1. ENTREPRENEUR Commercialization GO

2. The licensed technology is the primary product or service of… Who are fully dedicated to the development of the company and the technology. An early stage company managed by founders… For this topic we define “entrepreneur commercialization” as situations where- 2 DEFINING the Topic

3. An employer business is one that intends to add additional workers This number represents- Less than 1% of households About 3% of workers Number of PARTICIPANTS 500,000 new “employer businesses” are formed each year 3

4. Data from the Kauffman Foundation indicate a lower company formation rate Non IT startups number less than 20,000 High technology businesses represent less than 10% of all new firms Another PERSPECTIVE 4

5. What about funded research based startups? Tech Transfer Activity 5

6. Data from the Association of University Technology Managers’ annual surveys The rate of equity participation by universities follows a different pattern Startup formation has grown 3.5X since the surveys began 6 Proxy- UNIVERSITY STARTUPS Tech Transfer Activity

7. Commercialization PATH 7 Common wisdom says that the technology transfer screening process creates the following activity levels- Tech Transfer Activity Funded Research Invention Disclosures Patents Licenses Inventor Tech Transfer Office

8. 8 The number of invention disclosures has more than doubled Patent applications have quadrupled in the same time period Opportunity FLOW Tech Transfer Activity

9. 9 Research institutions recognizing the value of their technologies, or… Is there patenting of marginal technologies due to pressure to achieve results? NORMALIZED Flow Tech Transfer Activity

10. 10 The patent success rate (2 year lag) is declining This suggests a quality decline Challenges at the US Patent & Trademark Office during this period may have contributed to the decline Invention VALIDATION Tech Transfer Activity

11. 11 Startup formation appears to be following applications, not awarded patents A reflection of pent up demand, or… Chasing an elusive pot of gold? STARTUP Activity Tech Transfer Activity

12. 12 Analysis of data by institution suggest wide variance in this average performance- $25MM to $250MM of research per startup Path REVISITED Tech Transfer Activity

13. What happens at the institution level? Startup Activity 13

14. 14 Of the 180+ US universities who reported to AUTM in the last two available years Numbers of startups per institution varied widely Startup LEVELS Startup Activity

15. 15 Non/low participation rates haven’t changed much… The upper tier (six startups and above) has risen by 50% ALTERNATE View Startup Activity

16. How many startups are being funded? Funding Activity 16

17. This represents about one in eight new companies Most angel capital is informal- Personal networks Small amounts ANGEL CAPITAL Activity Funding Activity 70,730 companies received “angel capital” in 2013 University of New Hampshire Center for Venture Research 17

18. Less than 0.20% of startups enter the venture capital world each year This number hasn’t changed much over the last five years VENTURE CAPITAL Activity Funding Activity 1,334 firms received a first venture capital round in 2013 18

19. 19 Overlay of AUTM data on PWC MoneyTree seed stage funding data Research-related startup activity exceeds available venture capital funding Venture Capital AVAILABILITY Funding Activity

20. 20 Availability of venture capital is further constrained by geography VCs work close to home Geographic BIAS Funding Activity

21. What happens after a company gets founded? Startup Outcomes 21

22. Just over half of new firms survive three years OVERALL Survival Rates Startup Outcomes 22

23. Data from a study of- 539 investors 3097 companies 1137 outcomes Angel funding does create big winners 14% of companies Overall survival rates are only slightly better ANGEL FUNDED Outcomes Startup Outcomes 23

24. NVCA analysis of ten years of investments Outcomes sometimes difficult to determine Similar to angel capital experience- Over half fail or lose money 1 in 7 big wins VENTURE CAPITAL Outcomes Startup Outcomes 24

25. Support for Entrepreneurial Commercialization 25

26. Data from- 30 institutions Avg. $80 MM research budget Comprehensive view of ecosystem structure Geographically and structurally diverse Survey of startup ecosystems at universities 26 SURVEY- University Ecosystems Support & Analysis

27. Large research universities engage with startups across multiple departments Beware of conflicts between departmental goals and startup effectiveness INSTITUTIONAL Support Support & Analysis 27

28. Recognizing the funding gap, universities are providing broad- based support for capital raising New emphasis on proof-of- concept funds FUNDING Assistance Support & Analysis 28

29. Outside of the established startup ecosystems universities provide a broad range of support mechanisms for entrepreneurs Understanding how to marshal these resources is a key driver of success MANAGEMENT Assistance Support & Analysis 29

30. Availability of resources and support mechanisms alone are not indicative of success The process is complex Coordination of these resources is critical RESULTS Support & Analysis 30

31. Process Application 31

32. Opportunity COSTS 32 Costs to commercialize a technology in a startup can be significant Total out-of-pocket costs can be more than $100,000 –Patenting: $5K to $50K –Commercial Assessment: $0 to $25K –Licensing Legal: $5K to $10K –Business Plan & Team: $0 to $50K –Capital Raising Legal & Travel: $5K to $40K Process Foundation & Infrastructure (Funding) Business Plan & Management Market & Product Assessment Invention Readiness (Patenting)

33. Tech transfer offices are undertaking more comprehensive reviews prior to licensing to startups REVIEWING Opportunities Process 33

34. Questions and Discussions http://www.rpxgroup.com 312.291.9000 - BobOkabe 225 West Washington Street Suite 1500 Chicago, IL 60606 34