2. 803 North Main Street Ann Arbor, MI 48104 (734) 930-9741 info@bioconsultants.com www.bioconsultants.com managing partners: Lisa M. Kurek Michael Kurek, PhD partner emerita: Mickey Katz-Pek Developing the Business of Life Science

3. “Securing Funding Opportunities for High-tech Businesses” A high-level overview of common funding sources available to entrepreneurs for technology-based high-tech startup businesses.

4. Developing the Business of Life Science 3 The Academic Entrepreneur (and most other entrepreneurs) A good idea is necessary but not sufficient

5. Developing the Business of Life Science 4 Funding for Commercialization $ Internal institutional grants $ Michigan 21 st Century Jobs Fund $ SBIR/STTR $ Angel investment $ Venture capital $ Corporate investment $ Banks

6. Developing the Business of Life Science 5 Funding for Commercialization $ Non-Dilutive $ Equity $ Debt

7. Developing the Business of Life Science 6 Funding for Commercialization Non-Dilutive: $ Internal institutional grants $ MUCI $ SBIR/STTR

8. Developing the Business of Life Science 7 Funding for Commercialization Equity $ Michigan 21 st Century Jobs Fund $ Angel investment $ Venture capital $ Corporate investment

9. Developing the Business of Life Science 8 Funding for Commercialization Debt $ Corporate investment $ Banks $ SBA Loans

10. Developing the Business of Life Science 9 Non-Dilutive $ Typically government or non-profit $ Looking to achieve goals such as job creation or public good

11. Developing the Business of Life Science 10 Create jobs Create jobs Promote small businesses: recognized more and more as a unique national resource of technology innovation Promote small businesses: recognized more and more as a unique national resource of technology innovation Stimulate technological innovation Stimulate technological innovation Help develop products of commercial merit Help develop products of commercial merit Purpose of SBIR/STTR Programs

12. Developing the Business of Life Science 11 Participating Agencies* DOD - $1200 mUSDA - $19.3 m HHS - $650 mDOT - $4.0 m NASA - $138 mEPA - $7.0 m NSF - $105 mDOC - $9.4 m DOE - $102 mDoED - $8.4 m DHS - $30 m TOTAL: >$2.3 B FY 2005 SBIR & STTR SBIR Only * www.sbirworld.com

13. Developing the Business of Life Science 12 Small Business Innovative Research Grant (SBIR) Phase Amount/Period Purpose I $100k/ 6 months Evaluate scientific/technical merit and feasibility II $750k/ 2 years Expand results of and further pursue development III requires private $ Commercialization

14. Developing the Business of Life Science 13 Small Business Innovative Research Grant (SBIR)  PI’s primary employment is with the company  Must identify company controlled research facilities  Lag between phase I and II funding  Extremely limited discretionary funds

15. Developing the Business of Life Science 14 Non Dilutive: Michigan – Based Sources $ Michigan Universities Commercialization Initiative (MUCI) $ Michigan Economic Development Corporation (MEDC)

16. Developing the Business of Life Science 15 MUCI Challenge Fund $ Goal is to transfer university- based technologies into the private sector $ Available to 10 MI public universities $ University TTO/OVPR is the applicant $ Up to $150K available per project for market studies, prototype development, business plan prep and more… www.muci.org

17. Developing the Business of Life Science 16 What you’ll need for non-dilutive financing… $ Find a funding source applicable to your opportunity $ Typically require response to an RFP or Solicitation $ Technical / Product Development / Business Plan as appropriate $ Ability to write extremely competitive proposals

18. Developing the Business of Life Science 17 Equity: Angel Investment $ Typically high net-worth individuals $ Looking for a product, service, company or entrepreneur with whom they can identify $ Mentoring relationship $ “Street Smarts” $ Can move quickly

19. Developing the Business of Life Science 18 Equity: Venture Capital $ Often specialize in a business sector $ Many have life-stage preferences $ Often require significant equity positions to invest $ Typically are able to invest more than angels $ Company needs a clearly defined exit strategy

20. Developing the Business of Life Science 19 What you’ll need for equity financing… $ Extensive knowledge of your market $ How do you plan to make money? $ “Elevator Pitch” $ Clear, concise executive summary - only one chance to make a first impression! $ Business Plan

21. Developing the Business of Life Science 20 Where to find Angels… $ Networking (Accountants, Attorneys, University TTOs) $ Michigan Angel Networks:  Great Lakes Angels (www.glangels.org)  Grand Angels (www.grandangels.org)  Aurora Angels (www.auroraangels.com)  Ann Arbor Angels (www.annarborangels.org)

22. Developing the Business of Life Science 21 Where to find venture capital firms… $Networking $Venture Capital Associations:  Michigan Venture Capital Association (www.michiganvca.com)  National Venture Capital Association (www.nvca.org)

23. Equity: Michigan – Based Sources “ Convertible Debt” $ 21 st Century Jobs Fund $ Michigan pre-seed capital fund

24. MI 21 st Century Jobs Fund: www.michigan.org/21stcentury $ FY2006 almost completed $ FY2007 RFP due???? $ Technology areas supported:  Advanced automotive, manufacturing, and materials  Alternative energy  Homeland security and defense  Life sciences

25. Developing the Business of Life Science 24 Michigan Pre-Seed Fund $ Goal is to provide access to early-stage capital for company development $ Supported by Michigan Smart Zones $ Technology areas supported:  Advanced automotive, manufacturing, and materials  Alternative energy  Homeland security and defense  Life sciences $ $50K to $250K available per company $ $1 : $1 match required! www.annarborspark.org

26. Developing the Business of Life Science 25 Debt: Banks $ Difficult for start-ups to secure debt financing $ Risk averse $ Collateral Required $ May require personal guarantees $ Do not require board seats $ Do not share in profits

27. Developing the Business of Life Science 26 Debt: Small Business Adminstration (SBA) $ Provides loan programs to small businesses $ SBA is a guarantor of loans, not a provider $ Works through its network of lenders $ Small Business Investment Companies (SBICs) $ Many other services

28. Developing the Business of Life Science 27 What you’ll need for debt financing… $ Summary of the loan request $ Historical balance sheet and income statements $ Projected balance sheet, income statement, and cash flow $ Accounts receivable/payable reports $ Breakdown of inventory $ Summary of collateral values $ Personal financial statements (incl. tax returns) $ Summary of the business and industry

29. Developing the Business of Life Science 28 Corporate Investment $ Team up with customers, suppliers, even competitors $ Lots of possibilities…  Joint ventures  Strategic alliances  Other business combinations  Technology licensing $ May allow you to concentrate on what you know best – your technology!

30. Developing the Business of Life Science 29 Other Sources $ Personal assets $ FFF (Friends, family and fools) $ Vegas, baby, Vegas!

31. Developing the Business of Life Science 30 Michigan – Based Sources $ 21 st Century Jobs Fund $ Michigan Universities Commercialization Initiative (MUCI) $ Michigan pre-seed capital fund $ Michigan Economic Development Corporation (MEDC)

32. Developing the Business of Life Science 31 Funding for Commercialization: Build a funding portfolio $ FFF $ $ SBIR/STTR $ $ Angel investment $ $ Venture capital $ $ Corporate investment $ $ Banks $

33. Developing the Business of Life Science 32 Funding Strategy Timeline

34. NETWORK, NETWORK, NETWORK! BBC Training Meetings and Seminars www.bioconsultants.com MEDC Strategic Economic Investment & Commercialization Board www.michigan.org/medc/ttc/tricorridor/ MTEC Training and Events www.mtecsmart.com

35. Developing the Business of Life Science 34 Business Development Resources Attorneys - corporate and patent Accountant Scientific Advisors Consultants Non-profit agencies FMichigan SBTDC: www.misbtdc.org Michigan Economic Development Corp.: http://medc.michigan.org FJohn Shallman – Life Science FVince Nystrom – Advanced Manufacturing FFred Grasman – Homeland Security Smart Zones/ Accelerators Fwww.michigan.org/medc/smartzones/index.asp

37. Commercialization Training SBIR/STTR Training Business Development Consulting Grant Development Assistance Client Access BBC MTTC Program Life Sciences Only All 21CJF Tech Sectors

38. Developing the Business of Life Science 37 BBC MTTC Program: Deliverables SBIR Phase I Funding SBIR Phase II Funding Commercialization Plan Market Research & Competitive Analysis Business Plan Investor Presentations Equity Funding Licenses negotiated Strategic Partners Management recruited Customers identified Financial and grant management systems developed Board members recruited Contract Manufacturers identified Sales plans and implementation strategies Grant Development Assistance Business Development Consulting Client Access

39. Developing the Business of Life Science 38 Questions??

40. 803 North Main Street Ann Arbor, MI 48104 (734) 930-9741 info@bioconsultants.com www.bioconsultants.com managing partners: Lisa M. Kurek Michael Kurek, PhD partner emerita: Mickey Katz-Pek Developing the Business of Life Science