Accelerating Innovation: Proof of Concept Gap Fund Program Best Practices
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The document outlines best practices for proof of concept (POC) gap funding programs aimed at enhancing early-stage university and lab technology commercialization. It highlights objectives such as increasing awareness of capital gaps, creating access to knowledge for gap fund managers, and connecting startups to essential funding sources. Additionally, it discusses the POC process, funding sources, and expected impacts, emphasizing the importance of structured evaluation and decision-making for successful program outcomes.
Accelerating Innovation: Proof of Concept Gap Fund Program Best Practices
- 1. Accelerating Innovation: Proof of Concept Gap Fund Program Best Practices www.gapfunding.org
- 2. Increase awareness of the capital gap for early-stage, university/lab technology and advocate for solutions, including gap funding Expand knowledge and create access to best-practices for current/aspiring gap fund managers and stakeholders Connect university/lab proof of concept technologies and start- ups to sources of early-stage capital (venture, angel, crowdfunding), talent, and other peer support inform. advocate. connect. Objectives the resource for those interested in university-affiliated translational research, proof of concept, and pre/seed gap funds Research Universities Laboratories and Hospitals Early-stage Investors High-tech Companies Government Agencies www.gapfunding.org! • Founded in 2005 • 82 Gap Funding Programs from 51 Universities and Affiliated Organizations • Over $300M Funded in over 2,000 Projects and Start-ups www.gapfunding.org
- 3. www.innovosource.com The Innovation Capital Continuum
- 4. RESEARCH TECHNOLOGY START-UP Translational Research Gap Funds Proof of Concept Gap Funds Start-up Formation Gap Funds Start-up Growth Gap Funds Start-up License to Existing CompanyWaive or Further Develop Defining Gap Funding Types Defining “Proof of Concept” Proof of Concept (POC) programs evaluate commercial potential, demonstrate the potential value, and take steps to de-risk the project (real or perceived) to attract commercial partners or investors Pre-commercialization • $50-60K/Project • Add value/De-risk www.gapfunding.org
- 5. POC Source and Sustainability Translational Research Proof of Concept Start-up Form 16% 36% 30% 15% 24% 23%33% 31% 14% 21% Source Licensing Royalties Donation/Endowment (Alumni) Donation/Endowment (Non-Alumni) Equity Return Federal Program State/Region Program Local Program Venture Capital Angel Capital Corporate Support Translational Research Proof of Concept Start-up Formation 15% 14% 16% 36% 30% 15% 24% 23%33% 31% 14% 21% ni) Type of Fund Translational Research Proof of Concept Start-up Formati 0 2 4 6 Number of Funds 0 10 20 Number of Funds 0 5 Number of Fund License Royalties/Equity Returns Donations and Endowments (Alumni) Donations and Endowments (Non-Alumni) Federal Programs State/Region Programs Local Programs Venture Capital Angel Capital Corporate Support 3 2 2 1 1 1 1 15 13 129 3 4 2 2 2 2 2 1 1 1 1 1 5 3 3 6 6 4 2 2 2 1 1 1 1 1 • 70¢ for every $1 comes from the sponsoring university • Increasing trend in donations and public programs • Strategy for source/sustainability should tie directly to intended impact, expectations of fund Source Sustainability ~$500K www.gapfunding.org
- 6. POC Process and Best Practices PROMOTION INTAKE EVALUATION DECISION OVERSIGHT Promotion • Open and Targeted Approach • Transparent Communication of Process • Established Internal/External Communication Channels • Showcase the Impact www.gapfunding.org
- 7. POC Process and Best Practices PROMOTION INTAKE EVALUATION DECISION OVERSIGHT Intake • Collect Adequate Applicant Information • Provide Proposal Assistance • Submission Management System www.gapfunding.org
- 8. POC Process and Best Practices PROMOTION INTAKE EVALUATION DECISION OVERSIGHT Evaluation and Decision-Making • Defined, Consistent Evaluation Criteria • Use Review as a Teachable Moment • Scorecard + External Advisory Board • Purposeful Feedback Advisory Board Breakout PaidRFRFirst View www.gapfunding.org
- 9. POC Process and Best Practices PROMOTION INTAKE EVALUATION DECISION OVERSIGHT Oversight • Annual Impact, 3-yr Operational Assessment/Benchmarking • Tranche or Milestone Investment • Evangelism and Program Feedback www.gapfunding.org
- 11. POC Impact Horizons Immediate Nearterm Midterm Longterm Catalyzing the Commercialization Process Growing a Community of Innovation Building Businesses and Creating Jobs Attracting Capital and Expertise Returning Capital 1-3 Years 3-5 Years 5 +Years Expected Time from Initial Investment www.gapfunding.org
- 12. Some POC Impact… • Catalyzing the Commercialization Process ü 35% Yield Rate ü 43 out of every 100 commercialized, 80% startups • Growing a Community of Innovation ü 4,000 Faculty, 11,000 External Stakeholders • Building Businesses and Creating Jobs ü 322 Start-up Companies, 6,300 Reported Jobs ü 71% Five Year Survival Rate • Attracting Capital and Expertise ü $2.1B Leveraged on $90M in Funding ü Up to $12 Government/Angel and $148 VC per $1 • Returning Capital ü Jury Still Out! Future Reporting www.gapfunding.org
- 13. A Shot at Forecasting POC… 1)In the next three years, we will see some major returns from POC funded deals (that happened 5-10 years ago!) 2)US Government will follow emerging economies in aggressively funding POC 3)Larger venture capital funds/large banks will spin out microfunds to invest in Pre-seed/POC 4)Corporations will look at getting more involved in POC funds as matching sponsors, advisors 5)Smart university POC managers will see their role as connector/process innovators, not business developers/ entrepreneurs www.gapfunding.org
- 14. Additional Resources can be found at: www.gapfunding.org www.innovosource.com • The Mind the Gap Report: Detailed analysis of 82 university research, POC, and start-up gap funding programs • Over 4,000 stories showcasing funds and activity • 25 hours of archived and upcoming web- workshops for gap fund program managers and www.gapfunding.org Including: