a&d conf breakout session #1

© Copyright 2003-2012. EnableVentures, Inc. 1

Breakout Session #1

Cases Studies: Commercialization using the SBIR/STTR Program

by

Sharon C. Ballard, President/CEO EnableVentures, Inc.

Phoenix Convention Center

January 26, 2012

“You envision . . . we enable.”™


• $Ms in R&D a year over 8 years

• Invoices paid in 1-3 days, twice a month

• Still own majority of venture

• Products with high-profit sales worldwide

• Three spin-out ventures sold for $MM

• My venture – Reticular Systems, Inc.

Imagine this start-up scenario:

2


Venture Funding using SBIR Program

• Successful cases: Learn from others

• Reduce R&D risks

• Generate science, business credibility

• Delay dilution of business ownership

• Lower Accounts Receivables risk

• Do business!

• Pop Quiz: contrast Pb of SBIR awards vs. selling equity?


Where do entrepreneurs get funding? (Who is the first fool?)

Amount of Start-up Cash INC 500 Fastest Growing US companies

Under $10,000

41%

10,001 to $100,000

37%

over $100,000

22%

http://www.inc.com/magazine/20021015/24778_Printer_Friendly.html


Qualcomm Inducted into SBIR Hall of Fame

• Founded in 1985, 7 founders • IPO 1991, $100M in gross revenue • $1.5M in SBIR funding • Global workforce = over 17,500 • Market capitalization = over $80 billion • Annual revenues = $11 billion • Over 13,000 patents • 200 manufacturers licenses worldwide • SBIR funded chip development = 2/3 annual revenue


• Founded 1996, $25,000 initial funding • 2100 employees, $688 million sales • Over last 10 years received over $175 million in Phase III (non-SBIR) funding directly from DoD

• $10M Phase II with DoD

• $100M in Phase III equipment sales

• IPO 1996 (NASDAQ: VSAT)

ViaSat Trajectory lands it on Hall of

Fame

Started in their garage!


• Former Motorola AZ engineer

• $230M in SBIR-developed technologies

• IPO 1995

• 1270 employees

• Acquired by Fair, Isaac for $810M, in 2002

• Founder now university researcher

“The Big One that got away!” Arizona

HNC Software, San Diego


• Technology called “coating’s holy grail”, Cutting Tool Engineering (October 2008).

• TuffTek® coatings sales to cutting tool manufacturers and users in automotive and other manufacturing industries; coating technology for manufacturing, biomedical, electronics, and military.

• Frost & Sullivan’s 2005 Award for Excellence in Technology in Advanced Coatings, Surface Technologies, and Spray Coatings.

• R&D Magazine Micro/Nano 25 Technologies of Tomorrow Award among 25 best micro- and nanotechnologies of 2006.

• 2007 Recognition of Excellence in Innovation Award, Under Secretary of Commerce for Technology.

• Twenty employees with high wages for Arkansas.

NanoMech, Inc., Fayetteville, AR SBIR Hall of Fame


HemCon, Inc.

• Dressing developed with Oregon Medical Laser Center & US Army

- $300K initial Army contract

• Received 2nd fastest FDA clearance (48 hours)

• 2003 – $8.7M appropriation for manufacturing expansion & procurement

• 2004 – $10.5M appropriation for R&D & procurement

• 2005 – STTR Grant for $272K

• Top 10 Army Inventions Award

• 2006 – $5.0M appropriation for procurement

• Today – global commercial and retail sales


• Frost and Sullivan’s 2006 Technology Innovation of the Year award

• Best of What’s New Award by Popular Science 2003

• 2007 Tibbetts Award from the Small Business Technology Council

• 2007 Deloitte Technology Fast 500 • Entrepreneur magazine’s Hot 500 • Inc. magazine: America’s 500 fastest – growing private companies

Life Sciences Cases – Hemcon cont’d


• ACR’s first revenues from SBIR and $1,000 in start-up capital.

• Since 1989, received nearly $6 million in SBIR/ STTR funding

• Over $30 million in follow-on non-SBIR/STTR funding

• $35 million in license and technology transfer contracts.

• Early follow-on funding from ONR, DARPA, DOE; now most from defense prime contractors, Fortune 500 companies.

• From 3 employees in 1990 to 40+ in 1999.

• Revenues grew 2,000%, making Inc. magazine’s Fastest 500 (1993 to 1997).

• Successful acquisition by BAE Systems

Advanced Ceramic Research, Inc.

Tucson, AZ

SBIR Hall of Fame


What’s in SBIR for large businesses?

Phase I Award $ 150,000

Phase II Award $ 1,000,000

Phase III Typical Commitment $ 350,000

Government Phase III Match $ 150,000

Total: $ 1,650,000

What is Pb alone vs. partnering?

Primes, where can you get $1M at such Pb?


• Long-term strategic decision

• Compelling business proposition

• Relationships with customers

• Good systems engineering

• Consistency in sound business

practices

Venture funding with SBIRs?


Sharon’s lessons

• Have a strategic plan and stay focused – Technology maturity > market pace

• Offer a specific solution

• Build relationships based on common science/technology interests, if possible

• Make customer a hero – Agencies want and need bragging rights

– SBIRs often used for training

– Keep relationship active if possible

– Publish/present papers in great venues

• Don't give up on a good idea!!!


Common Questions

• Company qualifies for program?

- Ownership

• Principal Investigator (PI) issues

- SBIR vs. STTR

• Come back for Breakout Session #2 – SBIR Program Overview


Break

2:30 – 2:45 pm