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Technology and business innovation Venture Backed Spin-Offs 7 th Venture Capital Forum Athens June 28, 2006 Spyros Trachanis NBGI Ventures
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VC Manager, investing in early-stage technology ventures in Europe and Greece since 2001 Member of NBG Group Offices in London and Athens 7 portfolio companies in 4 countries, 3 Greek related, 4 academic spin-offs Almost all deals syndicated, ca. 20 VC and strategic investment partners
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Many paths to leveraging Academic Research License technology to industry Offer as service Build Spin-Off company Raise VC funding Researcher engagement
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Key factors for profitable spin-offs Technology relevant to the industry Clear differentiation Globally competitive Strong Intellectual Property position Simple, practical and scalable solution
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Magnitude of Opportunity Definition of addressable market Size of addressable market (TAM) Potential market share as justified by competitive differentiation (SAM) Gross Profit margin potential Size matters: –Potential for return on VC investment –Attract follow-on capital –Enable exit
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Execution Capability Research team engagement Management identification & attraction Industry strategic relations Flexibility and adaptability Stamina and perseverance
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University spin-offs in the US Since 1980, 4,543 spin-off companies have been formed from US academic institutions – 462 in 2004 Venture Capital firms funded 20% of new start- up companies in 2004 The US Patent Office in 2004 issued more that 3,800 patents to universities It usually takes 7 to 10 years for a spin-off company to reach the state of an IPO AUTM – Association of University Technology Managers
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The UK status of spin-off companies 431 spin-off companies in the UK until mid 2005 –46% life sciences, 39% ITC –Only 25% of spin-off companies currently profitable The hits: –Wolfson Microelectronics (Edinburgh U.) floated on LSE for £214 mil. –Renovo (Manchester U.) floated on LSE for £154 mil. –Cambridge Display Technology (Cambridge U.) floated on NASDAQ for $255 mil. Unico – University Companies Association
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Policies: UK Government Initiatives Science Enterprise Challenge – Launched in 1999 and earmarked £28.9 million to set up entrepreneurship centers by mean of competition in the UK. Lead to the establishment of 12 Science Enterprise Centers in Universities University Challenge – Launched in 2000. Aim to enable universities to establish seed funds. Total funding available £45 million. Created 15 seed funds Higher Education Innovation Fund – On going White Paper: Excellence and Opportunity- a science and innovation policy for the 21th century including records, roadmaps, targets etc. Tax incentives for IP commercialization
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Greek academic spin-off and VC backed community Greek technology VC backed companies 13 Greek academic spin-offs 16 6 VC backed spin-offs €25 million total funding to-date 1999-2006
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From IP to IPO Universities Research Institutes PRAXI Incubators VCs Capital Markets PRAXE
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Case study RF semiconductor company established in 2001 HQ in Silicon Valley, Operations in Athens More than $10m invested to date from NBGI Ventures and six other VC’s from the US and SE Asia Break-even in 2005, profitable in 2006 Contracts with significant global companies
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Conclusions and Key Points First wave of Greek spin-offs under way since the late ’90s, results start to appear Greek ventures underfunded –Attraction of international venture capital is critical –More syndication among local VC’s –Large scale initiatives (Digital Leap) Leverage EU programs to forge strategic relations with international industry Availability of management talent a key issue Design for success!
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