical #6 Nuclear #9
Environmental #6 Petro/Mining not offered
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9. GT Research Distribution
Approx. half a billion dollars total R&D on campus for FY2008!
College of
Computing
Other
Research Centers
College of
Sciences
College of
Engineering
GTRI
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10. Nutrients
• Recruiting research
talent—worldwide
• Georgia Research
Alliance (GRA)
–Eminent Scholars
–Facilities/equipment
• Reinventing academic
disciplines
–College of Computing
–Emory/GT Biomedical
Engineering Dept.
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11. Signs of Life
• Emphasis on
interdisciplinary
research
• Research centers
–Over 100 on campus,
from textiles to
nanoscience
–MARC, MiRC, GEDC,
Broadband Institute,
GTEC Tissues, etc.
• GRA Phase Zero awards
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12. Patent Ranking
U.S. Patent & Trademark Office,
Calendar Year 2005 (last year available)
# patents
1 390 University of California (system)
2 136 Massachusetts Institute of Technology
3 101 California Institute of Technology
4 90 Stanford University
tie 90 University of Texas
5 77 University of Wisconsin
6 71 John Hopkins University
tie 71 University of Michigan
7 64 University of Florida
8 57 Columbia University
9 43 Georgia Institute of Technology
tie 43 University of Pennsylvania
10 41 Cornell University
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13. Natural Selection
• Intellectual property
protection (OTL)
• VentureLab
–Business plan
–Management
–Money
• GRA Phase I and II
awards
• GT Edison Fund
• SBIR Assistance
Commercialization Services
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14. Intellectual Property Goals
• Reward the faculty for creation of valuable IP
• Support innovation
• Strengthen research programs
• Strengthen global reputation
• Attract top-quality faculty & students
• Fulfill tech-transfer obligations
• Add value to intellectual property
• Strengthen industry relationships
• Create successful entrepreneurs
• Strengthen local technology community
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15. Income Distribution
100%
Georgia Tech
Research Corp.
66%
Academic Unit(s)
33%
First $2500
Inventor(s)
0%
$2,500
$500K $1M+
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16. Converging Challenges
• Increasing number of disclosures drives
overall demand
• “The World is Flat”
–Increasing GT demand for overseas filings
• Drives patent cost from ~$15K to ~$100K
–Increasing competition for research partnerships
from overseas universities
• Increasing ratio of biotech at GT (requires
overseas protection)
• Potential USA shift from “first to invent” to
“first to file”
• USTPO proposed limitations on claims, etc.
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17. IP Mgmt./Evaluation
Invention
Screens Disclosures
Export Control
Need more information / development
Industrial Contracts Technology Technology
Evaluation
Analysis
Dept. Chairs / Protect Rights to
$ Faculty?
Deans / GTRI IP?
Initiate IP Prot. $ External $ Patent
Counsel Application
Market Market
Evaluation
Responsibility Analysis
GTRC
EI2 / CS Path?
...continued
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18. IP Business Development
Standard
Templates Consulting Rights to
Path? Faculty?
Georgia
Research $ Startup / Spinout Industrial License
COI Review Alliance
Conflict of Business Marketing
Interest Plan Plan VentureLab Tech. Marketing White Paper
Rights to Funding Rights to
Faculty? Licensee? Faculty?
& CEO?
Term Sheet Negotiation Standard
Templates
Responsibility
GTRC Compliance License
Review Negotiation External Counsel
EI2 / CS
...continued
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19. IP Licensing/Compliance
License
Responsibility
Negotiation
GTRC
Startup / Spinout Industrial License
EI2 / CS
Startup Formed License
ATDC or
EmTech Bio Incubator?
Royalty Collection
Successful Industrial Monitoring
Startup Partner Compliance / Litigation
Patent Maint. & Defense
Equity Royalties & etc.
Inventor(s)
Portfolio Distribution $ Academic Department(s)
LIquidation of Payments
GTRC
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20. IP Business Development
Standard
Templates Consulting Rights to
Path? Faculty?
Georgia
Research $ Startup / Spinout Industrial License
COI Review Alliance
Conflict of Business Marketing
Interest Plan Plan VentureLab Tech. Marketing White Paper
Rights to Funding Rights to
Faculty? Licensee? Faculty?
& CEO?
Term Sheet Negotiation Standard
Templates
Responsibility
GTRC Compliance License
Review Negotiation External Counsel
EI2 / CS
...continued
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21. VentureLab
• Founded September 2001
–Now a model for other universities
–Part of Enterprise Innovation Institute
• Reports up through Office of the Provost
• Faculty-focused process
–Risk identification and mitigation
–Venture-backable innovations
• Goal: Successful startup companies based
on Georgia Tech research
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22. VentureLab
Market
Milestones
Meetings
Management
Money
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23. Market: Business Plan
• Classic startup questions—Who, What,
Where, When, Why, How:
–Who is the customer?
–What is the pain they are trying to eliminate?
• Candy, vitamin, or painkiller?
–Why is your technology the right answer?
–Where (geographically) are your customers?
–How much are they willing to pay?
–When will effective competition emerge?
–What are the growth trends?
–What is the right sales channel?
–Who are potential partners? Exit through M&A?
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24. Milestones: Business Plan
• It’s far too easy to focus on the technology
promise, and ignore the “details”:
–When will you have a prototype?
–When will you have a beta test?
–When will you have a paying customer?
–How many people do you need to hire?
–When will you hire them?
–How much money do you need at first?
–When does that run out?
–How much will you need after that?
–How do you know when you are winning?
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25. Meetings
• Launching a startup company is a team sport!
• VentureLab can introduce you to:
Angel investors Bankers
Venture capitalists Accountants
Government grantors Corporate lawyers
Business advisors Patent lawyers
Potential employees Recruiters
Beta customers Marketers
Corporate partners Consultants
Regulatory experts and more...
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26. Management
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27. Dealing with Universities
• Teaching a professor how to be an
entrepreneur is like teaching a cat to swim:
–It can be done.
–You will lose blood.
–You’ll never be satisfied with the results.
–You will annoy the cat.
• Different motivations, different priorities,
different views of “proper procedure”
• Best bet: Recruit an entrepreneur to work
with the professor. 1+1=3.
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28. Money
Assistance with small-
business grants from
eleven Federal agencies.
Grants and loans to
startups based on Georgia
university research.
Equity investments in
startups with a connection
to Georgia Tech.
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29. Georgia SBIR Assistance
• Small business R&D funding available from
eleven Federal agencies
–NASA, DOD, DOE, NIH, EPA, etc.
• Grants, not loans or equity!
• For help with SBIR and STTR process, visit
<http://www.innovate.gatech.edu/sbir>.
• Up to $850K available
across two phases of
development
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30. Georgia Research Alliance
• Recruiting Eminent Scholars from all over
the world to Georgia
• Investing in university capital equipment
–Over $600 million in last 15 years
• Innovation grant program
–Phase 1: up to $50K to university R&D
–Phase 2: up to $100K to university (must be
matched—equity, SBIR, sale of services, etc.)
–Phase 3: up to $250K loan to company (must be
repaid upon success or leaving Georgia)
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31. GRA Matching Funds
• Provides up to 4:1 non-dilutive leverage for
initial outside investment:
Equity, Other
Grants, etc.
Phase I $50K grant to
university
Phase II $100K validation $100K matching
investment grant to univ.
Phase III $250K loan
Total $100K $400K
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32. GRA Venture Fund
• Approved by Georgia legislature in April ’08.
• State invests $7.5M as anchor to $30M+
early-stage venture fund.
• State tax credit established as incentive to
private (3:1) investors.
• Can invest in equity or debt in VentureLab
graduate companies.
–University intellectual property
–VentureLab business discipline
• Target: $1M+ per deal.
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33. GT Edison Fund
• Newly-launched program to encourage
invention and innovation.
• Funded by charitable gifts from GT alumni,
foundations, friends of the university.
• Early-stage equity prior to angel or venture
capital investments.
• Still primarily in fundraising mode, but has
made a single initial investment (4Q2007).
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34. VentureLab
✓
Market
Milestones
Meetings
Management
Money
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35. VentureLab Projects (current)
http://
www.gtventurelab.com
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36. VentureLab Graduates
May 2008
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37. Incubation
• Advanced Technology
Development Center
(ATDC)
• GRA Phase III loans
• Ga. Seed Capital Fund
• Minority Business
Enterprise Center
• National VC attention
• Centers of Innovation
–Statewide tech areas
Entrepreneur Services
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38. ATDC Member Profile
• Protecting the brand by being selective in admitting
new members.
• Historically, only 1 out of every 9 applicants is
accepted.
• Early stage company with unique technology
differentiator.
• Product-based (no service companies).
• Demonstrate a competitive advantage and high
growth potential.
• Attractive to external financing.
• Coachable, community-oriented founders.
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39. ATDC Offerings
Consulting
–Strategic business advice
Community
–Interaction with other entrepreneurs
Connections
–Connections to people and resources
Centre
–Facilities designed for startups
Credibility
–Instant recognition
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40. Thriving Community
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41. Technology in Southeast
Multiple technology
centers.
Anchored by:
Atlanta,
Research
Triangle,
Florida.
Pockets of
innovation:
Universities,
Federal
Biggest challenge: R&D centers.
Lack of local venture capital.
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42. Attractive Targets in SE
• Local startups have demonstrated consistent
potential to attract investment dollars.
Silicon Valley
Other
New
England
Midwest
Texas NY Metro
SoCal
Source: MoneyTree Survey,
Southeast 1998-2003
8%
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43. VC in the Southeast
Venture capital investments in the U.S., by quarter
30
Quarterly VC Investment ($Billions)
25
Total Venture Capital Investment
Investment in the Southeast U.S.
20
15
10
5
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: PWC MoneyTree
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44. VC in the Southeast
Southeast: steady state of less than $500M/quarter
10
Quarterly VC Investment ($Billions)
— off scale — Total Venture Capital Investment
Investment in the Southeast U.S.
5
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: PWC MoneyTree
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45. Regional Capitalization
• Local venture firms do not offer adequate
leverage for local R&D.
45 21 ×
40
9 ×
35
30
Substantial
25
room for
20
improvement!
15
10 1.6 ×
5 University R&D ($B)
Venture Investment ($B)
0
Source: Venture Economics and the
Bay Area Northeast Southeast Center for R&D
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46. Growth: Industries
• Industry Services
–Business consulting for
competitiveness, quality,
lean mfg, etc.
–Environmental, energy
–Gov’t procurement
–Strategic business
services & analysis
• Designed to help
Georgia companies
compete in the global
marketplace
Industry Services
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47. Helping Mature Industries
Simplex Nail
…with Ga Tech
Ind. Services:
• Cut inventory
costs by 52%
• Resumed production in all of its
product lines
• “We are alive because of it. Our
cash flow all around has
improved and our production is
more efficient.”
– Plant Manager Jeff Kurtz
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48. Growth: Communities
• Community Policy &
Research Services
• Bringing innovation to
local and state
government entities
• Technology-based
research and policy
projects
–Local economic
development
–Balanced growth
Community Policy & Research –Sustainability
Services
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49. Cycle of Renewal
• Serves as a bridge to
Georgia Tech services
and resources
–Expand interaction with
key local, state, national
and international
corporations
–Seminars, workshops &
technology briefings
–Access to test beds,
research labs
Strategic Partners Office
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50. Cycle of Renewal
• Successful companies
–Sponsoring research
–Hiring GT graduates
–Spinning off new
companies
• Successful graduates
–Charitable giving
–Angel investment
–Mentoring
• More nutrients for the
ecosystem!
Klaus Advanced Computing Bldg.
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51. Building an Ecosystem
Signs
of Life
Nutrients
Natural
Selection
Renewal
Incubation
Growth
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52. For Further Information
Stephen Fleming
Chief Commercialization Officer
Georgia Institute of Technology
Personal blog: <http://www.academicvc.com>
<fleming@gatech.edu>
<http://innovate.gatech.edu/commercial/>
Project database and staff blog: <http://www.gtventurelab.com>
(404) 385-2360
Download this file at <http://www.gtventurelab.com>
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