Commercialization Overview The Austin Model. Laura J. Kilcrease Triton Ventures

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1 Commercialization Overview The Austin Model November 2004 Laura J. Kilcrease Triton Ventures 2004 Triton Ventures 1

2 Commercialization The Austin Model Establish excellence in R&D base Build community infrastructure Drive Entrepreneurship Attract Capital Measure Results 2004 Triton Ventures 2

3 Commercialization The Austin Model Establish excellence in R&D base Build community infrastructure Drive Entrepreneurship Attract Capital Measure Results 2004 Triton Ventures 3

4 Attract and Foster Strong Research Organizations Academic University of Texas Consortia MCC SEMATECH Corporate 3M Freescale (Motorola) IBM 2004 Triton Ventures 4

5 Build a Commercialization Process The Three Phases of Technology Commercialization Information Gathering Opportunity Analysis Implementation Technology Assessment Technology Identification Preliminary Technology Ranking Licensing / Startup Market Assessment 2004 Triton Ventures 5

Implementation Technology Assessment Technology Identification

6 Technology Ranking Criteria Technology Assessment: How does the technology compare to state of the art? Market Opportunity: Is it a large, growing market with a current demand? State of the Technology: How imminent is the opportunity? How much development, regulatory approval is required? Me Too Incremental Revolutionary Weak Moderate Strong Early Mid Late 2004 Triton Ventures 6

State of the Technology: How imminent is the opportunity?

7 Matrix Representations Focus on technologies with the best chances of success Technology Early Stage Market Mid Stage Late Stage 2004 Triton Ventures 7

8 Commercialization The Austin Model Establish excellence in R&D base Build community infrastructure Drive Entrepreneurship Attract Capital Measure Results 2004 Triton Ventures 8

9 Community Infrastructure Academic Business Community Government Talent Technology Capital Know-How Market Needs Successful Value-Added Technology Firms 2004 Triton Ventures 9

10 Commercialization The Austin Model Establish excellence in R&D base Build community infrastructure Drive Entrepreneurship Attract Capital Measure Results 2004 Triton Ventures 10

11 Drive Entrepreneurship Academic The Austin Model MBA Entrepreneurship Curriculum MOOT Corp. Business Plan Competition Business Networking Associations Conferences 2004 Triton Ventures 11

12 Drive Entrepreneurship The Austin Model Celebrate Successes Accept Failures Entrepreneurs pull & Universities push commercializable technology for start up / spin out 2004 Triton Ventures 12

13 Entrepreneurship - UT Austin 2004 Triton Ventures 13

14 Commercialization The Austin Model Establish excellence in R&D base Build community infrastructure Drive Entrepreneurship Attract Capital Measure Results 2004 Triton Ventures 14

15 Commercialization Capital Gap In the cash flow valley of death entrepreneurs face the convergence of high cash demands and low ability to raise it. Source: Bridging the Valley of Death: Transitioning from Public to Private Sector Financing, NREL May Triton Ventures 15

16 Valuing The Idea What technology gets the attention? Can we make a business out of this? Show me the plan! OK, so how much is this thing really worth? 2004 Triton Ventures 16

17 Alternate Views What It Takes to Start a Company Technologist 1) Technology 2) Technical People 3) Market 4) Business Management Venture Capitalist 1) Business Management 2) Technical People 3) Market 4) Technology 2004 Triton Ventures 17

Business Management Venture Capitalist 1) Business

18 Types of Financing 3Fs Angels Corporate Investors Venture Capitalists 2004 Triton Ventures 18

19 Investment Texas Deal Flow and Equity into Venture-Backed Companies Amount Invested ($M) $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 127 $ $ $6, $2,669.4 $3, $1,285.2 $1,068.8 $1, Number of Deals Amount Invested ($M) Number of Deals Underlying data available in VentureSource Source: VentureOne/Ernst & Young 2004 Triton Ventures 19

20 Investment Texas by City SA / S. TX 4% West TX 1% Houston 17% Dallas 38% Dallas Austin Houston SA / S. TX West TX Austin 40% Underlying data available in VentureSource 2004 Triton Ventures 20

21 Commercialization The Austin Model Establish excellence in R&D base Build community infrastructure Drive Entrepreneurship Attract Capital Measure Results 2004 Triton Ventures 21

22 Metrics The Austin Model Universities Royalties Equity Value Research $$$ Business New Companies Revenue Growth Shareholder Value Community Job Growth Industry Diversification Increased Salaries Increased Tax Base 2004 Triton Ventures 22

23 Impact on Austin 2004 Triton Ventures 23

24 The Austin Model Economic security requires competitive advantages that are realized by applying technology to transform basic and advanced industries as well as accelerating growth in emerging industries and starting new industries. -Dr. George Kozmetsky 2004 Triton Ventures 24

25 Step 1 - Large organizations sponsor R&D Triton Ventures Spinout Model in Action Step 4 - Proven market, technology and execution enable exit opportunities Step 2 - Technology is spun out Step 3 - Triton invests to fund commercialization and growth POWER PARAGON, INC Triton Ventures 25

26 Commercialization Overview The Austin Model November 2004 Laura J. Kilcrease Triton Ventures 2004 Triton Ventures 26

Traditional Texas City to an Innovative, Sustainable, Creative Business City. Laura J. Kilcrease. laura@tritonventures.com

Traditional Texas City to an Innovative, Sustainable, Creative Business City Laura J. Kilcrease laura@tritonventures.com The Situation in 1989 Highest office building vacancy rate in the country Dependency