Start Up Boot Camp Start Up Boot Camp for University TTO Professionals and Inventors Session 6: Gauging Economic Impact and Outcomes Presents: 1www.technologytransfertactics.com

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Your Panel of Presenters 3 Gerard Eldering is Founder and President of InnovateTech Ventures, specializing in venture creation based on inventions licensed from universities and research institutions. Since the company’s founding in 2007, InnovateTech has supported numerous mid-Atlantic universities and co-founded three start-up companies including AlphaDetect and Trilumen. Gerard has been working in the technology transfer community for more than a decade and is passionate about the creation of professionally managed and funded start-up companies. Prior to launching InnovateTech, he founded and served as Director of the Technology Transfer Office at The MITRE Corporation. He is an MBA and a registered patent agent. John Casey is the Director of the Mason Small Business Development Center program, Director of Mason Venture Mentors, and Entrepreneur-in-Residence at George Mason University's School of Public Policy. As a lifelong entrepreneur, John has served as CEO of Caucus Systems Inc., Vice President of Baranof Software, Director of Advanced Systems at Phoenix Systems Inc., Director of Sales and Marketing for Coyne Kalajian Inc., and Co- founder of Sushi Software LLC. During his 30 years in the information technology industry, John has led activities that include venture capital financing, mergers and acquisitions, strategic alliances, business development and international sales. John holds a Master of Science in Information Technology from George Washington University and a Bachelor of Arts from Colgate University. John is a member of the Northern Virginia Technology Council, the MIT Enterprise Forum, the Association of University Technology Managers, and the Business Alliance of George Mason University.

Your Panel of Presenters 4 Charles Cella, Patent Attorney and Co-Founder of GTC, is a recognized thought leader and leading practitioner in the patent and licensing fields. He provides patent strategy, licensing and technology-transaction services to a broad range of clients, from industry-leading software companies to single-inventor start-ups. Prior to GTC, Charles founded and was CEO of BountyQuest, an Internet marketplace for information relevant to the strength, validity or applicability of patents and for which he recruited investments from Jeff Bezos and Tim O’Reilly, among others. Previously, Charles was the first patent attorney at Foley Hoag LLP, where he grew the practice to twenty-five people and advised high-tech and biotech firms of all sizes on building IP portfolios and negotiating technology transactions. Ed Nortrup is a patent strategy and execution specialist with a broad range of industry experience. A prolific inventor, with 72 patents issued in his name worldwide, he has served in key legal and engineering positions ranging from director of a research and development group to in-house IP Counsel and, most recently, General Counsel. Ed focuses on patent strategy, application drafting, prosecution and licensing, and has written and prosecuted patent applications in a wide range of technologies including software, hardware, optics, electronics, business methods and uses. Ed holds a B.S. in Electrical Engineering from Northeastern University, an M.S. in Manufacturing Management from the University of Massachusetts, and a J.D. from Massachusetts School of Law. Paul E. Rauch, PhD, founder, Evan Law Group LLC, has prosecuted numerous patent applications in a broad spectrum of technologies, including biotechnology, pharmaceuticals, polymers, materials, semiconductors, microfluidics, software, business methods, electronics, telecommunications, manufacturing simulation and analysis, and consumer products. He was a postdoctoral research associate at the Max-Planck Institute in Stuttgart, Germany, and at Harvard University. Dr. Rauch counsels clients on maximizing the value of their intellectual property, including developing prosecution strategies and patent portfolios, as well as preparing validity, infringement, and freedom to operate opinions directed to a variety of products and devices, including pharmaceutical compounds covered by FDA “Orange Book” patents. He has counseled domestic and foreign companies on freedom to manufacture, import and market their products in the United States. His biotechnology practice includes cases involving the diagnosis and treatment of many different disease states, stem cell therapeutic reagents and methods, pharmaceuticals, and drug delivery systems. Prior to founding Evan Law Group LLC, Dr. Rauch was a Partner at Sonnenschein Nath & Rosenthal, at Brinks Hofer Gilson & Lione, as well as Oblon, Spivak, McClelland, Maier and Neustadt.

Series Recap Early Decision Making Benefits and drawback to start-ups Assessment Bootstrapping issues Team building and dynamics Money Matters Angels versus VCs Valuation issues Equity allocations Option pools and other equity dilutions The University Stake Investment schedules/tranches Creating a Solid Business Plan Managing: - Market Risk - Technology/Product Risk - Execution/Team Risk - Financial Risk Problem & Solution Statement 5

Series Recap Funding Options and Opportunities Funding Options and Opportunities A. Attracting and/or seeking out the right investor(s) B. Structuring the investment C. Common terms and pitfalls to avoid D. Investor turn-ons and turn-offs E. Current investment landscape and forecast for 2011 F. Understanding and living with dilution Pitching Techniques: Get What You Want Pitching Techniques: Get What You Want A. Preparation strategies - Timing, NDA, confidentiality agreements, trade secrets, etc. B. Content C. How venue should impact the pitch D. What investors are looking for E. Key topics, words, and phrases – and common blunders F. Delivery techniques G. Striking the right balance between too much information, and too little H. Getting results – closing and follow-up 6

Today’s Agenda Growth Strategies Growth issues Stakeholder outreach Marketing strategiesLater-stage funding Freedom to operate Exit Strategies and Issues Exit Strategies and Issues When and how to seek a buyer Considering an IPO (Initial Public Offering) Case studies of successful exits and war stories Legal issues related to exit strategies Economic Impact and Outcomes Economic Impact and Outcomes The Context: “Evolving Priorities” Do’s: How to Use What You Collect Current ModelsDon’ts: Pitfalls to Avoid An Alternative ApproachThe Path Forward How To Collect & What to Collect? 7

Growth Strategies Marketing Growth issues Freedom to operate Stakeholder outreach Later-stage funding 8

Infringement of Others’ Patents Freedom To Operate Earlier decisions to defer FTO analysis must be revisited as revenues grow Risk profiling and risk management become more critical as revenues grow Offers For Sale Damage to patent rights if it occurs before an application is filed U.S. 1-year grace period Foreign Rights Non-confidential disclosure Reverse engineerable Risk Management Inbound licensing IP acquisitions Operational design guidance 9 Marketing Issues

Growth Issues Employee Turnover - Hiring & Loss – Protection of trade secrets – Customer lists – Supplier lists Protection of Data – CFAA Preserving Margins During Growth – Patent enforcement in the startup and emerging environment Establishing a “war chest” Establishing credibility – Patent licensing as an alternative to enforcement Using licensing to manage competition Avoiding unfavorable precedents 10

Stakeholder Outreach 11 Who are your stakeholders? — Investors — Key customers — Office of Technology Transfer Regular communication, no surprises Talk about your successes

Later-Stage Funding High impact intellectual property diligence issues in private equity and late stage VC transactions – Ownership/Chain of title – Asset quality – Emerging focus on FTO 12

Exit Strategies and Issues Exit Strategies and Issues When and how to seek a buyer Considering an IPO (Initial Public Offering) Legal issues related to exit strategies Case studies of successful exits and war stories 13

When and How to Seek a Buyer Who drives the decision – Investors or management? Decision factors – Competition – Company lifecycle – Market conditions… Preparation – Tax planning – Positioning – Management and employees… Seeking a buyer – Brokers – Targets and pitching 14

Freedom To Operate Opinion Freedom-to-Operate Opinion – One for Each Country – FTO search (about $10,000) – discover patents – FTO analysis of each patent ($30,000 - $100,000 each) Timing of FTO Opinion – Time to Market – New patents may issue – Changes in product design or business strategy, selection of markets Addressing FTO Risk – Patent portfolio, licensing – long term strategies – Business insurance – Avoid “willful” infringement (opinion of counsel) 15

Considering an IPO 16 High impact patent issues during IPO process – Validation and support for statements about technology and product differentiation – Risk factors related to freedom to operate

Legal Issues: Exit Strategies 17 High Impact intellectual property diligence issues in M&A transactions – Ownership/Chain of title Right to use (inbound and outbound software licenses, including open source) Shared ownership (such as with customers) – Non-competition obligations that could constrain the acquirer – Trade secret (fear of “infection” of the acquirer’s business) – Asset quality – Impact on any asserted claims on the acquirer Legal opinions – FTO for the acquirer Note that risk-oriented intellectual property due diligence may be much more intense for M&A transactions than at any other time in a company’s growth

Case Studies of Successful Exits 18 IP can play a significant strategic role in a successful exit Industry examples: – Lighting – Software – Navigation – E-Commerce

Case Studies of “Problem” Exits 19 IP issues that we have seen kill or greatly delay M&A transactions – Open source software – Patent litigation – Trade secret – Ownership

The Context: “Evolving Priorities” Current Models An Alternative Approach How To Collect & What to Collect? Do’s: How to Use What You Collect Don’ts: Pitfalls to Avoid The Path Forward 20 Tracking Local Job Creation and Economic Impact

Importance of Small Business To U.S. Economy Importance of Regional Economic Development to Public Universities Importance of New Venture Creation to Regional Economic Development New Challenges for University Tech Transfer 21 Evolving Priorities

Current Models – AUTM’s Metrics – University of British Columbia Example – K.I.S.S. Approach 22 Current Models

SBA’s Small Business Development Center Program Overview Economic Impact Other Impact Advocacy 23 An Alternative Approach

How To Collect? – Challenges – Techniques USPS Web-Survey In-Person – Automated vs. Labor Intensive – Business Intelligence 24 How to Collect Data

What To Collect? 25 What Data to Collect

Was your business in operation at any time during the calendar year 2009? _____ YES ______ NO (please go on to Question 4) If yes, please provide the following information about the activities of your business during Total sales of your business in 2009 $_____________ Total number of employees as of December 31, 2009 _____________ Dollar value of personal investments in your business during 2009 $_____ Dollar value of loans received by your business during 2009 $_____________ Dollar value of those loans that were guaranteed by the SBA $_____________ Number of new jobs created in 2009 _____________ Number of jobs retained (not moved out of state) in What Data to Collect (cont.)

How to Use What You Collect – Achieve clarity around goals – Maintain visibility on resource allocation (ROI) – Observe results of service offering improvements – Engage your stakeholders Next: Two Examples 27 How to Use the Data

Virginia SBDC Economic Impact Report “The long-term clients of the SBDC generated a total of approximately $7.2 billion in sales and 73,377 new full time equivalent jobs as a result of the assistance received. Based on clients’ assessments, we estimate that an additional $8.8 billion in sales and 93,449 jobs were saved due to SBDC counseling. “ 28 How to Use the Data (cont.)

University of Utah “Total with indirect employment is over 28,000 employees, payroll over $1.48 Bn and over $74M income taxes." 29 How to Use the Data (cont.)

Context is evolving Labels are changing: “Entrepreneurial Tech Transfer” Challenges are increasing Keep it simple and streamlined Get the word out about your successes 30 The Path Forward

Zen & The Art Of Economic Impact 31

Q&A 32 Utilize the chat box to the bottom left of your screen to submit a question to the panel. Please address your question to a specific presenter. Or Press * 1 on your touchtone phone and this will place you into the phone queue.

Recap of Start Up Boot Camp Series Session 1: Early Decision-Making and Team Building Session 2: Money Matters Session 3: Creating a Solid Business Plan Session 4: Funding Options and Opportunities Session 5: Pitching Techniques to Get The Funding You Want Session 6: Impact and Outcomes  Now available as a 6-DVD set, streaming video or PDF transcripts  Visit for more information.  Now available as a 6-DVD set, streaming video or PDF transcripts  Visit for more information. Thank you for your attendance