Texas Emerging Technology Fund North Texas Regional Center for Innovation

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Texas Emerging Technology Fund II (ETF II)North
Texas Regional Center for Innovation
Commercialization (RCIC)
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Texas Vs Silicon Valley

• Texas Excels in INVENTION
• Typically 2nd or 3rd in annual patent filings
• Texas Lags BADLY in Commercialization
• Typically 13th-15th in tech-based startups
• Biggest comparative shortages
• Tech-savvy, early-stage investors
• Experienced serial entrepreneurs

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2005 HB 1188-- ETF Objectives

• Accelerate the formation of high-potential, new
  technology-based businesses in Texas
• Commercialize Texas University-developed
  technologies in Texas.
• Invest Seed Funding in selected new companies
• Increase the applied research capabilities in
  Texas Higher Education.
• Attract more external RD funds for Texas schools
  and companies.
• Create high-skill, high-pay jobs for Texans.

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ETF Regions and Centers for Innovation
Commercialization
North Texas RCIC Contact Mike Lockerd Phone
[phone] Fax [phone] mikel_at_ntxrcic.o
rg www.ntxrcic.org
Texas Life Science CIC (statewide)
West Texas Coalition for Innovation and
Commercialization
Central Texas RCIC
El Paso / Trans-Pecos RCIC
Gulf Coast RCIC
Rio Grande RCIC
South Texas RCIC
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Our North Texas Region

• Population 7.6 million (over 1/3 of the state)
• 40 of Texas annual Gross Domestic Product
• 63 counties, incl. the Dallas/Fort Worth
  Metroplex
• 64 Institutions of Higher Education and research
• 1 medical school, 2 Health Science Centers, 11
  public and 18 private universities
• Wide variety of research, e.g., bio-medical,
  semiconductor, nanotechnology,
  telecommunications, information systems.
• Major concentration of high-tech industries,
  e.g.
• Texas Instruments, etc. in semiconductors
• Raytheon, Lockheed-Martin in electronics and
  defense
• Telecommunications, information services, etc.

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The RCICs

• Regionally-funded, non-profit entities that
• Are the Regional representative and marketing
  arm to create awareness of the ETF program
• Work with regional Higher Education Institutions
  to foster technology commercialization
• Identify and prepare Regional tech startups for
  application to the ETF.
• Mentor client companies from ETF
  pre-application through final funding and
  subsequent growth
• Each quarter solicits, evaluates and recommends
  the regional best to the state for investment.

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Allocation of ETF II Funds HB 1188 (2007)

• 193 million over the biennium (9/07 - 8/09)
• Plus
• Private, Industry and Federal funds attracted or
  catalyzed by ETF.

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Emerging Technology Sectors

• Semiconductors
• Information Technology
• Computer software technology
• Energy
• Manufactured energy systems
• Micro-electro mechanical systems
• Nanotechnology
• Biotechnology
• Medicine
• Life Sciences
• Defense/Aerospace
• Petroleum refining and chemical processes
• Clean and Green technologies
• Others as approved by the Governor

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The ETF Funding Model
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Technology-Based VenturesThe Gap
Potentially Viable Ventures
Our Targeted Gap
Surviving Ventures
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Supporting Technological Entrepreneurship
ETF Commercialization Investments (250K-3.5M)
Typical Investment Sources Self/FF Angels?
Outside Investors VCs Debt
Internal
Applic Idea
Tech.
Feas. Demo
Bus. Plan
Prototype
Revenue
Break-Even
Profit Growth
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ETF Pre-Seed Investments

• Early-stage, fledgling company w/ lt 500K prior
  investment and an attractive, basic business idea
• Initial award of lt250K
• Total 1M reserved
• Incrementally (lt250K) accessible by milestone
  progress
• Resulting state interest is as convertible debt
• Interest bearing _at_ 8
• Secured by future company equity
• Company has 30 months to secure addl investment
  and fix value of ETFs equity investment.

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Selecting ETF Commercialization Investments

• There are quarterly application opportunities
  statewide
• 4/14/09 is the next application date
• Companies typically work w/ RCIC for 2 months
• Investment-worthy companies are selected in all
  ETF Regions for state evaluation
• If chosen by the ETF Adv. Comm.
• Thorough due diligence by state staff
• Must get unanimous appvl of state Leadership
• Award results in contract with the state

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The ETF Decision Flow
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Must Have Criteria for ETF Commercialization
Awards

• Potential to create significant number of
  high-quality, new jobs in Texas
• Competitive advantage based on proprietary
  emerging technology
• Ongoing collaboration with a Texas Institution of
  Higher Education
• Commitment to remain a Texas-based company for at
  least 10 years

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Technology Entrepreneurship- The Essential
Elements
Patentable Technology
Valuable Comml Application
Successful Enterprise
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Technology Entrepreneurship- The Essential
Elements
Patentable Technology
Valuable Application
Successful Enterprise
Business Know-how
Realistic Business Plan
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Technology Entrepreneurship- The Essential
Elements
Patentable Technology
Valuable Application
Successful Enterprise
Business Know-how
Realistic Business Plan
Timely, Appropriate Funding
Systematic Startup Growth
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How hot is the Opportunity ?
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Calibrating the Opportunity
a Solid science good papers or theses
patentability??
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Calibrating Your Opportunity
ß Patentable potential for improved products
or services for established businesses
a Solid science papers or theses
patentability??
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Calibrating Your Opportunity
? 20() competitive advantage potential new
products/services lifestyle company?
ß Patentable potential for improved products
or services for established businesses
a Solid science papers or theses
patentability??
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Calibrating Your Opportunity
d 50() competitive advantage platform
technology big market pot. basis for new
company
? 20() compet. advan. potential for new
products/services lifestyle company?
ß Patentable potential for improved products
or services for established businesses
a Solid science papers or theses
patentability??
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Calibrating Your Opportunity
e Unique, seminal, platform technology w/
Google-sized business potential
d 50() compet. advan. platform
technology big market potential base for new
company
? 20() compet. advan. potential base for
new products/services lifestyle size company?
ß Patentable potential for improved products
or services for established businesses
a Solid science papers or theses
patentability??
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ETF Commercialization Perspective
e Unique, seminal, platform technology with
major, Google-sized business potential
d 50() compet. advan. platform
technology big market potential basis for new
company
? 20() compet. advan. potential base for
new products/services lifestyle size company?
ß Patentable potential for improved products
or services for established businesses
a Solid science yield papers or theses patent
it??
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Comml Application Process Flow
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NTXRCIC Commercialization Activity Stats
(9/05-2/09)

• Counseled 358 potential companies on ETF
• Plus 40-50 more re moves to Texas, etc.
• Received 158 Commercialization applications
• About 10 refunded rejects (no pre-counseling)
• Recommended 54 to the state Adv. Comm.
• Committee recommended 30 for ETF funding
• Recent 4 Rounds had 70 success rate
• Only 1 failed to gain Leadership Consensus

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Commercialization Application Activity History
(12/16/08)
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ETF Awards Through 1/08

• Commercialization State N. Texas
• 55 companies 54.2 M (13) 10.9 M
• Research Superiority
• 13 projects 52.3 M (4) 20.5 M
• Research Matching
• 12 projects 34.9 M (2) 9.5 M
• Total 141.4 M (19) 40.9 M
• N. Texas projects and companies funded to
  date. There are also 17 additional ventures for
  15 million awaiting announcement.

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N. TX ETF-Funded Companies

• Hanson Robotics, Inc (Richardson) 1.50M
• OptiSense Networks, Inc (Bridgeport) 1.50M
• Global Contours (Rockwall) .95M
• Photodigm (Richardson) .75M
• Resonant Sensors Incorporated (Arlington)
  .60M
• PrincipleSoft (Plano) .75M
• SNR Labs, Inc. (Richardson) .75M
• Texas Piezoelectric (Dallas) .25M
• MicroTransponder (Dallas) 1.40M
• Net Watch Solutions (Richardson) .50M
• DentLight (Richardson) .25M
• Codekko (Dallas) 1.50M
• EQMA (Waco) .25M
• Total 10.9M
• NOTE 17 more N. TX companies have been
  recommended by the State ETF Committee. All
  should be funded by mid-2009.

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Our Strategic Intent

• The Goal Evolve from the NTXRCIC into a major,
  networked regional asset to accelerate the
  incubation process for new ventures.
• A full-service Entrepreneurs Resource Network
  to support the development of fledgling
  entrepreneurs.
• That connects and leverages existing resources in
  the region, i.e., doesnt compete with them.
• That establish web-based and multiple local
  resource outlets for ready access by
  entrepreneurs across the N. TX region.

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For additional and current information, forms,
frequently-asked-questions, etc.
seewww.ntxrcic.orgor www.emergingtechfund.com