Georgia Research Alliance

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• Georgia Research Alliance
• A Partner with
• Technology Transfer
• Southeast Region Technology
• Transfer Directors Meeting
• Friday, July 30, 2010

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Georgia Research Alliance

• Formed in 1990 - Commitment from State
  government, local industry and academia
• Independent not-for-profit entity governed by
  leaders from industry and academia
• Investment funds from State appropriation
• Funds for operations raised privately

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GRA Programs

• Eminent Scholars
• Infrastructure development research centers and
  technology incubators
• VentureLab - commercialization of discoveries

• Investment through 2009 gt 550 Million
• Leverage on investment gt 2 Billion in federal
• and private investment

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GRA Eminent Scholars

• Helps to identify and bring world class
  scientists to Georgias research universities
  to lead extraordinary RD programs with the
  highest potential for improving the states
  economic vitality
• Over 60 scholars recruited to date
• Recruitment is highly focused on target areas
• Shared recruitment with one of the GRA
  institutions

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Investment in Eminent Scholars

• Historical Total of 75 Eminent Scholars
  recruited
• 15 separations to date
• Today 66 endowments in place
• 60 chairs occupied
• 2 existing chairs vacant
• 4 new endowments unfilled
• Investment 50,000,000 in endowments
• 75,000,000 in start-up packages
• 55,000,000 in follow-on support

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60 Scholars Across 3 Technology Areas

• Communications
• Computing
• Content

Environmental Industrial
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Bioscience
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Infrastructure Development Focused on Targeted
Research Centers and Incubators

• Research Centers provide a mechanism to build
  resource infrastructure
• 24 Centers funded to date
• Wet lab incubators established and supported at 5
  institutions
• Infrastructure support includes equipment
  purchases
• Able to provide soft-landing for firms seeking
  a U.S. presence
• Facilitates establishing research relationship
  with institutions

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Commercialization of University Technology
VentureLab

• Created in 2002 to help build companies around
  university research results.
• Identifies university-based innovations, assesses
  their commercial potential, and provides
  resources to address management, market and
  technology risks associated with new venture
  formation
• Complementary to activities of Tech Transfer
  offices
• Covers the innovation continuum from idea
  generation to seed investment
• GRA provides program management working with
  VentureLab Directors at each institution

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VentureLab Goals

• Move university technologies out of the lab and
  into the marketplace
• Grow university-based start-up companies to
  create a vibrant industrial base and high-quality
  jobs.
• Provide an easier and more efficient process for
  turning technologies into new companies or new
  markets for established startups
• Strengthen local, regional and national economies

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How Does VentureLab Work?

• Simple answer convert uncertainty to risk and
  manage risk
• Work with VentureLab directors at each
  institution to identify opportunities and help
  faculty develop and implement a development plan.

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VentureLab Assessment

• Technical concept analysis
• Intellectual property assessment
• Market dimensions and dynamics
• Regulatory and Reimbursement issues and strategy
• Venture assessment economic feasibility
• Value proposition
• Business model
• People (Management Advisory)
• Capital needs

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VentureLab Process

• 3 stages of funding expectations increase at
  each stage
• Milestone-based process
• Phases I and II are grants to institution
• Phase III is a loan to company
• Participation of mentors and project management
  at each stage
• Project management coordinated at each
  institution
• Funding decisions made at meetings of VentureLab
  Directors
• Goal convert uncertainty to risk and manage
  project risk.

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Phase I Awards

• Grants to institution of up to 50,000
• Evaluation of feasibility technical, market,
  regulatory
• Initial assessment of intellectual property
  issues prior art
• Specific milestones and deliverables
• Funding released in tranches according to
  attainment of milestones
• Does not require company formation

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Phase II Awards

• Grant to institution of up to 100,000
• Further development of technology
• Investigation in relevant animal model for
  example
• Definition of market dimensions and dynamics
• Clarity regarding regulatory path and
  reimbursement issues
• Clear understanding of IP issues
• Requires 11 matching funds from
  non-institution source
• Validation of opportunity
• SBIR, STTR, equity investment are sources of
  match
• Funds released in tranches based on milestones
• Usually requires company formation

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Phase III Loan

• Loan directly to company of up to 250,000
• Non-collateralized, no personal liability
• Terms
• 5 year balloon note
• Prepaid if
• Leave State
• Two consecutive years of profitability
• 7 million of equity investment
• Like Phase I and II funds advanced in tranches
  based on milestones

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VentureLab Advisors

• VentureLab Fellows
• Serial entrepreneurs and other business people
  with start-up experience work with faculty as a
  business coach or launch CEO
• External advisory board
• Experienced industry representatives and venture
  capitalists
• Review projects at Phase transitions

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Overview of Use of GRA Funds

• Funds are to be used for purposes of translating
  university research into products for purposes of
  creating a fast-growth, stand-alone business.
• With this in mind, funds will be used for product
  development, not basic research, and validating
  the product under development with the
  marketplace.
• No university overhead is paid with GRA funds.

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Georgia Research Alliance Funds May be Used For
the Following

• Market analysis/reports
• Market experts/consultants
• surveys
• Technology and prototype development
• Travel to visit with potential customers
• Travel to industry trade shows
• Consulting contracts with future employees
  provided the individuals are not equity holders
  in the emerging company

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Georgia Research Alliance Funds May Not be Used
For the Following

• Basic research - must be directed towards
  commercializing the technology
• Supplementing faculty/employee income, i.e., no
  double dipping
• Income for equity holders (Phase I II only)
• Expenses not permitted under university expense
  and travel policy (Phase I II only)
• Legal fees (Phase I II only)

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GRA Venture Fund

• State allocation of 7.5 million in FY 2009 for
  venture capital fund
• Requires 31 private match 30M fund
• Captive to VentureLab companies
• First close at 20 million
• Investment decisions to be made by investment
  committee no general partner
• Three investments made to date

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VentureLab Funding Continuum
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VentureLab Case Study Sentrinsic

• Georgia Tech start-up based on motion sensors
  Sentrinsic makes industrial and mobile equipment
  smarter
• Entered VentureLab program in 2005 with a Phase I
  award of 50,000
• Initial prototype developed
• Market characterized
• Manufacturing assessment
• Angel investor funding

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Sentrinsic (cont.)

• Phase II award of 100,000 in FY 2006
• Completed license negotiations
• Initial customer traction
• Develop manufacturing/fulfillment capabilities
• Additional angel investment
• Phase III loan of 250,000 in FY 2007
• Moved to own facility
• Initial product revenue
• Engaged strategic partner
• GRA Venture Fund led financing round June 2010
• Distributor launch of product

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VentureLab Results

• VentureLab projects/companies funded
  180
• VentureLab investment to date gt17 M
• Georgia-based employees gt500
• State employment taxes paid gt2.5 M
• Equity investment attracted gt300M