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Startup Guide

Introduction | Part I: Invent | Part II: Getting started | Part III: Launch | Appendix | Top

Introduction

So, you want to be involved in a startup?

From TVC staff:

In recent years, the University of Utah has been widely recognized for its startup activities and the impact that it is having in bringing new technologies to market while at the same time creating great ventures, high paying jobs and meaningful returns for all those involved. As staff at the U of U's Technology & Venture Commercialization (TVC) we take pride in being able to work with one of the most entrepreneurial faculties in the world who have a proven record of success in bringing world class technologies to market and in creating opportunities for our community and economy.

More recently, because of increased interest in starting companies we have taken a very proactive approach in ensuring that startup companies based around the Universities intellectual property are established in a manner that most likely assures a positive ouTVCme for Inventors, the University, Investors, Employees and the greater community at large. The University now spins out an average of more than 20 companies annually. startups that have come out of the University are found in all industries including software, pharmaceuticals, energy, and more. Included in these companies are successes like Myriad Genetics and Idaho Technology as well as a number of failures that no one likes to talk about.

Without a doubt, starting a company is no simple task. There is no single best approach, no magic formula for success and no sure path to meaningful returns. At the end of the day, entrepreneurship and business can be more of an art than a science. A significant amount of creativity, teamwork, trust and constant learning is needed by all those who desire to be involved in startup activities. Because of our success and experience as a University in creating great ventures, we want to be able to guide the startup process through programs designed around best practices and through the guidance of seasoned entrepreneurs that are giving back to the University.

The purpose of this guide is to highlight programs, processes and goals that we have put together to ensure that all necessary steps are taken to assure that the startup experience is meaningful and rewarding for all involved.

Whose decision is it to start a company?

The choice to establish a new company for commercializing the University's intellectual property is a joint decision made by the Technology Commercialization Office and the inventors. If a new business startup is chosen as the preferred commercialization path, TVC's Licensing Managers, through our Engine Funding Program, can assist you and other founders in developing an appropriate corporate structure, finding investors, attracting appropriate management and in putting in place other essential business services and practices.

Some of the factors that should be considered when deciding to license or start a new company relate to the nature of the technology, the intellectual property, market potential, and the availability of investment funding and management. Some factors include the development risk, potential for multiple products and services, commitment from research and development teams and the likelihood of returns that are attractive to investors and potential partners.

What are the criteria used when deciding whether to start a company or license a technology?

A number of criteria are considered by both the licensing manager and inventor when determining the appropriate commercialization strategy. Some of these are included in the following table.

Licensing preferences Startup preferences
Technology
  • Technology represents an incremental improvement to existing technology used by existing and already established companies
  • Technology is market ready
  • Technology is usually disruptive
  • Platform technology Technology is far from market ready
  • No appropriate licensee
  • Broad range of potential applications for technology
Intellectual property protection
  • Crowded field, potential infringement risk
  • Potential to mitigate risk (exit strategy)
Market
  • There is an existing market, customer loyalties exist towards particular companies
  • Well established distribution channels have already been created by existing companies

  • New market with potentially high market demand
  • Clearly defined and addressed need
  • Reasonable chance for overcoming barriers for entry
  • Short time to market
  • Large market with significant growth potential
  • Significant profit margins
Availability of Investment / Funding and Management
  • Nature of technology makes raising capital difficult in comparison with others
  • No management team available
  • Investors and funding can easily be identified
  • Inventors are willing to dedicate time and resources and have the desire to be involved

Regulatory Considerations
  • In house resources available at existing companies
  • QA system in place
  • No Funds available to acquire
  • No expertise in securing regulatory approvals

What is the Engine Funding Program?

In deciding whether to license or start a company licensing managers and inventors have to take into account a number of items relating to the time and commitment of inventors, how clearly defined the business plan is, what resources exist at the company's disposal and level of the experience of individuals involved in the company.

A Venture Bench Company is a startup company that does not have the means, or access to the resources and talent necessary to assure its success. TVC will work with inventors to assure that a well thought out commercialization plan is put in place and that the essential operations and functions of the business do not become a distraction from the development and commercialization of the businesses core product.

There are many costs, resources and time commitments that need to be considered before starting a company. Depending on the type of company and its commercialization need, these costs can be in the ranges indicated below:

Startup needs Cost range
Establishment of Corporate Structure $500 - $1,000
Brand, Logo and Web Development $1,000 - $3,000
Trademarks $300 - $500
Business Plan Development $4,000 - $10,000
Accounting and Bookkeeping Services $300 - $800 per month
Management of Intellectual Property $5,000 - $25,000 or more annually
Access to Federal Grants for Small Business $2,000 - $10,000
Access to Capital Networks $ Invaluable
Effective Management $5,000 - $15,000 per month

How do I get Involved with the Engine Funding Program?

Whether you are faculty, an investor or an outside entrepreneur, we want to assist you in doing all we can to assure you succeed. The success of the Engine Funding Program comes as a result of our great staff and exceptional external service providers giving their time and resources in addition to current responsibilities. Needs of startups are managed according to their respective priorities and according to where TVC can add the greatest value. To become involved with TVC's Engine Funding Program simply fill out the attached form to that TVC can better understand your needs both in terms of technology development as well as business development.

As is the case with every early stage technology, the inventor plays a critical role in its development and in bringing it to market. Early-stage start ups simply don't stand much of a chance in getting off the ground without the original visionaries being actively involved and working to ensure that initial customer expectations are met.

Business Development

In an effort to assure that true value is created, we have developed a series of development phases or "benchmarks" around which licensee startups will be managed and monitored. Our goal is to create growing companies with real jobs that generate real returns to all those involved. The development process for one company over another could be completely different. A Therapeutic or medical device will have a much different path to success than a software or an energy company. Because of these differences, we have a broad set of benchmarks that fall under different development phases around which a company's development can be managed. Once 75% of these benchmarks are complete, we will classify your company in that phase and then work with you to assure that we reach the next phase. The goal for all companies is either an exit or a long-term growth strategy that leads to breakeven and profitability.

  • Phase One Companies – Characterized by formation of the company and activities that need to be completed before real "business development" can take place.
  • Phase Two Companies – Characterized by product/prototype development, compilation of a detailed business plan and external validation.
  • Phase Three Companies – Characterized by engagement of outside investors and management, essential business development and first customers.
  • Phase Four Companies – Sales, Additional Product Development and Creation of IP, Long Term Growth and Exit Strategies
  • Phase Five Companies – A company that has gone through an exit or is in a position where it is self sustaining and will be able to endure long term growth

What Phase is Your Company?

Phase One

  • License Executed with University
  • Corporate documents filed and entity established
  • Executive Summary or Commercialization Plan Created
  • Necessary Trademarks Filed
  • Brand and logo development and creation of necessary marketing material
  • Web Development and Hosting

Phase Two

  • Business Plan Developed
    • Target Market Defined
    • Financial Models and Pro-Formas
    • Capital Structure Defined
    • Business Model Defined
  • Product Development
    • Proof of Concept
    • Prototypes and/or Alpha and Beta products developed (Approval of IND application if a therapeutic)
  • External Validation
    • CEO formally engaged
    • External grant money secured
    • Seed / angel funding secured

Phase Three

  • Independent Board of Directors
  • Investors identified and engaged
  • Critical management in place (CFO, CSO, COO etc.)
  • Institutional funding secured (Phase 1 for Therapeutic)
  • Market Ready Product (Phase 2 for Therapeutic)
  • First Customers (Phase 3 for Therapeutic)

Phase Four

  • Long term growth strategy
  • Sales and marketing teams in place
  • Strategic partners engaged
  • Potential exits identified
  • Net sales according to definition outlined in license agreement
  • Additional products and IP being created

Phase 5

  • Exit
  • Long-Term Growth

Other Resources

In addition to our Engine Funding Program, TVC has ties to most other entrepreneur programs in the University and throughout the state that can assist you in getting the resources and experience you need.

Entrepreneur In Residence Program (EIR)–This program aligns seasoned entrepreneurs with University startup companies to help develop business plans, acquire financing, seek out appropriate management and to begin operations. Along with the Office of Technology Venture Development, we have assembled a group of veteran entrepreneurs who meet regularly to evaluate startup opportunities and assist in getting these companies off the ground.

Entrepreneur Faculty Advisors–Led by Glenn Prestwich, Presidential Special Assistant for Faculty Entrepreneurs, and Technology Venture Development's Faculty Outreach representative, the Community of Faculty Entrepreneus is a unique group at the University of Utah designed to bring faculty together. The EFA has a clear mission: to help faculty meet challenges and overcome hurdles to start successful companies. It comprises all of the University of Utah's faculty entrepreurs, both those with a history of successful commercialization and those interested in exploring the first steps toward commercializing their technologies.

This organization will connect you with other faculty entrepreneurs, help provide answers to crucial questions, address issues all faculty entrepreneurs face such as intellectual property, introduce you to the resources already available to you, and offer hands-on help that until now, has not been available.

Lassonde New VentureDevelopment Center– The Lassonde Centers goal is to provide unique educational opportunities through real world business experiences and to help young entrepreneurs be better prepared to understand and assume the risks of business ownership and management. Today the center represents the largest entrepreneur center of its kind in the United States. The Center provides students the ability to practice entrepreneurship and business development skills while at the same time adding significant value to potential startups.

KickStart Seed Fund's mission is to kickstart companies in the Mountain West by aligning technology creators, industry, entrepreneurs, and capital sources behind the funding and mentoring of seed investments.

Introduction | Part I: Invent | Part II: Getting started | Part III: Launch | Appendix | Top

Part I: Invent

Disclose

Researchers, faculty, graduate students and clinicians should disclose all intellectual property (including, inventions, prototypes, copyrights, software, tangible property, etc.) that may constitute a novel invention or copyrighted work to TVC as early in the process as possible. This is done through completion of an invention disclosure form (IDF). The IDF is a critical first step in this process as it constitutes a legal record of the invention, especially where any portion of the funding comes from the federal government, private foundation, or commercial sponsor. Federal law requires prompt disclosure of new discoveries or inventions. Failure to promptly disclose new discoveries or inventions could lead to a significant loss in rights associated with your research and its commercial applications. It is important to file a COMPLETE, ACCURATE AND SIGNED disclosure form so the assessment process can be streamlined and expedited.

Due Diligence

Once the decision has been made to protect an invention TVC has to determine what will be the best path for commercialization. TVC along with the inventor discuss and review the following criteria to aid in this process:

  • The disruptive nature of the technology
  • Funding needs of the technology
  • The commercial value of the technology
  • Market potential and size
  • Number of potential licensees
  • Competition
  • Stage of development, ease of implementation and timing
  • Prior art and patentability (IP strength)
  • Potential for additional IP to strengthen the value proposition

Decision – Licensing Strategy

A key decision in the commercialization process is whether a technology will be licensed, spun into a company or whether further research and development is needed to achieve its potential.

License or Start-up

The choice to establish a new company or to license the University’s intellectual property is a joint decision made by TVC and the inventors. If a new business start-up is chosen as the preferred commercialization path, TVC’s Licensing Managers, through our Engine Funding Program, and other resources, can assist you and other founders in developing an appropriate corporate structure, finding investors, attracting appropriate management and in putting in place other essential business services and practices.

Some of the factors that should be considered when deciding to license or start a new company relate to the nature of the technology, the intellectual property, market potential, and the availability of investment funding and management. The development risk, potential for multiple products and services, commitment from research and development teams and the likelihood of returns that are attractive to investors and potential partners are just a few of the many things that need to be considered.

Sometimes an established business with experience in similar technologies and markets is the best choice. In other cases, the focus and intensity of a start-up company is a better option.

A number of criteria are considered by both the licensing manager and inventor when determining the appropriate commercialization strategy.

Release or Hold

Technologies that are “released” include those that the University decides up front not to invest any of its resources in or technologies that the University will no longer support. Technologies that the University has been supporting, but with time, prove to not have the commercial value once thought or that cannot justify the University’s continued expenditure of resources, can also be “released” to the inventor to pursue commercialization with his or her own resources.

At other times, protection will be put on hold till inventors are able to come up with additional IP and data so that claims can be strengthened.

License Technology

Once it is decided that licensing of a technology is the best commercialization path, a licensee will be chosen based on its ability to commercialize the technology for the benefit of the Inventor, University and the general public. A number of benefits that can arise from licensing include:

  • New relationships with business
  • Potential to license additional IP created at the University in the licensee's field of interest
  • Accelerated introduction and use of your technology in the market due to established resources and distribution channels that established licensees could have access to.

Financial Rewards

Per University of Utah policy, a share of royalty income or revenue received from commercialization of an invention is given to the inventors(s):

From University Policies and Procedures:  “The inventors' share of income shall be based on a percentage of such income or revenue remaining after reimbursement of the University for all direct costs of patent prosecution or maintenance and all development funds advanced pursuant to section III.C.3 ("net revenue"). The inventors' share (in the aggregate where there is more than one inventor) shall normally be forty percent of the first twenty-thousand dollars ($20,000) of net revenue, thirty-five percent of the next twenty thousand dollars ($20,000) of net revenue, and thirty percent of any additional net revenue received by the Research Foundation.”

The “inventors’ share” of royalties is divided equally among all inventors unless all inventors agree in writing to another distribution formula of their collective choice.

Corporate Sponsored Research

The University of Utah has a history of forming strong alliances with companies to develop new technologies that add value to our community and the greater general public. If you are looking to expand your current research portfolio or want to get a new idea off the ground, fostering a positive relationship with a number of existing or potential licensees can provide access to the resources you might need to advance your research and goals.

Introduction | Part I: Invent | Part II: Getting started | Part III: Launch | Appendix | Top

Part II: Getting started

Starting a Company

Starting a company is no simple task and the odds of making it are always slim. There is no single best approach to starting a company, no magic formula for success and no sure path to meaningful returns. At the end of the day, entrepreneurship and business can be more of an art than a science. A significant amount of creativity, teamwork, trust and experience is needed by those leading the charge. Because of our long history of success at starting companies, TVC has put together an unmatched set of programs, funding channels and services to accelerate product and market development. In fact our Venture Bench assisted companies have far exceeded those start-ups that have proceeded down a traditional path. In fact, the odds that a start-up company will get VC money are about 1 in 4,000. That's worse than the odds that you will die from a fall in the shower. The Engine Funding Program requires an on-line application and companies are selected on a first-come and needs based assessment. Apply for some of those resources and services through TVC's Engine Funding Program.

Do you have what it takes?

Before starting a company, a significant amount of work has to be done to identify what the customer demands and market needs are, and what the time and cost of bringing the technology to market will be. To effectively engage investors, development partners and also additional management, information needs to be gathered about the target market and its trends, barriers to entry, risks, the competitive overview and how the product will be distributed and marketed.

The following table lists a few of the things to take into consideration in the earliest stage of a company's development. In addition to this, one has to consider the costs of developing market ready prototypes, raising capital, manufacturing costs, costs relating to pilot scale projects and trials for certain devices and therapeutics.

Licensing Preferences Startup Preferences
Technology
  • Technology represents an incremental improvement to existing technology used by existing and already established companies
  • Technology is market ready
  • Technology is usually disruptive
  • Platform technology
  • Technology is far from market ready
  • No appropriate licensee
  • Broad range of potential applications for technology
Intellectual Property Protection
  • Crowded field, potential infringement risk
  • Potential to mitigate risk (exit strategy)
Market
  • There is an existing market, customer loyalties exist towards particular companies
  • Well established distribution channels have already been created by existing companies
  • New market with potentially high market demand
  • Clearly defined and addressed need
  • Reasonable chance for overcoming barriers for entry
  • Short time to market
  • Large market with significant growth potential
  • Significant profit margins
Availability of Investment / Funding and Management
  • Nature of technology makes raising capital difficult in comparison with others
  • No management team available
  • Investors and funding can easily be identified
  • Inventors are willing to dedicate time and resources and have the desire to be involved
Regulatory Considerations
  • In house resources available at existing companies
  • QA system in place
  • No Funds available to acquire
  • No expertise in securing regulatory approvals

TVC, in partnership with local service providers and funding agencies, have put together a series of programs to increase your odds of success. Programs include:

Entrepreneur in Residence Program

This program aligns seasoned entrepreneurs with University startup companies to mentor, advise and manage companies and to provide assistance with business plans, financing, executive talent and operations. Along with the Office of Technology Venture Development, we have assembled a group of over 100 veteran entrepreneurs who meet regularly to evaluate start-up opportunities and assist in getting these companies off the ground. For more information contact the EIR Program Director.

Community of Faculty Entrepreneurs

The CFE has a clear mission: to help faculty meet challenges and overcome hurdles to start successful companies. It comprises all of the University of Utah's faculty entrepreneurs, including both those with a history of successful commercialization and those interested in exploring the first steps toward commercializing their technologies.

This organization will connect you with other faculty entrepreneurs, help provide answers to crucial questions, address issues all faculty entrepreneurs face such as intellectual property, introduce you to the resources already available to you, and offer hands-on help that until now, has not been available. For more information contact the Community of Faculty Entrepreneurs Program Director.

Lassonde New Venture Development Center

The Lassonde Center's goal is to provide unique educational opportunities through real world business experiences and to help young entrepreneurs be better prepared to understand and assume the risks of business ownership and management. Today the center represents the largest entrepreneur center of its kind in the United States. The Center provides students the ability to practice entrepreneurship and business development skills while at the same time adding significant value to potential start-ups.

Technologies are chosen from the existing TVC portfolio and are selected annually by its board upon recommendation of TVC and Lassonde Director. For more information contact the Lassonde Center Program Director.

Decision (two)

Decision – What start-up approach is best for me?

Key questions that need to be asked when choosing which start-up approach to take include:

  • Do I have access to capital?
  • Have I launched or run a company before?
  • Am I a full time employee at the Univeristy?
  • Do I have access to legal counsel to help me get my company off the ground?
  • Do I understand the start-up process and regulatory path (if needed)?
  • Do I have an executive team lined up?
  • Can I provide essential services to my company including, accounting, corporate governance, marketing and promotion?
  • Do I know how to develop and execute a well thought-out business plan?
  • Do I have access to research facilities and labs to fully develop proof of concept, prototypes and alpha and beta products?
  • Do I have access to investment funding from both angel investors and larger institutional investors?

The start-up approach you choose will largely be based on your answers to these questions.

What's so special about equity?

Equity or the shares you hold in a company can be extremely valuable (think Google, Facebook or Zappos) and this is the main reason people believe a start-up is worth all the effort but of course the numbers tell a different story.

  • More than 90% of all companies fail
  • Less than 10% of University licensees generate more than $1 million
  • Over 90% of faculty run companies fail

However, the allure of equity remains and can be a real motivator in starting a new technology based venture but it is important to be realistic about how much equity is worth, what its long term value is, and how realistic you should be about the chances of it being worth anything.

Traditional Startup

The traditional start-up model is one that most universities depend upon. Under this model a corporation is established by a lead entrepreneur or VC and a license is granted to that start-up similar to any other established licensee. Under this model all the responsibility for success of the company falls squarely on the founders.What the University looks for under this scenario is:

  1. An experienced entrepreneur
  2. A clear commercialization and business plan with realistic milestones for product launch.
  3. An understanding of the market and or regulatory path
  4. Access to capital
  5. A license with the University
  6. The inventor's (crucial to any new company) and University's role in the long term plan
  7. The ability to execute and perform
  8. Exit strategy

Venture Bench

A Venture Bench Company is a Startup company that does not have the current means, or access to the resources and talent necessary to assure its success. TVC will work with inventors to assure that the appropriate services and plans are put in place and that the essential operations and functions of the business do not become a distraction from the development and commercialization of the business's core product.

The goal of the University's Engine Funding Program is not to run or control companies, but to create self supporting, independent entities or acquisition targets, that are structured in such a way as to assure a positive experience and meaningful returns for all stakeholders (inventors, investors, University, potential entrepreneurs, etc.).

The formation and development of a Venture Bench Company is usually led by Internal and external professionals, with the assistance of the inventors until such a time that appropriate management and resources have been engaged. As is the case with every early stage company, the inventor plays a critical role in its development and in bringing the technology to market. Early-stage startups simply don't stand much of a chance in getting off the ground without the original visionaries being actively involved and working to ensure that initial customer expectations are met.

Typical Venture Bench Company Characteristics are as follows:

  • Capitalization Table – How equity is managed and distributed in a Venture Bench Company
  • Management
  • Licensing
  • Preparation for grants and fund raising
Start-up needs Cost Range
Establishment of Corporate Structure $500 - $1,000
Brand, Logo and Web Development $1,000 - $3,000
Trademarks $300 - $500
Business Plan Development $4,000 - $10,000
Accounting and Bookkeeping Services $300 - $800 per month
Management of Intellectual Property $5,000 - $25,000 or more annually
Access to Federal Grants for Small Business $2,000 - $10,000
Access to Capital Networks $ Invaluable
Effective Management $5,000 - $15,000 per month

To apply for inclusion in the Engine Funding Program please use the following application. Applications from startups will be reviewed every four months and will be selected by the Director of TVC. No more than 3 companies will be admitted into the program every four months so as to assure that sufficient time and resources can be dedicated to the company.

Grant Company

Many technologies disclosed to TVC might have a great commercial potential but even if there are strong preliminary results and a proof of concept, they often still require additional research, products usually are not well defined, market potential is untested and business is only starting to emerge. If funded, the SBIR proposal will provide the company not only with needed financial resources but will also provide an external validation of the proposed research, business concept and even market validation. TVC staff helped others and will help you to prepare a successful proposal. Awarded SBIR proposals increase the value of the company and decrease investment risk, making the company more attractive to private capital funding. Combining other government programs available to Phase 1 and Phase 2 awardees with private money would help in the development of a successful business. An "SBIR Company" has access to all TVC resources and is not much different from a Venture Bench company except for the participation in active business development assistance by TVC staff.

Introduction | Part I: Invent | Part II: Getting started | Part III: Launch | Appendix | Top

Part III: Launch

Stages of Companies

In an effort to assure that U of U Start-ups are working towards the creation of real value for inventors, investors, the University and other key stake holders, TVC has created different development stages that correlate with a typical venture life cycle. These start-up stages allow everyone to quickly identify where in the venture life cycle your company might be, and what key steps might need to be taken towards an exit and/or the creation of a long term profitable company.

While no one size fits all, this general framework is a tool to assure that the right resources are dedicated to your company at the right time. Standard milestones as outlined in the license agreement will oftentimes be correlated with these stages and will give TVC the means to pull back a technology if not met.

At the end of the day, the goal is a profitable company and/or an exit or significant liquidity event. Many companies will be able to get to that without the completion of each one of these milestones, but in most cases, each milestone must be addressed individually.

Stage 0

In Stage 0 a company has yet to be formed. The potential founder/inventor has had an idea or created a technology that could be the foundation of a company. To validate the expense, time and other resources needed to start and run a company the inventor should do preliminary market analysis for the new technology. Some of the questions that must be answered in this stage are: "Is there a large and growing need for the new technology I have produced?", "Will someone pay for the value that my new technology will create?", "Would this technology be better suited for a license to a company already in the industry or is there merit in starting a new company?".

In this stage an inventor also must disclose the new technology or invention to the University TVC so that any legal requirements are satisfied. This type of preparation by the inventor can save time and resources for both the inventor and the University TVC.

Stage 1

Stage one is characterized by the formation of the corporate entity and by essential activities that need to occur before real business development can take place. In this stage a license is secured from the University and essential work is done that lays the foundation for real business development. This will include a well thought out executive summary or commercialization plan and the creation of targeted marketing material that allows for the engagement of potential development partners.

A stage one company typically does not have an appropriate management team but work is being done to identify and engage individuals with a strong business background and expertise in the invention/technology's field to assure that development is undertaken in the most appropriate manner possible.

Stage 2

In stage two, three critical pieces of business development must take place to assure that the company can successfully move forward. These are the creation of a well-developed business plan, product development and external validation.

A well-developed business plan will include defining what your target market is, reasonable financial models including an outline of your costs and time to market and breakeven and the creation of a business model showing how money will actually be made. Significant steps must be achieved in the development of the product by showing proof of concept, prototypes and alpha and beta products. External validation into your business idea is also critical. This could come in the form of an outside CEO engaging himself in the company, securing seed capital or significant grant money external to the University.

Stage 3

In stage three a lot of management, structural and operational work happens and can often take a year or more to complete the milestones defined in the stage. In this stage TVC begins to take a smaller role in the company's operations and strategic decisions. Critical management for the company like a CFO, Full-time CEO and a COO should be put in place. The idea is that this new management team will be the ones to execute on the business plan and really take the company and its licensed technology to market. An independent board of directors should be put in place with independent board members being important.

Outside investment is often sought by companies in this stage and it is important to start engaging potential partners. In this stage a significant amount of work might also need to be undertaken to establish partnerships to further develop and deploy a technology. Therapeutics and other companies seeking government approval will have a bit of a different timeline in this stage. Companies doing phase 1, 2 and 3 clinical trials will complete all of those phases in this stage. Other types of companies will acquire their first customers and generate leads that are pushed into the steady sales pipeline in the next stage. Much of what goes on in this stage is execution of the business plan and the establishment of customers and relationships for the future.

Stage 4

A company in stage four has consistent sales of their product and is, in general, financially self sustaining. A sales and marketing channel is established and working well to generate customers for the company. The company may still raise additional capital but for product growth or additional development. At this point, a company could be creating additional IP that is synergistic to their original product line. Additionally, the company is making net sales or what is to be considered the equivalent in their licensing agreement. If a company is not working towards an acquisition, it should be working to add additional products and IP so as to assure competitiveness, growth and profitability moving forward.

A stage four company should also be preparing themselves to execute transactions with outside parties. This includes having the right structure financially and operationally to be an attractive partner or acquisition candidate. Developing a long term growth strategy or "dressing the company up" for an acquisition is done in this stage to prepare for the next stage. Having an "eye on" and keeping in mind what the shareholders of the company want is very important in this stage.

Stage 5 (Exit)

An exit or liquidity event is when original investors, founders or other stakeholders in the company have some or all of their shares purchased by an investor or acquiring company. Generally early investors/stakeholders in a company will want to see their investment produce a return that they can then re-invest in other companies. TVC is such a stakeholder, because to continue to work with new startup companies there has to be some sort of liquidity event from the more mature TVC backed companies. For this reason TVC encourages and helps companies make good business decisions that could lead to an exit event that is beneficial for all stakeholders in the company. If a startup company does not fit well into an exit scenario TVC likes to help build a long term growth plan that will allow the company to be relevant in their market long term. To do this, a company often must be able to produce enough cash flow to fund the company's growth as well as give some sort of return to early investors through dividends or royalty payments.

TVC wants to help faculty entrepreneurs reach the highest level of success possible with their companies. As an equity partner in a company TVC has aligned interests with all of the other owners and works to produce the best return for all of the stakeholders.

Introduction | Part I: Invent | Part II: Getting started | Part III: Launch | Appendix | Top

Appendix A: Example Executive Summary/ Commercialization Plan

An executive summary is not a business plan. The main purpose of an executive summary is to introduce your technology and business and to communicate to investors and customers the value and opportunity behind your product. Below are some of the things that could be included in a commercialization plan, or executive summary. A complete business plan will address each one of these areas. An executive summary will typically be 3-6 pages in length.

  1. Problem or market need. Explain in layman's terms and quantify the "cost-of-pain" in dollars or time. Give the "elevator pitch" for your startup.
  2. Solution product & technology. Here is how and why it works, including a customer-centric quantification of the benefits. Make sure to communicate the relevance of your product / services to market needs. Describe your technology, patents, and any other competitive advantages you offer.
  3. Technology Status and Development. Explain the status and development stage of your technology and the resources and cost of further development. (Concept, proof of concept, prototype, bench scale product, ready for manufacturing etc.)
  4. Opportunity sizing. Define the characteristics of the overall industry, market forces, market dynamics, and customer landscape. Outline potential growth for the market using third party data such as Marketresearch.com, Forrester, Gartner, LexisNexis, etc.
  5. Business model. Explain how you will make money, who pays you, and gross margin. Will you use an internal sales force, distribution partner, merely license the technology etc.
  6. Competition and sustainable advantage. List and position your competition, or alternatives available to the customer. Highlight your competitive advantages.
  7. Marketing, sales, and partners. Describe marketing strategy, sales plan, licensing, and partnership plans. Here is also a good place for a rollout timeline with key milestones.
  8. Executive team. Although an early stage company, it is important to identify key players and drivers for both technology development and business development. Who will your team consist of and what are their backgrounds?
  9. Financial projections and funding requirements. Project both revenues and expense totals for the next five years, and the past three years. Outline foreseeable costs associated with getting to market and what it will take to recoup those costs. How much money has been contributed to the venture and what are the sources of that funding? What is the level of capital funding sought during this stage?
  10. Exit strategy. What is the timeframe of return on investment? What is the planned exit strategy? What is the timeframe for the exit?

Introduction | Part I: Invent | Part II: Getting started | Part III: Launch | Appendix | Top