VentureLab: A University Innovation System
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Transcript of VentureLab: A University Innovation System
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VentureLab:A University Innovation System
Lee HerronVice President of CommercializationGeorgia Research Alliance
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Background• The GRA is a public-private partnership in its 22nd year• Receives an annual allocation from the State of Georgia
for redeployment in Georgia’s research universities with the goal of stimulating innovation-based economic development
• Strong board incorporates business and academic leaders
• Coalition of major research universities• Three programs: Eminent Scholars, Infrastructure
Development, VentureLab
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Focused investments in research capability lead to commercial outputs
GRA invests in recruiting world-class Eminent Scholars to universities
Scholars build research teams that attract major R&D grants/contracts
Teams generate discoveries with commercial potential
TALENT
GRA invests in specialized R&D equipment and facilities
Helps universities recruit and support Scholars, land major R&D grants
Promotes collaboration across universities and with industry
INFRASTRUCTURE
GRA invests in most promising discoveries to encourage formation of new companies
Tiered investment approach provides seed funding to “best of the best” projects
GRA Venture Fund, LLC fills gap in available early-stage venture capital
COMMERCIALIZATION
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What is VentureLab?
• Program for commercialization of science and technology inventions from the labs of Georgia’s research universities
• Milestone-based, providing funding and advice to facilitate commercialization
• Focused on creating sustainable, Georgia-based companies• Covers the innovation continuum from idea generation to
seed investment• University partners: University of Georgia, Georgia Regents
University, Georgia Tech, Emory University, Morehouse School of Medicine, Georgia State University
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VentureLab starting point
Knowledge and Invention
Innovation New Venture
Uncertainty Risk
Little or no information, difficult to manage
Risk can be measured and managed
VentureLab helps to convert uncertainty to risk and manage risk to create value
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How does VentureLab work?• VentureLab directors at each institution identify
opportunities and help faculty design and implement a development plan.
• Assessment includes:– Intellectual property– Technical feasibility– Market dimensions and dynamics– Funding feasibility– Regulatory and reimbursement issues as appropriate– Management requirements
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VentureLab process• Project management– Relevant and measurable milestones identified for each
project– Budget developed and allocated to phases:
• Phase I – feasibility, proof of concept• Phase II – prototype manufacture, demonstration in relevant
animal model• Phase III – initial customers, recruit management, initiate IND-
enabling studies
– Funding• Phases I and II are grants to the institution• Phase III – loan to the company • GRA Venture Fund – dedicated to companies emerging from
VentureLab
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Commercialization process and VentureLab role
Commercialization Catalysts
Technology Transfer
Technologyopportunity
identification and evaluation
Business strategy and
model
Company formation, technology
licensing
Company scale-up
incubation
Venture capital funded
Proof of ConceptPhase I
Company LaunchPhase II
Company Scale-upPhase III
University Partners
Incubators(e.g. ATDC, BioBusiness Center)
Start-up team
Investors, other fund sources
Stage-appropriate management
▪ Phase 1 funds ▪ Phase 2 funds ▪ Phase 3 loan
Seed Funding
GRA Industry Fellows and Distinguished Entrepreneurs
VentureLab functions
GRAVenture Fund
GRAVentureLab
Community Resources
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VentureLab project management• VentureLab Fellows– Serial entrepreneurs and other business people who work
with faculty as a business coach or launch CEO
• External advisory board– Members consist of experienced industry representatives
and venture capitalists– Review projects at Phase transitions– Provide critical advice and contacts
• Industry Fellows and Distinguished Entrepreneurs – FY2014
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GRA Venture Fund
• Seed venture fund captive to companies emerging from the VentureLab program
• First close in July 2009 at $20 million with target of $30 million
• 6 investments to date with three follow-on investments and one exit
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VentureLab Project Pipeline: FY 2003 – FY 2012
Proof of Concept
Phase 1Company Launch
Phase 2Scaling Company
Phase 3
3
1
3
122
88
9 1
18
6
39
2
15
58 Active
64 6 2
56 Active
32
33 Active 17 Active
32 Active 15 Active
Company Acceleration
GRAVF
13 2
Due Diligence
Due Diligence
30
Investments Made5
Investments Made
Bioscience companies
Technology companies
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Results to date• More than 1,000 university technologies/inventions
reviewed since 2002• 370 awards administered to 265 companies/projects– Awards and loans total over $25 Million
• More than 100 companies formed– Over 650 employees– Greater than $550 million in equity investment– Revenue: $111 million in 2011, $298 million since
2002
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Lessons learnedRun out of
funds
• Cash mismanagement ability• Unable to attract follow-on funds• Adverse funding market conditions
Poor business model
• Model inconsistent with market structure• Inappropriate pricing model
Technology fails
• Development takes too long• Failure in trials• Non-reproducible product
Management dysfunction
• Poor start-up team “chemistry”• Incomplete or non-complementary
skill set of team
Failed IP protection
• Misjudgment during due diligence• Insufficient claims awarded
Market related issues
• Misjudged market dimensions or dynamics• “Stolen market” (i.e., new competitor)• Adverse market dynamics
Relocation• Faculty member relocates• Company moves out of state
Start-up failure modes
7
12
34
32
4
24
6
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VentureLab: Critical success factors• Manage expectations • Team – stage appropriate, industry experienced
management to complement the knowledge and skills of the faculty inventor
• A focus on relevant risk factors – prioritization of commercially relevant activities– Should be guided by a well-thought out commercialization
strategy rather than scholarly preferences– Prioritization forms the basis for milestone development
• Realistic assessment of commercial viability– Preferably prior to formation of company
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Observations from 10 years of experience
Factors for success Rationale
▪ Hiring experienced, “fundable” entrepreneurs must occur in concert with active technology sourcing and scale-up
▪ These actions are self-reinforcing and address multiple bottlenecks
▪ Patience is necessary when assessing performance, since university-based projects take time to show job creation results
▪ Typical time to market for a bioscience start-up can easily exceed 5-7 years
▪ Active sourcing of technologies is critical to find the strongest commercialization opportunities
▪ Prudent scale-up depends on finding more strong ideas, not simply funding a higher percentage of applicants
▪ Investing in connectivity and networking is required, despite seemingly ambiguous benefits
▪ Benefits of “critical mass” generally occur through interconnections in the ecosystem
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2013 – A focus on outcomes• Incorporate new program elements– Formalize Industrial Fellows program– Distinguished Entrepreneurs– Host forum to showcase VentureLab projects and
companies • Fund to milestones rather than to an amount
per phase of development• Greater emphasis on Venture Development
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VentureLab: Part of a dynamic, interrelated ecosystem
UniversityResearch
and Invention
Angels, F&F, SBIR/STTR
GRA Venture Fund
Venture CapitalStrategic Partners
VentureLab: Up to $400,000
Sustainable Business
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Contact information
H. Lee Herron, DVMVice President of CommercializationGeorgia Research Alliance50 Hurt Plaza, Suite 1220Atlanta, GA 30303Direct : 404-443-2650Telephone: 404-332-9770, ext 2650Mobile: 404-386-7929 [email protected]; www.gra.org