Transcript WIP - Yale Entrepreneurial Institute

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Yale
Yale
Entrepreneurial
Institute (YEI)
Early Stage Capital
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Creating the Most Possibilities to Excel
Start
Something
Tech
Boot
Camp
Venture
Creation
Program
Summer
Fellowship
Program
(Accelerator)
YEI
Innovation
Fund
YEI is equipped to help
students start scalable
ventures by providing:
1.
2.
3.
4.
Funding
Resources
Mentors
Space
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Growing the Pool of Funds
Time
Academic Year
Funnel of Start-ups
Student ventures are eligible for ~$120K in funding
Promising start-ups have more
opportunities to secure funding
~$2K
Fellowship
~$15K
YEI Innovation
Fund
~$100K
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YEI Funding Success
 Started in 2007
 More than 70 companies accelerated
 3 companies acquired
 $70M raised in outside funding
 305+ jobs created
 YEI grads have gone onto MassChallenge,
Ycombinator, TechStars, etc.
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Successful YEI Teams
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Panorama Education
 Aaron Feuer, Xan Tanner and
David Carel
 $4M Funding – Google
Ventures, Zuckerburg, Yale
 School systems engaged
with students, parents and
teachers participating in
highly-focused, digital opinion
surveys.
 2012 YEI Summer Fellows
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Successful YEI Teams
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Dr. Daniel Abadi, Computer Science
Justin Borgman, SOM ’11, YEI ‘10
• Complex analytics for cloud computing
• Founded in 2010 by Faculty Member and
SOMer
• 35 Employees
• Raised $17+ Million
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Funding Technology
Innovation
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Resources Available ($)
Industry
Investors
Valley of Death
Small Business
Academia
Development
Discovery
Commercialization
Level of Technology Maturity
NSF, NIH
Academic
SBIR
Senior Debt
Angel
Venture Capital
From
Angus Kingon
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What is your Enterprise Risk Profile?
Friends,
Family
(and Fools)
Threshold
Technology Risk
NSF
SBIR/STTR
Threshold
Venture Capital Threshold
Finance Risk
People Risk
Economic
Development
Funds Threshold
Senior Debt
Threshold
Angel Capital Threshold
Market Risk
Bootstrap Techniques
What you have in your pocket!
Pros
+ Protection of Entrepreneur’s Equity
+ No Outside Oversight
+ Low Cycle Time and Transaction Costs
+ Certain Consulting Activities May Augment Technology
Development
Cons
- Self-Funding Brings High Level of Personal Exposure
- Consulting May Dilute Core Development Activities
- Licensing May Erode Downstream Revenue Potential
- Equity-for-Service Trades Dilute Entrepreneur Ownership
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Federal and State Funding
SBIR, STTR ($3B available annually) and other grants
Pros
+ Non-Dilutive
+ May Offer Federal Customer Entrée
+ Potential Adjunct to Development Roadmap and Business Direction
+ Clear Milestone Expectations
+ Validating of Technology Direction
Cons
- Government Funding Sources May Bring Less Business Expertise Than
Equity Investors
- If Grants Define and Drive Development Roadmap and Business Direction,
Cancellation of Requirement Could Leave Business Without a Customer
- Generally Insufficient to Bridge “Valley of Death”
- May Not Be Anchored to End-User Requirements
- Not All States Offer Incentives
Yale Support for SBIR/STTR
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 BioHaven Event (November)
 Office Hours –
– Dec. 4, 11 – Merrie London from CT Innovations
 SBIR “How To” – February 11-12
*** Additional Resources Available
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Angel Investment
>2M individuals w/ Net Worth > $1M “Qualified Investors”
May have investment motivations beyond Rate of Return (ROR)
Various structures – Angel funds, Individuals, Super Angels
Pros
+ May be Active Advisors
+ May Assist in Business-Building Activities
+ Less Structured Monitoring and Control than Venture Capital
+ Shorter Due Diligence Cycle than Venture Capital
+ Relatively Loose Terms and Conditions
+ Option Pool Likely not Required
+ May be Widely Accessible
Cons
- May be Active Advisors
- Valuation Sensitive
- High Expected Rate of Return (ROR)
- Limited Ability to Support Follow-On
- Availability / Access Subject to Macroeconomic Climate
** TERMS VERY IMPORTANT TO POSITION COMPANY FOR DOWNSTREAM CAPITAL**
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Venture Capital
Private Equity Class Focused on Funding and Building Early Stage, High-Growth
Enterprises
Pros
+ Investment Validates Business Plan
+ Adds Significant Value to Business
+ Ability to Significantly Assist in Business-Building Activities
+ Well-Structured Terms and Conditions Designed to Balance Management and
Investor Objectives
+ Assistive in Finding Follow-On Financing
Cons
- Extensive Due Diligence Cycle
- Heavy Company Monitoring and Control
- High ROR Expected
- Moderately – Highly Dilutive
- Expectation of Preferred Stock
- Option Pool Required
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Strategic Partners
Any alliance between commercial entities that furthers business interests
(Formal to informal)
– Financing
– R&D
– Marketing / Sales / Distribution
Pros
+ Able to Add Meaningful Business Value
+ Able to Assist in Business Building Activities
+ Source for Technology, Market, or Business Model Validation
+ Numerous Industry contacts
+ Investment from Partner May Be Relatively Valuation Insensitive
+ Expect Lower ROI
+ courtship by Prospective Acquirer
Cons
- Restrictive Terms and Conditions
- May Require Certain Preferences to the Business Partner
- Can Sometimes Limit Attractiveness of Company for Future Investment
Panelists “Advice for Accessing Early
Capital”
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Kyp Sirinakis – Managing Partner, Rock Spring
Ventures
[email protected]
Adrian Horotan – Principal, Elm Street Capital
[email protected]
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Resources

National Venture Capital Association. Provides listings of venture capital firms and entrepreneur education.
http://www.nvca.org.

Kauffman Foundation Entrepreneurship Resource Center. Education on the A to Zs of business, including venture
capital. http://www.entrepreneurship.org.
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National Associate of Seed and Venture Funds. Provides lists of state venture capital funds and other resources.
http://www.nasvf.org.
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Angel Capital Association. Provides lists of angel groups. http://www.angelcapitalassociation.org.
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Small Business Administration (SBA). http://www.sba.gov
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Connecticut Innovations http://www.ctinnovations.com/
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CVG http://www.cvg.org/