Speaker: Raphael Ronen, Commercialization Manager, The Innovations Group (TIG) Within universities and research institutions there are no shortage of good ideas; but not all of those ideas make commercial sense. In this lecture, we explore what makes a technology worthwhile commercializing. We also touch on some of the lessons we can take from the university setting and apply to any start-up technology. Part of the CIBC Presents Entrepreneurship 101 lecture series: http://www.marsdd.com/ent101

1. Follow or Tweet:#ent101

2. Introduction to technology
`
commercialization
Presented by:
Raphael Ronen
Commercialization Manager -The Innovations Group
University of Toronto
raphael.ronen@utoronto.ca
16 October 2009

3. “At TIG, we bring together researchers and
businesses to capitalize on the ideas developed at
the University of Toronto and the hospitals
affiliated with the university, where more than $2
million worth of research is conducted daily. . .”
-Tim McTiernan

4. Research or ??
Idea
Commercial
Potential?
Development
Development
Technology
Business
Value established
-financing
-licensing

5. Tech Transfer
• Assess
Commercial
Potential?
• Protect (patent)
Business • Funding
Development • Business Plan
• Marketing
Value established
-financing • License / Start-up
-licensing

6. Outline
• Assessment
– Understand your product/company’s
strengths/limitations
• Lessons learned from commercializing
from an academic armchair
– Start-up versus License
– Funding/Financing
– Ownership

7. Technology Commercialization
Evaluation
• Intellectual Property Factors
• Technology Factors
• Market Factors
• Team Factors
• Impact

8. Intellectual Property Background
• Patents . . . also copyright, trade secrets,
trademarks
• Principle:
– Reward to disclose – 20 year monopoly where
right to exclude everyone else
– Greater good: Everyone can practice
afterwards

9. Why Patent
• Development Costs
Competitive – Pharma: $500M-$1.2B
Advantage – Device: $50M-$160M
• Development Time
Invest in R&D – Therapeutic: 8-15 years
– Device: 3-6 years
– Recoup costs
R&D / Approvals Revenue
Patent First Sale Patent expiry

10. Patent Factor Evaluation
• Invention has protectable IP
– Novelty (i.e. new and not disclosed)
– Non-obviousness
– Utility
• There is freedom to practice the IP
• IP is defensible and infringement
detectable

11. Patent costs and timelines
Office
$10-12k
US
Actions
$25k
$$
PCT 18 months CAN
EP Issuance
1 yr
JP +$50k
Provisional
Patent
$2-4k Abandon

13. Technology Commercialization
Evaluation
• Intellectual Property Factors
• Technology Factors
• Market Factors
• Team Factors
• Impact

14. Technology Factors
• Scientific basis understood
• Scientific data is thorough
• Technology is well developed
• Team has product development capabilities
IS IT REAL – WILL IT WORK?
Value in developed technology

15. Micro-CT System
• Scientific basis understood
• Scientific data is thorough
• Technology is well developed
• Team has product development
capabilities

16. Technology Commercialization
Evaluation
• Intellectual Property Factors
• Technology Factors
• Market Factors
• Team Factors
• Impact

17. Market Factors
• Need is well defined
• Product addresses the need
• Market is large and growing
• Competition and barriers are low
• Time to market is short
• Profit margin of product is high
• Market receptors can be easily identified
• Investment or funding can be easily obtained

18. Example
• Need is well defined
Technology Commercialization
• Product addresses the
need
Evaluation Market is large and
•
growing
 Intellectual Property Factors
•
• Competition and barriers
 Technology Factors
• are low
• Time to market is short
 Market Factors
• • Profit margin of product
• Team Factors is high
• Market receptors can be
• Impact easily identified
• Investment or funding
can be easily obtained

19.  Need is well defined
? Product addresses the
need
Technology Commercialization
 Market is large and
growing
Evaluation
 Competition and barriers
 Intellectual Property Factors
• are low
 Technology Factors to market is short
•  Time
Market Factors  high margin of product is
•
Multi-element
Transducer
Profit
• Team Factors  Market receptors can be
Bladder
Urethra
easily identified
Heating Pattern
 Investment or funding can
• Impact
Thermal Damage
Boundary
be easily obtained
Rectal Wall
Cooling Balloon

20. Technology Commercialization
Evaluation
• Intellectual Property Factors
• Technology Factors
• Market Factors
• Team Factors
• Impact

21. Team Factors
• Team has product development
capabilities
• Team has time and is willing to support
• Team has realistic expectations
• Team has commercialization experience

22. Team Factors
• Team has product development
capabilities
• Team has time and is willing to support
• Team has realistic expectations
• Team has commercialization experience
• Team is reasonable, ethical, can work well
together and deliver

23. Technology Commercialization
Evaluation
Idea
• Intellectual Property
Factors
• Technology Factors Commercial
• Market Factors Potential?
• Team Factors
Understand your strengths, understand your
weaknesses and plan accordingly

24. License versus
Spin-Off

25. License
• “Sell” technology to an established company
• Return:
– royalty paid based upon sales attributable to IP (a
percentage of net sales)
– Repayment of patent costs
– Milestones – if license is exclusive then minimum
royalties typically apply as well as development
milestones (especially in drug development.)

26. Spin-Off
Create a new company
• Build: • Return:
– Team – IPO
– Product – Acquired
– Sales – Dividends
– Financing

27. Licensing Considerations
• Good Licensee fit: Can Leverage
development, sales and marketing
capabilities of an established company
• Add-on technology
• Time and risk constrictions
• Willing to pass control (and responsibility)
of your technology

28. Spin-Off Considerations
• Lack of suitable receptor capacity (licensee) for IP
• Platform technology with solid IP potential for
additional synergistic IP
• Potential to be a multi-million dollar public company
• Committed team with long term perspective
• Funding and management can be attracted (team)
• Potential return

29. Spin-off Company
• Belief that you can advance the technology
better than another company
• Spin-Off’s are time consuming, risky, and take
up a lot of time that may or may not, be better
spent on licensing the IP
• Have potential for big upside under right
circumstances.
• Decision to do spin-off needs careful
consideration and commitment from all parties
involved.

30. Industry Need
• Some companies and sectors not well suited to
generating new lines of business and divisions;
others have sophisticated in-licensing
experience
• Large companies sometimes look to M&A
(Mergers and Acquisitions) as an alternative.
• Companies will pay premium for small
companies that are synergistic with their
business mission.

31. It takes 10 times more time to
manage a spin-off than it does a
licensing transaction

32. License vs. Start-up Summary
License Start-Up
Good fit with company Platform technology
Add on No good licensee
 Less effort  Under your control
 In hands of  Higher potential
experienced people returns
 Chance of success
 Lesscontrol  Time consuming
 Lower potential returns  Risk of failure

33. Early stage funding
• Government (Check with your TTO)
– NSERC I2I
– CIHR POP
– OCE market readiness
– HTX
– Accelerator Funds
– IRAP
– Next Generation of Jobs (MRI)
• 3 F’s (friends, family and fools)
• Angel / VC funds

34. Returns to the financiers
• Government • Money
– Job creation • Tax credits GIFT
– Training of HQP
– Return to region
• Angel / VC
• Money
– Multiples of their
investment (5-10x) • Guidance NEGOTIATION
– Tangible exit • Contacts

35. Ownership and rewards
Who owns the intellectual property?
• If you work for a company  Company
– Might get a reward recognition-$1000 per patent
• If you just left a company/university  Be careful
– Developed (or appeared to be developed) from work done while
Clear ownership is needed before
at the company  ~company owns
– Agreements (confidentiality, will fund!
investors non-competition)
• If you work for a university  varied
– You own / University owns / Jointly own (talk to your TTO)
– Reward: 33%-75% of the revenue
• If you work for a university on research funded by a
company  company probably has some rights

36. What TTOs do
• Pay to Protect IP – patents, trademarks, copyrights.
• Assist in the developing of Business Plans and
commercialization strategy.
• Assist in getting additional grant funding to further
develop IP (sometimes mandatory that the technology
transfer office is involved NSERC –I2I).
• Create start-up company when appropriate vehicle for
commercialization.
• Assist in raising financing for company.
• Negotiate agreements with licensees.

37. Recurring Pitfalls and Themes
• Overestimating the science/technology and one’s
capabilities
– Lack of realism regarding the actual stage of development of the
science/technology (“the next Google”)
– Someone else is probably developing the same technology in
their basement
• Poor understanding of the customer and his/her
value chain
– Proactive ignorance of challenges involved in developing and
realizing value
• Disconnect between business and the science
– Underweighting of importance of demonstrating progressive
commercial achievement

38. Questions