KICKSTART SEED FUND:IGNITING INNOVATION

KICKSTART SEED FUNDOVERVIEWGAVIN CHRISTENSEN, MANAGING DIRECTOR, KICKSTART SEED FUND

Aug, 2009

Agenda

High-Level Overview Kickstart Seed Fund

The Opportunity Fund Strategy Fund Structure

2

High-level concept3

The Mountain West is a innovative and entrepreneurial region with tremendous potential

The Kickstart Seed Fund is a unique seed fund that can help catalyze entrepreneurship in the region through: Aligning key ecosystem participants Supplying seed capital Providing investment leadership Educating all participants Facilitating access to follow-on capital and strategic

partnerships

By accomplishing this, Kickstart Seed Fund will create outsized strategic and financial rewards for all participants

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Strong Partner is critical to successKey role in communityTrusted agentLong history of exitsThird FundManages front and back end

Economics don’t work wellVenture Capital is sitting at Table

vSpring Overview4

Traditional Funding Continuum5

SEED/START-UPFUNDING

DEVELOPMENTFUNDING

EXPANSIONFUNDING

OPPORTUNITYDEVELOPMENT

CONTINUEDGROWTH

ANGELS, FOUNDERS & SEED FUNDS

VENTURE CAPITAL – GROWTH EQUITY

PE - PUBLIC MARKETS

VALUATIONS INCREASE

BUSINESS RISKS DECREASE

MENTORING NEEDS DECREASE

$5M-20M$500K-5M$50K-500K >$20MSweat

Opportunity6

Rocky Mountain Innovation

Regional innovation clusters in

Management Software, Internet and

Communications, and Life Sciences

15,000 technology companies,1

300 public technology companies2

Over $16B in total R&D spending3

Well-funded research universities

in region

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Source: 1. US Economic Census, 2002 2. Credit Risk Monitor Website (www.crmz.com) 3. AAAS Survey, 2005 (www.aaas.com)

Startup creation from universities

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Since 2004, schools in UT, AZ and NM are creating startups at record levels

Source: AUTM

Startups created from licensed university technology by year

Top start up creation universities

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In 2006, University of Utah was 2rd in the nation in startups created from licensed technology

Source: AUTM

Startups created from licensed university technology

The Case for University Spin-Outs

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1. More likely to have large outcomes• Go public at 114x the rate of other startups

2. Less likely to fail

Rate of Going Public Failure Rate

Source: National Council Of Entrepreneurial Tech Transfer

.07%

History of success for University spinouts…

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Kickstart Seed Fund12

R&D relationships

15-20 Seed Companies

5-10 VC-backed Startups

Fund I ~ $10MM of seed capital

Post- Bubble Seed Capital13

Source: Venture Source, NASVF

Seed Capital hasn’t recovered14

Regional Gap in Seed Funding15

Investments in UT and NM since 2003

Source: Venture Source, Utah Angels

Bridging the Technology Commercialization Gap

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R&D Institutions Mission Commercial Sector

Basic Research Applied R&D BusinessDevelopment

Full-ScaleCommercialization

• Early-Stage Capital• Market Insight• Human Capital

Kauffman FoundationKauffman Foundation

Kickstart Ecosystem Alignment17

Capital, value add, syndication

Technology transfer, student opportunities, economic development

Deal flow, “clean” deals

Deal flow, economic alignment, coinvestment and follow-on rights

Deal flow, outsourced R&D, executive involvement & education

Financial Investor

s

Kickstart – Aligning Utah’s Ecosystem

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University Alignment19

Value to the students

Kickstart Seed Fund Class vSpring/ Kickstart Seed Fund has partnered with BYU/ Nathan

Furr to create a innovative new class to prepare students to actively participate with the fund in due diligence/ working with seed-stage companies

Internships vSpring/ Kickstart Seed Fund operates a summer intern

program of 25+ students. Including three international internships this year.

Entrepreneurship KSF actively sponsors and supports every business plan

competition Create an information marketplace that actively connects the

right talent and technology in our network

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Fund Strategy21

Kauffman Study: Mitigating Risk

Strategic Choices Due diligence: venture capital-

style due diligence pays off

Experience: engaging individual with direct industry experience

Participation: High participation is interacting with the company 1 or 2 times per month, Low is 1-2 times per year

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1HIgh due diligence was defined as > 20 hours spent

Source: Kauffman Study: Returns to Angel Investors in Groups, 2007

Average Return Impact

High1 due diligence: 5.9X

Low due diligence: 1.1X

High experience vs. low experience nearly 2X

improvement:

High participation: 3.7X

Low participation: 1.3X

Potential Portfolio Composition

0123456789

Clean Tech Software/ Internet Life Sciences

# of

Com

pani

es

Sample 20 deal Portfolio By Stage and Sector

Early-StageSeedCommercialization

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Deal Types24

Fund Structure25

The Fund Structure26

Kickstart L.P.

Kickstart, LLC

Investment

Committee

Investors (LPs)

GP LPs that invest > $1 MM

LPs that invest > $.5 MM

Invested Capital

Management Fee

ROIC

Carry

Managing Member

Portfolio Investmen

ts

Non Managing Member

Next Steps

Expansion Model has wide applicability in multiple

regions A local sport Alignment first, collaboration second

Tying this to a new model for commercialization

Exploring right model for addressing multiple regions

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Gavin ChristensenManaging Director, Kickstart Seed Fundgavin@vspring.com

Thank You28