Carolina KickStart NEO Program. A User s Guide

Transcription

1 Carolina KickStart NEO Program A User s Guide

2 About the NEO Program The NEO Program facilitates the development of startup companies at an early stage to create vehicles that allow for the following: Corporate entity around which SBIR/STTR grants can be submitted Early assessment of the commercial potential of the technology prior to expensive IP investments Early recruitment of management team to develop a business plan and secure funding Clear structure and expectations for founders, UNC, and management

3 The First Steps to a Startup

4 Timelines and Responsibilities Founder s Responsibilities 1) Name the company 2) Contact COI 1) Sign LLC Operating Agreement 2) Open Bank Account 3) Sign Collaboration Agreement 1) Train on QuickBooks 2) Prepare SBIR/STTR grant applications 3) Prepare content for starter website 1) Submit first SBIR/STTR grant application 2) Submit Facilities Use Agreement application Sign Company Formation Agreement 1) Notify OTD of company formation 2) Secure URL 3) File incorporation documents 4) Obtain EIN and DUNS number KickStart s Responsibilities 1) Prepare LLC Operating Agreement 2) Prepare Collaboration Agreement 1) Introduce founders to: HPG (accounting) SBIR/STTR consultants Ruby Red Design Studio (web development) Pace Law (IP attorney) 1) Organize SBIR/STTR mock review

5 Company Formation Agreement The initial step to starting a company through the NEO program is to sign the Company Formation Agreement This agreement outlines the responsibilities of the Founders and the University. It also includes information on the services covered in the NEO support package

6 Naming the Company Carolina KickStart (CKS) will work with the founders to create a simple, yet descriptive name for the company After a name is chosen, CKS will secure the URL for the company CKS will reserve the URL for a 2 year period, after which the company will be responsible for maintaining the domain CKS will transfer the URL to the founders

7 Incorporation CKS will incorporate the company as a Delaware LLC Founders must supply an address and telephone number for the company The address is usually one of the founders home address CKS will obtain the following key documents Certificate of Formation Statement by Organizer Certificate of Good Standing Certificate of Authority (NC) CKS will notify the Office of Technology Development that the company has been formed

8 Conflict of Interest As part of forming a company, the faculty founder(s) must notify the Conflict of Interest (COI) office The first step in the process is to disclose a conflict through the Activities, Interests, and Relationships Management System (AIR) If you have any questions coi@unc.edu or call Afterwards, a meeting with COI will identify conflicts or potential conflicts and develop a plan for managing these conflicts.

9 Employer Identification and DUNS Numbers CKS will register the company with the IRS to obtain an Employer Identification Number (EIN) This number is used for tax purposes and is necessary to open a checking account CKS will obtain a DUNS Number from the federal government This number is required to apply for federal grants (SBIR/STTR) and enables the company to build credit

10 LLC Operating Agreement Formalizes an agreement between the founders and the University Outlines the organization, management, and financials and tax matters of the company The LLC will be governed by the Members Representative Committee (MRC) that is similar to a board of directors Initial members: One company founder and the Director of CKS Includes a capitalization table (cap table) that outlines the equity positions of the founder(s) and the University CKS will maintain and update the cap table as necessary Initial equity allocations: Founders-- 85%, UNC -- 15%

11 Company Bank Account Founders are responsible for opening a company bank account Required documents to open account: Incorporation documents and EIN. Note: some banks require an NC Certificate of Authority, which Carolina KickStart will acquire on behalf of the company

12 SBIR/STTR Grants Standard due dates for NIH SBIR/STTR grants: April 5 th, August 5 th, and December 5 th (note: other agencies have varying deadlines) Small Business Innovation Research (SBIR) grant The PI of the grant must be primarily employed by the company Small Business Technology Transfer (STTR) grant The primary employer is not stipulated so the PI can be employed by the company or UNC The company must collaborate with a non-profit institution (e.g. UNC, RTI, other) At least 40% of the work performed by the company and at least 30 % of the work must be performed at UNC Remaining 30% may be performed by either organization Note: Other funding agencies may have differing eligibility criteria

13 Preparing to Submit an SBIR/STTR In order to submit a grant application to NIH, the company must be registered with the following organizations: System for Award Management (SAM) Grants.gov era Commons SBA Company Registry This process can take up to 6 weeks, so it is essential that the company start early

14 NEO Support Package

15 Overview of the Support Package Service SBIR Consultants $ IP/Corporate Attorney Consultants (Pace Law LLC and Hutchison PLLC) Financial & Tax Consultant (Hughes Pittman & Gupton LLP) Startup Fund Allocation* $ $ Web Design (Ruby Red Design Studio) $ Logo Design $ Quickbooks accounting software Domain Registration $ (one year) $30.00 (two years) Total $ *The startup funds are to be allocated as indicated. Deviations should be approved by KickStart

16 Collaboration Agreement CKS will prepare the Collaboration Agreement The Collaboration Agreement formally outlines the services provided in the NEO support package and how the startup funds are to be allocated In order to release the funds, the company will need to complete a W-9 form and submit an invoice to CKS

17 SBIR/STTR Consultants CKS has identified SBIR/STTR consultants that will assist the company throughout the registration process and help prepare a strong grant A total $1250 (approx. 10 hours) of SBIR/STTR consultant support is provided in the NEO package

18 Legal Support The NEO support package includes $1500 (approx. 12 hours) of legal support IP attorney support by Pace Law LLC Corporate attorney support by William Wofford and/or Dan O Korn at Hutchison PLLC

19 Financial Planning The NEO support package includes up to 15 hours of financial planning support from Hughes, Pittman, and Gupton LLP (HPG) Preparation of DE franchise tax filing Assistance with NC Tax ID Application Checklist (with due dates and guidelines for additional assistance) and startup deliverable binder including tax forms, contact information and IRS publications. Assistance with filing of IRS 83(b) and Schedule K-1 tax forms

20 Accounting The NEO support package includes a 1 year subscription to QuickBooks HPG will train the founders on Quickbooks All NEO companies must use Quickbooks to manage funds CKS requires companies to submit a quarterly budget report during the NEO period Founders are responsible for the report until a business lead joins the company

21 Website and Logo As part of the NEO support package, CKS has designated $875 to pay for the development of a basic website by Ruby Red Design Studio The company is responsible for all content of the website The company should begin working with the web developer shortly after incorporation to establish an online presence The NEO support package includes an additional $250 for logo design

22 Recruitment of Business Lead CKS will work with the company founders to identify a business lead A Management Agreement will be prepared for the business lead Outlines duties and expectations Outlines the share of equity the business lead will receive, which is contingent upon completion of mutually agreed upon milestones

23 Additional Services and Information

24 Advisory Panel Meeting With input from the founder, CKS will organize an advisory panel meeting to bring in experts to help assess the commercial potential of the technology and help develop an action plan for the company CKS will prepare a confidentiality agreement to be signed by the participants to protect any discussion of proprietary information

25 SBIR/STTR Mock Review Prior to every NIH SBIR/STTR deadline, CKS will organize a mock grant review All UNC companies are eligible to participate in the mock review; however, priority will be given to NEO companies CKS has engaged a team of expert consultants that will review your SBIR/STTR application and provide feedback The mock reviews typically occur 4 weeks prior to the NIH submission deadline

26 Facilities Use Agreement In order for the company to conduct work in University facilities, a Facilities Use Agreement (FUA) must be obtained Required documents: FUA application Approval from Department Chair, where facilities are located Approval from Conflict of Interest Office Lab safety plan approved by EHS Insurance License (if company will be working with University IP) The time to obtain an FUA can be several months. Submitting the FUA concomitant to the SBIR/STTR submission is encouraged.

27 Patent Landscape Analysis The Kenan Institute of Private Enterprise can perform a patent landscape analysis Portfolio planning Prior art identification Citation family analysis Identification of potential licensee

28 Licensing A license must be obtained by the company to develop any technology based on University owned intellectual property (IP). Most companies take advantage of the Carolina Express License No upfront fee Six month grace period granted to begin payment of patent costs 1-2% royalty on product sales (depends on type of product) 0.75% liquidity fee (this fee is waived for NEO companies) It is the responsibility of the Business Lead operating on behalf of the company to negotiate the terms of the license with the Office of Technology Development Note: If the business lead forgoes using the Carolina Express License, no more than 30% of the attorney funds provided by NEO may be used in the process of negotiating the license.