1. Managing Milestones for University Startups
February 25th, 2014
Thomas Lipkin, Ph.D.
Assistant Director of Entrepreneurship and New Ventures
UCLA Office of Intellectual Property & Industry Sponsored Research

2. Outline Overview of OIP-ISR Building a Strong Foundation
Setting Startup Milestones
Leveraging the Ecosystem

3. Overview of oip-isr

4. The Office of Intellectual Property & Industry Sponsored Research
Business Development
Licensing

5. OIP-ISR Metrics

6. Building a Strong foundation

7. Recognizing a Startup Opportunity
1. Is there market pull or is this just cool technology?
What problem in the existing market are you trying to solve?
Does your technology provide a solution in an overwhelmingly better way?
2. Is the technology well-differentiated from what the big players are doing?
Will your IP position block the big guys, and conversely, can you access outside IP needed to bring this to market?
4. Are you close enough to a major value-adding milestone?
SBIR/grants—will they get you to venture fundability?
VC—will the round get you to a significant valuation step-up?
5. Does the potential financial upside warrant the risk?
Technology risk—feasibility, scalability, safety, efficacy
Market risk—demand, pricing, reimbursement, regulatory
Competitive risk—time to market, better technologies
IP risk—will the patents issue, scope of patent claims, freedom to operate, etc.

8. Level-Setting with Faculty Startups
Family support?
Department support?
Is the PI tenured?
What is the PI’s motivation?
What will be PI’s level of engagement?
Will PI be receptive to constructive feedback?
Will a graduate student or postdoc leave to join the company?

9. Roadmap for Faculty Protect intellectual property (though TTO)
Consult Conflict of Interest Office/ University SOPs
Write 1-page executive summary of opportunity
Conduct extensive market analysis and due diligence
Seek feedback from KOLs, academics, regulatory experts, industry execs, investors, and advisors
Network to find CEO/ groom postdoc or grad student
Construct pitch deck to articulate the vision
Incorporate the company
Secure rights to intellectual property (LOI or Option)

10. Company Leadership
Entrepreneur-led: An outside entrepreneur starts the company, fundraises, etc.
Advantage—business-savvy person is involved from the outset
Challenge—requires active involvement of the university inventors at investor presentations and initial team-building to access their knowledge
Investor-led: A VC or angel investor seeds the company and recruits the team
Advantage—direct access to capital and a deep rolodex
Challenge—alignment of investor’s interests and the university inventors
Inventor-led: One or more of the academic researchers starts the company
Advantage—university inventors know the technology better than anyone
Challenge—requires a new business mindset on the part of the inventors

11. Setting Startup Milestones

12. Milestone Guidelines
Set realistic milestones – you will be judged against them
Ensure milestones are measurable and actionable
Document milestones and articulate them to the team
Be able to describe circumstances surrounding unmet milestones
Always cite past achievements when communicating with investors

13. Milestones Across Development
Source: UC Davis Center for Entrepreneurship

14. Sample Life Sciences Milestones
Concept
Pre-Seed
Early Seed Stage
Mid Seed Stage
Later Seed Stage
Early Stage
Company Development Stage
Research
Opportunity Investigation
Feasibility Proof
Development
Market Introduction
Growth
Milestones
Invention and discovery
Pre-molecule; promising early results
Molecule selected and working in cell lines
Molecule optimized for cell lines; moving into animal
Pre-clin trials (efficacy, tox, PK); IND application/ approval
Entering Phase I trials
Time to achieve milestones
1-10 years
1-3 months
3-6 months
6-9 months
9-15 months
12-18 months
Funding
$1-10M
$25-75k
$500k-$1M
$1-4M
Avg. Valuation
---
<$750k
$1-2M
$2-3M
$3-5M
$5-7M
The Start-Up Company Map, Albers et al. 2008

15. Sample Physical Sciences Milestones
Concept
Pre-Seed
Early Seed Stage
Mid Seed Stage
Later Seed Stage
Early Stage
Company Development Stage
Research
Opportunity Investigation
Feasibility Proof
Development
Market Introduction
Growth
Milestones
Invention and discovery
Pre-prototype (science complete; engineering continues)
Lab prototype; feasibility demonstrate in lab
Lab prototype; feasibility demonstrate in alpha tests
Lab prototype; beta tests complete; validating manufact.
Commercial grade prototype; first production runs
Time to achieve milestones
1-10 years
1-3 months
3-6 months
6-9 months
9-15 months
12-18 months
Funding
$1-10M
$25-75k
$ k
$1-4M
Avg. Valuation
---
<$750k
$1-2M
$2-3M
$3-5M
$5-7M
The Start-Up Company Map, Albers et al. 2008

16. Capital Milestone Considerations
Industry comparables
Commodity chemicals vs. therapeutics
Margins vary by sector
Stage of development of the technology
Phase I drug vs. preclinical lead compound
Stage of IP
Issued patent vs. provisional application
Patent lifetime

17. Development/ Regulatory FDA, Payer, Provider, Industry Discussions
Months 1-6
Months
6-12
12-18
18-24
Year 2-4
Years 4-6
Beta Device
Commercial Device
Manufacturing
Device Development
Software
Additions/
Corrections
Prototype Design
Design Review
Scientific
Development/ Regulatory
Strategy
IRB
Proof of
Concept Studies
Pivotal Study
Launch
510K
FDA, Payer, Provider, Industry Discussions
Reimbursement
Seed ($500k-1M)
Funding
Series A ($5-9M)
Series B $10-15M
Today

18. Leveraging the Ecosystem

19. New Ventures Team Facilitate Startup Creation Facilitate
Goals
Activities
Facilitate
Startup Creation
Source opportunities from faculty
Diligence startup potential
Source entrepreneurs
Connect to “Startup in a Box” services (vendors)
Facilitate
Startup Funding
Market to angels / VCs
Host SBIR / STTR workshops
Identify and help prepare for business plan / pitch competitions
Coordinate potential seed fund efforts
Facilitate
Startup Success
Connect with talent / mentors
Organize Entrepreneur in Residence (EIR) program
Provide pitch coaching services
Connect with core facilities and UCLA assets that could add value

20. Startup in a Box Legal Services Bank Accounts SBIR Workshop Mentors
Partnering with 6 startup-focused law firms
Bank Accounts
Partnering with 2 entrepreneurial banks
SBIR Workshop
Partnering with QB3
Mentors
Recruited ~30 from multiple disciplines
Pitch Coaching
Hosting workshops throughout the year

21. Startup in a Box Timeline
File Provisional Application
12 months
File US and/or PCT
U.S.
only
PCT
National/Regional phase
Patent Issues
Decision to file
30 months
Not under prosecution
Awaiting examination/ Active prosecution
Startup in a Box

22. OIP-ISR Entrepreneurs-in-Residence Program:
Startup Guidance for UCLA Faculty
and Grad Student Entrepreneurs
25+ yrs Pharma & Biotech Regulatory Affairs
Debra Gessner, M.Sc.
John Gillespie, MBA
30+ yrs Investing & Corp. Mgmt
Sandra Itkoff, MBA
25+ yrs in Clean Tech Investment & Corp. Mgmt
Kevin Stark, Ph.D.
20+ yrs in Biotech Corp. Mgmt & R&D
oip.ucla.edu/EIR

23. Encouraging New Company Formation
Provide Entrepreneurship Seminars
Discuss structure of Company
Explain Term Sheets
Provide Introductions to Investors and Entrepreneurs
Explain University Policies and Conflict of Interest Management
Sponsored Research or Collaboration Agreements
Consulting Agreement/ Scientific Advisory Committee
Establish Incubators or Accelerator Programs
Develop Mentorship programs
Establish Entrepreneur in Residence Programs

24. Contact: thomas.lipkin@research.ucla.edu