Technology and business innovation Venture Backed Spin-Offs

1
Technology and business innovation Venture
Backed Spin-Offs

• 7th Venture Capital Forum
• Athens
• June 28, 2006
• Spyros Trachanis
• NBGI Ventures

2
NBGI Ventures

• VC Manager, investing in early-stage technology
  ventures in Europe and Greece since 2001
• Member of NBG Group
• Offices in London and Athens
• 7 portfolio companies in 4 countries, 3 Greek
  related, 4 academic spin-offs
• Almost all deals syndicated, ca. 20 VC and
  strategic investment partners

3
Many paths to leveragingAcademic Research

• License technology to industry
• Offer as service
• Build Spin-Off company
• Raise VC funding
• Researcher engagement

4
Key factors for profitable spin-offs

• Technology relevant to the
  industry
• Clear differentiation
• Globally competitive
• Strong Intellectual Property position
• Simple, practical and scalable solution

5
Magnitude of Opportunity

• Definition of addressable market
• Size of addressable market (TAM)
• Potential market share as justified by
  competitive differentiation (SAM)
• Gross Profit margin potential
• Size matters
• Potential for return on VC investment
• Attract follow-on capital
• Enable exit

6
Execution Capability

• Research team engagement
• Management identification attraction
• Industry strategic relations
• Flexibility and adaptability
• Stamina and perseverance

7
University spin-offs in the US

• Since 1980, 4,543 spin-off companies have been
  formed from US academic institutions 462 in
  2004
• Venture Capital firms funded 20 of new start-up
  companies in 2004
• The US Patent Office in 2004 issued more that
  3,800 patents to universities
• It usually takes 7 to 10 years for a spin-off
  company to reach the state of an IPO
• AUTM Association of University Technology
  Managers

8
The UK status of spin-off companies

• 431 spin-off companies in the UK until mid 2005
• 46 life sciences, 39 ITC
• Only 25 of spin-off companies currently
  profitable
• The hits
• Wolfson Microelectronics (Edinburgh U.) floated
  on LSE for 214 mil.
• Renovo (Manchester U.) floated on LSE for 154
  mil.
• Cambridge Display Technology (Cambridge U.)
  floated on NASDAQ for 255 mil.
• Unico University Companies Association

9
Policies UK Government Initiatives

• Science Enterprise Challenge Launched in 1999
  and earmarked 28.9 million to set up
  entrepreneurship centers by mean of competition
  in the UK. Lead to the establishment of 12
  Science Enterprise Centers in Universities
• University Challenge Launched in 2000. Aim to
  enable universities to establish seed funds.
  Total funding available 45 million. Created 15
  seed funds
• Higher Education Innovation Fund On going
• White Paper Excellence and Opportunity- a
  science and innovation policy for the 21th
  century including records, roadmaps, targets etc.
• Tax incentives for IP commercialization

10
Greek academic spin-off and VC backed community
1999-2006
Greek academic spin-offs 16
6 VC backed spin-offs 25 million total funding
to-date
11
From IP to IPO
Universities
Research Institutes
VCs
Capital Markets
PRAXI
Incubators
PRAXE
12
Case study

• RF semiconductor company established in 2001
• HQ in Silicon Valley, Operations in Athens
• More than 10m invested to date from NBGI
  Ventures and six other VCs from the US and SE
  Asia
• Break-even in 2005, profitable in 2006
• Contracts with significant global companies

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Conclusions and Key Points

• First wave of Greek spin-offs under way since the
  late 90s, results start to appear
• Greek ventures underfunded
• Attraction of international venture capital is
  critical
• More syndication among local VCs
• Large scale initiatives (Digital Leap)
• Leverage EU programs to forge strategic relations
  with international industry
• Availability of management talent a key issue
• Design for success!