2011 Spring B2B
UK faculty entrepreneurs learn about partnering with investors at B2B networking event
UK president Lee T. Todd opened the event with a reflection about his experience as a UK faculty inventor. "We've changed the entrepreneurial attitude here at the university," said Todd, who created the UK Office for Commercialization & Economic Development in late 2006. "I believe that education and commercialization go hand in hand. We have an equal obligation to educate students in a competitive way and to create jobs for new UK graduates in Kentucky."
The panel of investors echoed many of the same investment strategies before financially partnering with a company. Angel investors and venture capitalists look for company management, a business plan, and a compelling presentation that addresses the problem inventors plan to solve.
Rick Miller explained that the Bluegrass Angels want to make sure the inventors have intellectual property protection and a strong, realistic business plan.
"We often see a brilliant inventor who lacks a business plan or they have one that is long on science and short on business," Miller said. "So we look for the team—the inventor and others—who understand the science well enough to help transform it into a viable business. The Bluegrass Angels want to be part of Dr. Todd's vision to help develop the economic vibrancy of the state."
Dov Rosenberg with Allos Ventures and Blue Chip Venture Co. emphasized the need to be direct during the presentation to potential investors and focus on what makes the company different.
"The key to university spinouts is that you need to have something really interesting and really compelling," he said. "What is going to differentiate you from others is science or technology that is directed toward a business problem. What's the pain point that you are addressing? Ideally, it is what will make your product a 'need to have' instead of a ‘want to have’."
Miller also urged faculty presenters to be brief and concise, and to use the resources available in the UK Office for Commercialization & Economic Development.
"In terms of preparation, that is where Dean Harvey (Von Allmen Center for Entrepreneurship) and Warren Nash (UK Lexington Innovation & Commercialization Center) come in because they can help the entrepreneur with those presentation skills," Miller said.
Suzette Dutch's firm, Triathlon Medical Ventures, seeks to partner with companies that fit the skill set and interest of the investment group members. She addressed how early-stage companies that may not have a complete management team could still receive funding.
"We want to know that you could amass a team: that you have a vision, that you understand what is needed to do it and a team could be brought together," she said. "The idea has to be something reasonable and you could attract people if you have the capital."
While all angel and venture groups have investment strategies, occasionally they make exceptions. Bob Saunders who is retired from Chrysalis Ventures described how his firm invested in two student entrepreneurs who were developing an energy trading company. The firm helped the inexperienced pair partner with an entrepreneur-in-residence at a university who had successfully sold two energy-related companies. The arrangement worked and the company was recently acquired providing an excellent return to both the founders and investors.
"That was against my colleagues' better judgment and my better judgment but by putting the students together with that one experienced entrepreneur it caused us to make an exception."
According to an annual survey conducted by the Lexington Venture Club, entrepreneurial companies in the Bluegrass Region attracted $65 million in venture funding, including angel and venture capital investments in 2010. The 89 Central Kentucky early-stage companies that participated in the survey reported a total $94 million in revenue and 748 people employed with an average full-time salary of $63,485. These companies hired 240 people for newly created jobs in 2010.
The UK Office for Commercialization & Economic Development is the university's nexus for commercializing UK technology and creating spinoff companies and jobs. The office manages UK's patent and technology portfolio, and includes ASTeCC-AgTeCC campus incubators, Coldstream Research Campus, Kentucky Small Business Development Center, Kentucky Technology Inc., Lexington ICC and the Von Allmen Center for Entrepreneurship.