U of MN Discovery Capital

The Discovery Capital Program Problem: financing University start-ups is difficult Lack of seed/early stage capital affects our most valuable, disruptive technologies Solution: Discovery Capital seed funding program Participate in the first round of invested money into the opportunity Proof-of-Concept Funding; $25K - $50K prior to exiting the UMN Seed Funding; Up to $350K in matching investment in NewCo Benefits Shorten the time to commercialization and time to cash flow from the license agreement Attracts stronger outside management --- increasing probability of success and speed to market Details Selected participation; estimating 2 – 3 investments per year Qualified by external, sector and business experts Funded from OVPR licensing revenue

UMN Discovery Capital - Unique Program External Guidance from Experts Strategic Advisory Board Domain Advisory Boards (domain experts) Medical Device Pharmaceuticals Engineering and Physical Sciences Software and Services Energy and the Environment Food and Agriculture University Administration OVPR/OTC Oversight and Administration Office of Investment & Banking Support

Domain Advisory Board Members Medical Device Bill Murray Warren Watson Danny Sachs Scott Augustine Karen Larson Pharmaceuticals John MacDonald Kathy Tune Bill Brown John Santini Barbara Nelsen Software and Services Tom Kieffer Jeff Hinck Chris Heim Michael Gorman Dan Ryan Engineering and Physical Sciences David Reamer Brian Bischoff Todd Ortberg Paul Orzeski Mark Marlow Energy and Environment Doug Cameron Paul Bieganski Ed Cannon Tom Halverson Food and Agriculture Rolf Engh Tom Erickson Joel Nelson David VandenEinde

Strategic Advisory Board Members Doug Baker – EcoLab CEO Frank Berman – former Regent Todd Brooks – Entrepreneur Leslie Frécon – LFE Capital Erwin Kelen – Kelen Ventures John Lindahl – Norwest Equity Partners Dick Lindstrom – Entrepreneur, Physician Ravi Norman – Entrepreneur Tom Olson - Entrepreneur Jeff Sheldon – Med Device Entrepreneur Ed Spencer – Affinity Venture Capital Eric Torgerson – Investor, Private Equity

What is Changing in the Policy Allows the UMN (via OIB) to invest cash in individual companies Clarifies how returns from cash investments will be distributed Separate from license agreement returns Changes our ability to participate on the company’s board of directors

Discovery Capital Program - Overview Potential Start-ups Independent UMN Start-up Company Company Pitch Company Pitch Follow-on Seed Funding $50K - $350K Pre-startup Seed Funding $50K - $350K (matching) Proof of Concept Funding $25K - $50K UMN OTC/OVPR and OIB Deal Team Administration and Final Decision Domain Advisory Board Insight, Recommendation and Support Strategic Advisory Board Strategic Direction and Support

Discovery Capital as part of Seed Investment Equity Split Example; Seed Stage Discovery Capital as part of Seed Investment Seed Investors UMN License Equity Faculty as part of Mgmt Company Mgmt