nwa forum presentation 062711
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business conference presentation 6.24.11TRANSCRIPT
Building the ArkansasVenture Ecosystem
Jeff Amerine, PMPTechnology Licensing Officer
Adjunct Instructor, EntrepreneurshipUniversity of Arkansas
Advisor, Innovate [email protected]
Introductions The Global Innovation Race What is Arkansas Doing to Win? Recap / Q&A
Topics
– BS, US Naval Academy 1984– MS, Operations Management – U of A– EdD (in-process), Workforce Development – U of A– US Air Force Officer 1984-1990– System engineer, product manager, VP, CEO, CTO
• 7 startup ventures• 3 Fortune 500s
– U of A Technology Licensing Officer & Adjunct Instructor, Entrepreneurship
– Staff Advisor, Innovate Arkansas– Manager & Investor, Gravity Ventures Arkansas
Intros
TLO Overview University of Arkansas Technology Licensing Office
◦ Access to 100+ technologies developed at the UA◦ Team of business and intellectual property professionals◦ Mission:
Commercialize world-class research to build a lasting knowledge-based economy to benefit Arkansas and the world.
◦ http://www.uark.edu/ua/tlo/index.html
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What Does IA Do?
• Accelerate the technology commercialization process
• Facilitate partnerships between firms, universities and economic development organizations
• Prepare firms to obtain early-stage capital • Provide expert assistance in technology, business,
organizational management and marketing
• Advise with legal and intellectual property matters
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IA Metrics
• Approximately 100 knowledge-based client companies
• Support for $49 million in capital raised in 2009-2010
• IA process makes Arkansas companies “venture ready”
“I shall be telling this with a sigh Somewhere ages and ages hence: Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the
difference.”
The Road Not TakenBy: Robert Frost
Why Do a Startup?
Entrepreneur Lifecycle: Who Are These People?
$$
Time
Seed Early Growth Mature / Expansion
Adrenaline Junkies
Growth Leaders
Crank Turners
Revenues
Expenses
Future “Economic Arms Race”: The Global Innovation Battleground
Arkansas’ Challenge and Opportunity
Innovation Section Topics
Innovative / entrepreneurial economies will prosper
Innovation accelerates and product lifecycles shorten
Capital and talent migrate toward innovative regions with high quality of life
Institutional unemployment occurs in stagnate regions
Government, business, and individuals compete globally based on their “innovation quotient (IQ)”*
What’s at Stake?
* Source: Mochari, I., (2002) The Innovation Factor: What's Your Innovation Quotient?, Inc. Magazine Online.
Innovation to Economic Growth Lifecycle
Ideation Innovation CommercializationEconomicGrowth
Time
◦ Sustained Economic Growth = Continuous Innovation Cycle
“Innovation Heat Map”
Source: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company
Prerequisites
◦ Physical Infrastructure ◦ Rule of Law◦ Government Stability◦ Focus: World-class
Technology Sector◦ Innovation Culture
Regional Innovation & Economic Growth Ingredients
Innovation Hot Spring
• Small, fast growing hub• Reliant on a few firms• Narrowly focused
Source: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company
Arkansas Challenges &Opportunity
Source: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company
http://whatmatters.mckinseydigital.com/flash/innovation_clusters/
NWA
Interactive “Innovation Heat Map” View:
Three Growth PathsGovernment IncentivesGeographic DifferentiatorsUniversity Hub
Sustaining Innovation & Economic Growth
Dynamic Ocean
• Sustained Innovation• Significant Start-up Churn• Innovation Culture• Multiple Sectors/Clusters
Source: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company
Innovation Hot Spring
• Small, Fast Growing Hub• Reliant on a Few Firms• Narrowly Focused
Mostly not in Arkansas…but progress is happening
Where’s the Innovation to Commercialization Activity?
Desired Venture Ecosystem
UniversityR&D
InnovationEngine
EntrepreneurialCulture
AvailableVentureFinance
Current Arkansas Situation
UniversityR&D
InnovationEngine
EntrepreneurialCulture
AvailableVentureFinance
The Valley of Death
$$
Time
Seed Early Growth Mature / Expansion
Angels
Venture CapitalRevenues
ExpensesBootstrap
Gov Grants
Concept
Basic Research
Applied Research
Validation – Mkt & Tech
Patent Application/Licensing
Pre-Seed Funding & Skill Gaps = Commercialization
Friction Points
SBIR/STTR Proposal Dev
Pre-companyUArk
Business Strategy Dev
Innovate ArkansasPost-company
Market Launch
Arkansas’ Innovation Future: “Hot Spring to Dynamic Ocean”
Building the Venture Ecosystem
Crossing the ValleyOf Death
More QualityArkansasVentures
• Programs• Events• Networking• Places
Making it Happen!
Filling the Talent/Funding Gap
SustainableEconomic Clusters
• Angel Network Creation• NWA Entrepreneurship Alliance• Accelerators / Incubators• Contests / Competitions• New Venture Funds & Incentives
Arkansas Initiatives = “Dynamic Ocean”
Angel investor network being created
Modeled after Mid-America Angels in KC
Forum for review of early-stage investments
“Opt-in” investment model
Will include existing angel funds and VCs
Operational date: Q4 2011
Natural State Angels
Forum for entrepreneur networking
Grew out of UA entrepreneurship club
Now has 70+ members across the region
Meets twice monthly
Free to join, so join now!◦ http://nwaea.net/blog/
NWA Entrepreneurship Alliance
Arkansas Green Accelerator
◦ Promotes company creation around green tech
◦ Proposal submitted to Dept of Commerce for $1M
◦ Joint UA/IA venture
◦ Award date: October 2011
Accelerators
The ARK Accelerator◦ IT-focused and aimed at retail, supply chain, food
clusters in NWA
◦ Modeled after Y-Combinator
◦ Joint Winrock / UA / NWACC Venture
◦ Seeking $2M in EDA/ETA funding
◦ Award date: late summer 2011
Accelerators
UAMS NW Healthcare Innovation Incubator
◦ Focused on applied healthcare technologies
◦ Housed at UAMS NW in Fayetteville
◦ Status: Planning stage
New Incubators
“Gone in 60 Seconds” Elevator Pitch Contest
Objective: startup networking
Monthly competition
First event: August
Venue location: NWA (tentatively Buck Nekkid BBQ in Fayetteville)
Contests / Competitions
Angels Venture Capital (VCs)
Strategic investors Debt Mezzanine Public markets Other
Financing Sources
Management Team Intellectual Property that can be a barrier to entry Customer traction – can the company execute?
Physical proximity to the investors Other interested investors – nobody wants to be first Entrepreneur skin in the game Realistic valuation
What Attracts the Money?
Angels◦ High net worth individuals◦ Early stage seed investments◦ Can bring relevant domain knowledge◦ Occasionally form “Angel Funds”◦ Can include “friends, fools, and family”
◦ Angel Fund Examples: Fund for Arkansas’ Future Gravity Ventures Arkansas
Angels
• Grew out of Silicon Valley in the 1950s• Largest concentration around R&D Universities• Desired returns: Typically a minimum of 10X• Examples: Kleiner-Perkins, Sevin-Rosen, NMP
• Investment Preferences: – Proven management team– Intellectual property that creates high barriers– Customer traction
Venture Capital
VC Deal Flow
1-2 Winners10X Returns
Due Diligence on 20 Investments
Receive 1000s of Business Plans
Read 1000s of Executive Summaries
Invite 100s of Companies to Present
Invest in
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Angel ◦ Fund for Arkansas’ Future
$6M angel fund Up to $500K investments
◦ Gravity Ventures Arkansas <$1M angel fund $50K-100K investments 21 active members
What’s Available in Arkansas?
Public Sector Seed Capital
◦ Arkansas Science & Technology Authority (ASTA)◦ Up to $50K-$300K in royalty/ debt financing
◦ Arkansas Development Finance Authority (ADFA)◦ Risk Capital Matching Fund - $100K - $750K
Mezzanine
◦ Diamond State I & II
◦ Look for EBITDA positive growth stage companies
• Other Investment Incentives– Arkansas Economic Development Commission
• Equity investment state tax credits – 33.3% • Can be monetized and transferred
– ASTA• R&D state tax credits – 33%• Can be monetized and transferred
– Arkansas Capital Corporation• New Market Investment tax credits• SBA Loan Guarantees
What’s Available in Arkansas?
The Road Less Traveled – new ventures are critical to our economic health and success!
The team, the plan, and a good finance strategy are key
A “startup culture” has to be nurtured
Arkansas is taking steps to create the right environment!!
Recap / Q&A
Supporting the Venture Ecosystem
Jeff Amerine, PMPTechnology Licensing Officer
Adjunct Instructor, EntrepreneurshipUniversity of Arkansas
Advisor, Innovate [email protected]
“Techpreneurship Blog”http://blog.innovatearkansas.org
Thank You