The talk is describes the development of the University of Michigan / Ann Arbor Entrepreneurial ecosystem over the last 10 years and the role of U-M's Tech Transfer Office. This presentation was for the National Business Incubation Association 26th International Conference on Business Incubation (2012.)

1. University of Michigan
and the
Entrepreneurial
Ecosystem
Wesley Huffstutter Megan Reichert-Kral
University of Michigan University of Michigan
Tech Transfer Tech Transfer
@wes_huffstutter @meganreichertkr
@UMOTT

2. Entrepreneurial Ecosystem
Ecosystem
encompasses Includes
Business Idea
all
Technology
Translational,
Pre-seed,
Seed,
capital
Funding Talent
Technical &
Management

3. About the University of
Michigan
University of Michigan and Ann Arbor Profiles
(We have been working at this for a long time)

4. University of Michigan
Technology
• FY 2011
– $1.24 Billion in Research
• FY 2010
– $2.19 Billion in Research
– Largest Publically funded
research university in the country
– 12th time in the past 26 years U-M has held
top spot
• U-M held that distinction every year from 1991-1999.

5. University of Michigan
Technology
• Since 2001
– 2811 Invention Reports
– 814 License or Option Agreements
– 93 Startups
– $167.7M in Paid-up royalties and Equity sales

6. U-M Startup History
• Startups in aggregate
– Equity financing Raised by all U-M Start-ups
(Angel, Seed, Series Venture)
• last 5 years -- $538 Million
• last 10 years -- $984 Million
Sampling of our Successes
– Accuri Cytometers (BD)
– HandyLab (BD)
– Arbor Networks (Danaher)
– HealthMedia (J&J)
– IntraLase (IPO)

7. Funding (Michigan)
• Traditional Venture Capital “Flyover” Zone
• Angel Networks
• Michigan Rank
– #18 in VC Investments
– 33 Investments in 2010
– Total of $151 Million
• 25 Funds operating in MI;
19 Michigan-based
– $1.2B Under Mgmt. (Avg. $74M)
– $206 Available for Investment
– Avg. Fund Size $40M
– 78% Seed/Early

8. Talent
• Ann Arbor – 113,934 people
• MSA – 344,791
• Detroit is nearest Largest City – Declining
population for the last 30 years
• Highly Educated
Bachelor’s degree or higher
– Ann Arbor = 71.9%
– County = 50.2%

9. Talent
• Have:
Technical Talent
– Scientific: Former Pfizer R&D HQ
– Engineering: Auto Industry
– Manufacturing Talent
• Need:
“Fundable” Management Talent
– Industry specific experience and expertise

10. Ecosystem
• Collaboration
– We work hard to collaborate with the community
• Ann Arbor SPARK (Economic Development)
– Many resources
• Networking Opportunities
• Increasing Culture of Entrepreneurship
• College Town/Great place to live
• State hub of Innovation and Venture Capital
• Non-University Opportunities

11. U-M Tech Transfer Structure
• 31 Full-Time Employees
– Licensing Group
• 9 people
– Business Formation Group
• 4 Business Formation
• 6 MIRs (Half-time)
• 1 Accelerator Manager
– Legal
• 2 Attorneys, Office of General Counsel
– Other
• 15

12. 10 Years Ago (2001)
• Tech Transfer
– 10 startups/yr
– Business Formation
– TechStart Internship (2001)
– Gap Funds ($35k)
• Zell-Lurie Institute for Entrepreneurial Studies
– Established in 1999; $10M gift
• Michigan Growth Capital Symposium
– Established in 1980
• Michigan Universities Commercialization Initiative (MUCI)
– Started in 2001; $2M Challenge Fund
• IT Zone (Community)
– Founded in 1997 and operational since 2000
• Everyone Took Sole Credit

13. Campus Ecosystem Map

14. Campus Ecosystem Map
Jump
Start
Grants
Michigan
Venture
Center
Michigan
Business
Challenge
SI
Create
Michigan
Investment
in
New
Technology
Startups
(MINTS)
Frankel
Marcel
Gani
Wolverine
Venture
Commercializa?on
Internships
Fund
Fund
Mayleben Venture Zell Entrepreneurship
Shaping Grants and Law (ZEAL) Clinic

15. Funding Map
@UMOTT

16. Funding Resources for U-M Startups
Outside
Sources
Community
/
Early-­‐Stage
VC
Angel
(
$250K
max,
matched
conv.
debt
,State-­‐wide)
(
Angel
Groups-­‐
A2A,
GA,
GLA,
SPARK
Pre-­‐Seed
BWA;
Michigan
Angel
Fund)
SPARK
Business
Accelera?on
(
$50K
micro-­‐loans)
Michigan
Venture
Match
Fund
Research
Federal
Grants
Small
Business
(
MI
SBTDC
SBIR/STTR
Match)
(
$350-­‐500K
co-­‐investment)
OVPR
($100K,
4/yr
Biomedical
Engineering
Only)
Coulter
(
$50K-­‐250K
max
by
stage
-­‐Medical
School
Only)
MINTS
Pilot
&
Collabora?ve
Grant
Program
for
Transla?onal
&
Clinical
Research
($500k
co-­‐investment
with
VC)
Funding
Inside
U-­‐M
ETR
/
College
of
Engineering
Gap
(
$50K
max,
$30K
average
Engineering
Only)
WVF
OTT
Gap
(Average
1
Investment/Yr.
Cannot
lead,
Small
amounts
)
MUCI
(Match
for
OTT
Gap)
(
Average
6/yr
at
$50K)
MIIE
(Match
for
OTT
Gap)
(MBC
$15K;
D2D
$10K;
Jump
Start
$1k;
Venture
Shaping
$500;
Compe??ons
and
Grant
Programs
Accelerate
MI
$500k;
GLEQ
$100k;
CEVC
$
50k)
Frankel
Fund
(
2/yr
at
~$80K)
(
Not
funding
-­‐
Prototype
Dev.
)
Med.
Innov.
Cent.
(
Not
Funding
-­‐
Compound
iden?fica?on
and
tes?ng
)
Center
for
Chemical
Genomics
Plan
/
Team
/
Startup
Market
Analysis
Financing
Concept
Valida?on
Op?on
Launch
/
License
Commercializa<on
Science
Evalua<on
Emerging
Business
Forma<on
Growth
Basic
Proof-­‐of-­‐Concept
Tes?ng
Product
Principles
Technology
Prototype
Pre-­‐Clinical
/
Development
Observed
Concept
Development
Toxicology
/
β-­‐Test
Site

17. How Did We Get Here?
A timeline of a decade of work

18. Business Formation
• Little “VC pull”/VCs don’t walk the halls
• Experienced entrepreneurs helping faculty
start companies
– Help develop business models/plan
– Make connections and introductions
– Guide technology toward product
– Educate the faculty founders
• Work with investors to find/ develop startups

19. Gap Funds
• Started small
– Leveraged other University sources
– Funds of $35k
• MUCI/MIIE (Matching Funds, 2001)
– Must be repaid – 3x to MUCI/MIIE
– Selective
• Leverage Ann Arbor SPARK
• Now: $750k including Matches

20. TechStart
• Started in 2001
• Summer Internship Program
– Graduate Students
• Wide array of students
• 10-15 interns
– Help with Licensing and
Commercialization activities
– Some (2) students have gone on to run startups
– One student joined our Licensing staff
– One joined MUCI/MIIE

21. Catalyst Resource Network
• Started in 2005
• Need for Talent
– Mentors
– Industry Experts
– Consultants
– Potential Management
• Internal Database
– Leverage Social Networks
– Alumni Network

22. Coulter Translational
Research Program
• Started in 2005
• Translational Funding for Biomedical
Engineering
– Wallace Coulter Foundation
• Initially $5M for 5 years
– Now $20M endowment
• Coulter Foundation and U-M
– Fund Projects

23. Investors
• We were a good source of deal flow
– Relied on them to come to us
• Spreadsheet in 2006
• Meet with locals and socialize deals
– Help Angel Networks
• Database of investors
– Profile
– Tied into our Project Database
– “Hot List” (List of Potential Startups/Active deals)

24. Mentor In Residence
• Started in 2009
• Different from Executive or
Entrepreneur-In-Residence
Programs
– Serial entrepreneurs
– Part-time
– Work on several projects
– Offer “outside” perspective
– See how hard it is to commercialize
University Technology

25. Venture Center

26. North Campus Research
Complex
• Former Pfizer Facility
– Global R&D Headquarters
– Closed doors in 2007
• Approx. 2 million Sq. Ft.
of Space – significant
research space plus a
GMP facility
• U-M purchased in 2009
• 30 buildings

27. Venture Accelerator
• Opened January 2011
• Over 16,000 sq. ft. of office and lab space
• 18 clients
• 5 clients in the application cue
• 70 employees
• More than half of clients have
expanded within first year
• Inside University
• 3 year maximum tenancy

28. Tech Transfer Fellows
• Started in 2011
• Use Graduate Students for initial assessment
– Copied Columbia and Illinois
– By expertise
– Hourly
• Saves our office time
• Create commercial-minded researchers

29. New Program (2012)
• Entrepreneurial Post-Doc
– Work on technology for a year
– Avoid pressure to take a Tenure-track position
– Part of a Grant from The Michigan Economic
Development Corporation (MEDC)
• Tech Transfer Talent Network

30. Michigan Investment in New
Technology Startups (MINTS)
• Created by the Michigan Board of Regents
(October 2011)
• $25 Million allocation from Endowment
– $500k per (could go up to $1M)
• Co-investing along with other qualified investors
– On same terms as investor
• Must be University of Michigan Spin-Off
Company
– Use clause in license
• First agreement (4/4), Crossbar Inc. (KPCB)

31. Other Campus Resources

32. Zell-Lurie Institute
• Part of the Ross School of Business
– Offer classes
– Started with a gift in 1999
• Includes Center for Venture Capital and Private Equity
• Michigan Growth Capital Symposium
– Large Midwest Venture Capital Conference
• Wolverine Venture Fund
– $3 Million Student-Managed Fund– early stage capital, (Co-invest)
• Frankel Fund
– Up to $100,000 per pre-seed investment
• Entrepalooza
• Other:
– Dare to Dream (Grants)
– Michigan Business Challenge
– TechArb Student Accelerator
– Gani Internships
– Mayleben Venture Shaping Grants
– Social Venture Fund

33. Center For Entrepreneurship
• Part of the College of Engineering
– Started in 2007
– Offer Classes
– Certificate in Entrepreneurship
• Tech Arb Student Incubator
– 8th Cohort this Summer
– Space, networking, mentorship
• 1000 Pitches
• Jump Start Grants
• Michigan Clean Energy Venture Challenge

34. Business Engagement Center
• Formed in 2007
• Connects Businesses to U-M
– One-Stop-Shop for Business
– Concierge/router
• Help businesses…
– Find Technology (Tech Transfer)
– Sponsor Research (ORSP)
– Donate(Development)
– Find Students
– Access Faculty Expertise

35. Medical Innovation Center
• Founded in 2008
• Fellows Program
– Post-graduate education program
– Fellow come from various disciplines
– Focus on developing medical innovations
– Educate on commercialization
• Assist others
– Prototyping
– Innovation assistance

36. Zell Entrepreneurship and Law
(ZEAL) Program
• Entrepreneurial Law Clinic
– Help Student Entrepreneurs Give Law Students Practical
Experience
– Staffed by Law School Students
– Supervision of Faculty and Well Known Firms
• Helped 12 companies it first semester
– Entity Formation
– Intellectual Property
– One Financing Deal
• Had 43 companies apply for services
• 16 spots for Fall 2012
– 97 students applied
– Next Closest Law Clinic had 36 application

37. Master in Entrepreneurship
• Joint between Business and Engineering
– First Class, Fall 2012
– One year program (plus summer)
• Move technologies through coursework
• Includes Tech Transfer, Medical Innovation
Center

38. Off campus activity
We are not in this alone

39. Community
• Creation of Ann Arbor SPARK
– Tech Transfer Board 2005
– Place for our startups to land
– Startup services
• Events
– Service provider events
– Entrepreneurial Networking
• BioArbor
• A2 New Tech Meetup
• MI Energy Forum
• State and other services
– MI SBTDC, Competitions (GLEQ, Accelerate
Michigan), NEF, Etc.

40. Changes in the VC Community
• Venture Michigan Fund (I & II)
• MVCA EIR program
• MVCA CEO Placement Program
Bucking the trend
• Number of firms growing
• Assets under management are growing
• Fund sizes are increasing

41. Moving in the Right Direction
• 25 Venture Firms
– 76 VC-backed companies
– $2.6 Billion in Capital Under Management
– $340 Million available capital
• 6 Angel Investment Networks
– $5 Million invested in 2010
– 19 companies
• More than 80 out of state Venture Capital
Firms active in Michigan

42. Takeaways
• Hard to drive idea creation
• Leverage Funding
• Focus on Talent
– Mentoring very important
– Management team is critical
– Getting the Right team, early

43. Thank You!!!!
Megan Reichert-Kral – meganrk@umich.edu
Wesley Huffstutter – weshuff@umich.edu
@UMOTT