Transcript Presentation Title

The Evolution of the OTC
A comprehensive approach to technology commercialization
The Texas A&M University System
Research and Commercialization in
Universities
FY 2007 Statistics
• $48 billion in research at US universities
• $3.4 billion in industry funded research, a 15%
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increase over FY 2006
Almost 20,000 invention disclosures
3,622 newly issued patents
555 new start-ups based on university
technology
Approximately 13,000 active licenses
Overview at Texas A&M System
OTC Facts
Evolving Demands
The Three Paths to Commercialization
• Direct Licensing
• R&D Alliances
• Start-Up Formation
Partnership
The Office of Technology
Commercialization
Since its founding, the OTC has:
• Processed more than 2,400 inventions created
by A&M System faculty and staff
• Filed more than 2,700 patent applications
• Completed more than 1,700 License
Agreements and Material Transfer Agreements
• Generated revenues exceeding $60 million
related to intellectual property rights
The Office of Technology
Commercialization
Revenues have gone to support:
• More than $20 million in sponsored research
• Retention of important faculty
• Support for more than 800 faculty and staff
inventors
• Sharing arrangements with co-developers like
USDA and other universities
The Office of Technology
Commercialization
The OTC:
• Became the youngest technology transfer office
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in the top 25 in North America in revenues
Is in the top ten in the number of license
agreements producing income
Does two-thirds of its license agreements with
small businesses
Files a patent every other day
Completes a license agreement once a week
In 2005 OTC Defined
Commercialization Broadly
Licensing alone has minimal impact on the
mission of the university
• Education
• Research
• Public Service/Public good
University commercialization must be
broader than licensing
• Industry-university partnerships are key to
commercialization success
Office of Technology
Commercialization
OTC is a matchmaker between System
members and commercial partners
• Single point of contact for partners
• OTC works across silos
OTC defines commercialization broadly
• Licensing
• New venture creation
• Increased research flow
• Assist with new research infrastructure
Evolving Demands
OTC’s strength has been direct licensing
This is one of three basic activities that any
technology commercialization office must
be proficient in
As Texas A&M becomes more
sophisticated, the OTC is challenged to
improve in other areas
The future of the OTC lies in improving our
abilities in the other two sectors of activity
Scope of OTC Services
Direct Licensing
Research and Development Alliances
• Industry
• State/Federal
Start-Up Formation
Improving Direct Licensing
Triage and Assessment
• Preliminary Reports
• Interview Reports
Communication of Commercialization Plan
• Intellectual Property Strategy
• Marketing Strategy
Disciplined selection of opportunities
Follow-through
Transparency
Low Reward
High Reward
Technology Evaluation Matrix
Low Licensing Risk
High Licensing Risk
High ValueAdded
Cost Drivers
(Prioritize)
Low ValueAdded
(Maintain low risk,
increase reward if
possible)
(Make a few smart picks
where risk can be
reduced; close the rest.)
Non ValueAdded
(Waive/Release to
Inventors)
Low Licensing Risk
High Licensing Risk
High Reward
Meet
Technical
Milestones
Cost
Drivers
Low Reward
Quicklook Reports Help to
Manage Risk
Trade Value
for Risk
Reduction
Waive/Release
TAMUS OTC Licensing Metrics
FY 2009 - $8.7 million in license revenue
How is the money divided up?
• $1 million for patent expense reimbursement
• $1.9 million to run the OTC
• $2.9 million to inventors
• $2.9 million to TAMUS System Members
Start-Up Formation
Creating companies
• to allow us to move disruptive technologies
forward
• to allow us to get a greater return on new
technologies
In the past, reliance on entrepreneurial
faculty to initiate these
Currently, have a dedicated team that
focuses on formation of start-ups
OTC and Start-up Creation
(Establishing New Business Entities)
Identify opportunities with start-up
potential for equity investment
Assist with market research, business
planning and partnering
(Commercialization Services)
Partnering with early stage capital funds,
investors, and strategic partners
• Focus on the relationship and be demand
driven
Provide incubation possibilities at Texas
A&M or with partners
• Be born big with international presence from
the beginning
TAMUS Approach
Inventor led spin-out vs. university led spinout
• Small equity stake vs large equity stake
• No investment vs cash investment
• No university business involvement vs university
board seats
• Part time professor CEO vs full time CEO
• Small university upside vs large university
upside
What Are Spin-Out Opportunities?
Goldilocks technologies
• Not developed enough to attract licensees
• Developed enough to attract angels
Next steps usually involve further research
at the university
Value add step is relatively inexpensive
Large market – fundable, exit strategy
Opportunity Review Process
Opportunities identified by licensing staff
• Internal review of opportunities
• Internal pitches of the vision of a company
• Internal analysis of “why a spin-out”?
Analyze the technology, market, intellectual
property, and internal support for a spin-out
Start-up Development
PHASE 1
ASSESSMENT
• Invention Disclosure
• Technology Assessment
• Identification of Products
and Services enabled by
the technology
• Engagement as Potential
Start-Up Project
•Determination of inventor
interest
•Determination of Member
interest
• Market Analysis
•Size of market(s)
•Size of market segment(s)
• Competitive Analysis (per
market segment)
•Competitors (sales of
products/services)
•Research competitors
• Integrate information to
create Assessment Report
on Start-Up Potential
•Inventor and Member
interest
•Market Analysis
•Competitive Analysis
• Go/No Go Decision
PHASE 2
START-UP FORMATION
• Business Plan Development
• Rationale
• Milestones
• Funding needed
• Licensing Terms
• Exit Strategy
• Internal Fundraising (cash for
equity)
• OTC
• Members
• External parties
• Team Formation
• Scientific Advisory Board
• Research Team (e.g. TAMUS
researchers who will develop
research proposals and
conduct the research)
• Board Members (OTC)
• Management (external)
• Creation of Start-Up
Proposal
• Submission of Start-Up
Proposal for Approval
(must be approved by
Chancellor)
• Drafting corporate
documents
• Filing for Incorporation of
the new company
• Execution of License
PHASE 3
BUSINESS PLAN
EXECUTION
• Fundraising by
Management
• R&D as needed
• Completion of Milestones
• Achievement of objectives
of exit strategy /
termination of license
Phase I – Project Screening
Work done by Licensing Staff
Invention Disclosure
Technology Assessment
Identification of Products and Services
enabled by the technology
Engagement as Potential Start-Up Project
• Determination of inventor interest
• Determination of Member interest
Phase I – Project Screening
Work completed by New Ventures Team
Market Analysis
• Size of market(s)
• Size of market segment(s)
Competitive Analysis (per market segment)
• Competitors (sales of products/services)
• Research competitors
Integrate information to create Assessment
Report on Start-Up Potential
• Inventor and Member interest
• Market Analysis
• Competitive Analysis
Go/No Go Decision
Phase II – Company Formation
Business Plan Development
• Rationale
• Milestones
• Funding needed
• Licensing Terms
• Exit Strategy
Internal Fundraising (cash for equity)
• OTC
• Members
• External parties
Team Formation
• Scientific Advisory Board
• Research Team (e.g. TAMUS researchers who will
develop research proposals and conduct the research)
• Management (external)
Phase II – Company Formation
Creation of Start-Up Proposal
• Business plan
• Risk profile
• Expected research and equity upside potential
Submission of start-up proposal for approval
(must be approved by Chancellor)
Drafting corporate documents
Filing for incorporation of the new company
Founding investment made
CEO contract signed
Execution of license
Phase III – Business Plan Execution
Fundraising by management
• Assistance from OTC
• Short time line with specific goals
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$1,000,000 within 12 months
• Fundraising success leads to success fee for CEO
After funding
R&D as needed
Completion of milestones
Achievement of objectives of exit strategy /
termination of license
Typical Deal Breakdown
Caveat is that all deals are different
Starting point is a total investment of
$75,000
• OTC invests $25,000
• TAMUS member invests $25,000
• Research Valley Angel Fund invests $25,000
Starting point for equity break down is:
• OTC 5% set aside for commercialization services
• Inventors 10% set aside to keep their interests
• Each of the 3 investors receives 28.33%
• CEO is compensated 5-20% equity upon funding
Industrial R&D Alliances
Finding corporate partners to bring
technology development forward
In the past, reliance on faculty to initiate
these
Currently, members of licensing staff
dedicate time to pursuit of industry
alliances
UNIVERSITIES
HEALTH SCIENCES
AGENCIES
Scope of System Capabilities
11 Universities and the Health Science Center
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Campuses in Texas and the Persian Gulf state of Qatar
7 state agencies
27,000 faculty and staff
• Performed $637 million in externally funded research
Physical and Program presence in all of the state’s 254
counties
In 2008 the A&M System
• educated 106,000 students in degree programs
22,888 degrees awarded
* * More than 1 in 5 students enrolled in a public university in Texas is
attending an A&M System institution
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• Agencies trained hundreds of thousands more students through
practical extension programs
Single Point of Contact
The need is clear, but how?
The System was the only organization
which spanned the Members
• OTC’s business focus made it a natural fit for
the job
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Referred clients to appropriate Members/laboratories
Worked across silos
Recognized synergies between industrial clients and
multiple Members
Initially organized under Business
Development in OTC
OTC and Business Development
(Philosophy of working with the Marketplace)
Understanding commercial needs and
demands can uncover collaboration
opportunities and potential funding
• Offer need-driven research opportunities to the
researchers
Collaboration opportunities are an outcome of
researchers gaining an understanding of
commercialization
Long-term commercial partnerships lead to
research funding opportunities
Start Small - Build Upon Success
Bio-energy efforts were greatly assisted by
OTC
Worked closely with AgriLife Research and
AgriLife researchers
• Led to millions of dollars in sponsored research
• Enabled AgriLife to pay for dedicated Corporate
Relations staff
• Has led to many more deals in AgriLife with
large industrial partners
Model is Evolving
Moving towards a distributed Corporate
Relations model
• Multiple offices/people in each of the major
Member organizations
Created a new Associate Vice-Chancellor
for Economic Development
• Coordinates efforts and helps to create bridges
between organizations
Corporate Relations Benchmarks
University of Wisconsin, Madison
Office of Corporate Relations, Wisconsin Alumni Research
Foundation, Research Park, WiSys
Purdue University
Office of Engagement, Office of Technology
Commercialization, Research Park, PURE Database
University of Michigan
Academic and Corporate Relations Center
Operational Model
State and Federal R&D Alliances
Finding state and federal sponsors to bring
technology development forward
These alliances may include industry
partners as well
In the past, reliance on faculty to initiate
these
Currently, senior staff dedicate time to
pursuit of these alliances
Results of Defining Commercialization
Broadly
 $100 million + in new revenue since 2006
◦ State – industry – university research institutes
◦ State - industry – university partnerships to attract
star researchers
◦ Industry – university multi-year research programs
 Direct impact on the mission
◦ Education, research, public good
Keys to Success
 Top administrator support for
commercialization
 Key staff are from industry and speak the
language of business
 Commercialization becomes part of the
project design
 Industry partners know their ultimate goal is
important to the university as well
 Thinking beyond licensing to other possible
business support
◦ Development funding
◦ New venture creation
Get Involved Early
Build a team of Trusted Technology
Advisors for our two customer bases:
• University researchers
• industry/investment partners
Long-term commercial partnerships can
lead to research opportunities
Collaboration opportunities are an outcome
of researchers gaining an understanding of
commercialization
“Our goal is not only to discover
knowledge, but to apply it,”
Chairman Bill Jones
Board of Regents