University of Minnesota Start-up Guide

Transcription

1 University of Minnesota Start-up Guide Office for Technology Commercialization (OTC) - Venture Center A guide for faculty, staff, and entrepreneurs interested in starting a new business based on University of Minnesota research Revised September Westgate Drive: Suite 160 St. Paul, MN venture@umn.edu

2 Table of Contents EXECUTIVE SUMMARY... 1 TECHNOLOGY COMMERCIALIZATION AT THE UNIVERSITY OF MINNESOTA... 2 STEPS IN THE TECHNOLOGY COMMERCIALIZATION PROCESS OTC s Intellectual Property Evaluation Process Researchers Approach Venture Center External Entrepreneurs Approach Venture Center... 5 ROLE OF THE VENTURE CENTER... 6 Venture Center Mission... 6 Service Offerings... 6 START-UP CRITICAL SUCCESS FACTORS World Class Technology Experienced Management Team Financial Capital... 7 EQUITY SPLIT: HYPOTHETICAL EXAMPLE... 8 APPENDIX A: VENTURE CENTER START-UP APPLICATION APPENDIX B: BUSINESS PLAN QUESTIONS APPENDIX C: SAMPLE TERM SHEET APPENDIX D: UNIVERSITY FUNDING OPPORTUNITIES Innovation Investments Ignition Investments...22 APPENDIX E: UNIVERSITY/INVENTOR COMPENSATION IN START-UP COMPANIES University Consideration and Compensation for Start-up Activities Considerations and Compensation for University Inventors...23 APPENDIX F: ADDITIONAL RESOURCES... 24

3 Executive Summary The objective of this start-up guide is to provide information and assistance to faculty, staff, and entrepreneurs who may be interested in commercializing University of Minnesota technology through the formation of a new company. The Venture Center is a business unit within the Office for Technology Commercialization (OTC) that works with researchers, entrepreneurs, and investors to create new start-up companies based on research conducted at the University of Minnesota. The purpose of the Venture Center is to create businesses that accelerate and maximize the impact of University innovations that save lives, create jobs, and enhance public welfare. The Venture Center employs a proven venture capital model of carefully analyzing start-up companies and then focusing resources on value creation in these companies. The impetus to start a new company based on intellectual property created at the University of Minnesota comes from three primary sources: 1. The first is OTC s Intellectual Property Evaluation Process. As part of this commercialization process, OTC evaluates whether the University should best commercialize a new technology via a license to an existing company, or through the creation of a new start-up company. 2. The second source is University researchers who have a desire to create a new company based on their University research. 3. The third source is external entrepreneurs who would like to create a new company to address an unmet market need. The Venture Center will assist all parties in their efforts to bring a specific technology to market. There are three factors that are critical to a new start-up company: 1. World-class technology 2. Experienced management 3. Financial capital The Venture Center aims to bring these critical success factors together in order to create successful companies with long-term viability. September 10 Office for Technology Commercialization - Venture Center 1

4 Technology Commercialization at the University of Minnesota The Office for Technology Commercialization (OTC) oversees all aspects of technology commercialization at the University of Minnesota. OTC has five business units: Agriculture and Horticulture Life Sciences Engineering & Physical Sciences Software and Information Technologies Venture Center These business units work together to determine the best path of commercialization for each technology. This process can best be explained through the model below and the accompanying step-by-step process that shows the way new technologies move towards commercialization. Office for Technology Commercialization University Researchers Technology Strategy Managers Intellectual Property Commitment Committee Evaluate commercial path and approve patent spend Licensing Candidates Licensing Center Determine market value Develop marketing plan Proactive marketing Monitor milestones High Value Licenses Seek Support Respond Start-Up Candidates Further Development Venture Center Develop business plans Recruit management teams Provide professional advice Negotiate terms Monitor milestones Start-up Companies Innovation Investments Investments Ignition Investments September 10 Office for Technology Commercialization - Venture Center 2

5 Steps in the Technology Commercialization Process The Office for Technology Commercialization (OTC) evaluates the ideas and technology that arise from University of Minnesota research, prepares this intellectual property for the market, and in some cases spins it out into new businesses. The initiative to start a new company based on intellectual property created at the University of Minnesota comes from three primary sources. 1. OTC s Intellectual Property Evaluation Process All intellectual property disclosed by University researchers to OTC undergoes a Technology Assessment to determine the technology s commercial potential and to develop an appropriate commercial strategy. As part of this commercialization process, OTC evaluates whether the technology is best commercialized via a license to an existing company, or through the creation of a new start-up company. Our Process: 1. Research: University faculty, staff, and students create innovation through research and experimentation. 2. Pre-Disclosure: University researchers contact Technology Strategy Managers at the Office for Technology Commercialization before making their discoveries public to discuss their inventions and ideas as well as the commercialization process. 3. Intellectual Property (IP) Disclosure: Researchers send completed IP Disclosure Forms to document their IP and initiate evaluation by the OTC. 4. Evaluation: The OTC reviews the IP Disclosure form with the inventor, conducts patent searches, and analyzes the market for commercial potential. 5. Protection Decision: The OTC selects the best protection strategy for technologies likely to provide a suitable return to the University. Not all disclosures are patentable or protected. 6. Protection: The OTC retains IP lawyers who file the patent application with the U.S. Patent Office and/or foreign patent offices. Some IP may only be protected through copyright. 7. Marketing: The OTC develops a go-to market strategy either license to an existing company or form a start-up company. 8. Licensing: The OTC negotiates the terms of the license agreement, which require the licensee to bring the technology to the marketplace. 9. Commercialization: The licensee turns the technology into a product or service. This usually requires additional development and sales investments. 10. Revenue: Revenues received from the licensee are distributed to the inventors, college or school, department or center, and the University. More information can be found here: September 10 Office for Technology Commercialization - Venture Center 3

6 2. Researchers Approach Venture Center University researchers who have a desire to create a new company based on University research are encouraged to follow the steps outlined below: 1. Identify University Intellectual Property to be licensed to a new start-up company through 2. Complete Start-up Application (see Appendix A) and Feasibility study 3. Meet with appropriate Office for Technology Commercialization staff for initial application review 4. Work together to form a team (including advisors and CEOs-in-Residence) to develop business plan 5. Meet with Office for Technology Commercialization staff to review business plan 6. Update Report of External Professional Activities (REPA) because of potential individual conflict of interest 7. Negotiate business terms (performance and financial milestones, capitalization table, etc...) 8. Negotiate IP license terms (exclusive/non-exclusive, minimum payments, royalties, equity, etc...) 9. Form new company 10. Execute license to start-up company More information can be found here: September 10 Office for Technology Commercialization - Venture Center 4

7 3. External Entrepreneurs Approach Venture Center External entrepreneurs who have a desire to create a new company based on University research are encouraged to follow the steps outlined below: 1. Identify University Intellectual Property to be licensed to a new start-up company through 2. Complete Start-up Application (see Appendix A) and Feasibility study 3. Meet with appropriate Office for Technology Commercialization staff for initial application review 4. Develop comprehensive business plan 5. Meet with Office for Technology Commercialization staff to review business plan 6. Negotiate business terms (performance and financial milestones, capitalization table, etc...) 7. Negotiate IP license terms (exclusive/non-exclusive, minimum payments, royalties, equity, etc...) 8. Form new company 9. Execute license to start-up company More information can be found here: September 10 Office for Technology Commercialization - Venture Center 5

8 Role of the Venture Center The Venture Center is a business unit within the Office for Technology Commercialization that works with entrepreneurs, researchers, and investors to create new start-up companies based on research at the University of Minnesota. The Venture Center employs a proven venture capital model of carefully analyzing start-up companies and then focusing resources on value creation in these companies. This unit was established to increase the number and success rate of start-ups founded on University technologies. As a fiduciary agent for the University of Minnesota, the Venture Center acts on behalf of the inventor, inventor s research unit and department, and the University itself in all dealings with start-up companies that have licenses to University Intellectual Property, which is outlined in the Regent s Intellectual Property Policy ( The Regent s Policy states that the University is to commercialize University-developed technology for two major reasons: first, to make these innovations available to the public; and second, to earn a return for the University. Regent s Policy also states any cash proceeds resulting from intellectual property commercialization are split 1/3 to the inventor(s), 1/3 to the research unit and department, and 1/3 to the University itself. In all dealings with start-up companies that have licenses to University intellectual property, the Venture Center acts as a fiduciary agent for the University on behalf of all these participants. (See Regent s Policy on Intellectual Property and Equity Holdings for more information.) Venture Center Mission To increase the number of successful start-up companies based on University of Minnesota research, and to allow the University to earn a fair return from these companies. Service Offerings The Venture Center staff members team with University researchers, entrepreneurs, and investors in activities essential to the establishment and success of a new company. Activities include: Evaluating and assisting with business plans and executive summaries Recruiting management teams and board of directors Preparing presentations to investors Structuring and negotiating investment terms for University licenses Finding professional expertise based on prior experience and reputation September 10 Office for Technology Commercialization - Venture Center 6

9 Start-up Critical Success Factors Start-up companies face many threats as they move from inception towards full commercialization of their technology. Much like a 3-legged stool, a start-up relies upon three separate pillars: world-class technology, experienced management, and financial capital to support its success. The Venture Center aims to bring these three critical success factors together in order to create companies with long-term viability. 1. World Class Technology As one of the largest public research universities in the world, the University of Minnesota is home to groundbreaking research and innovation in energy, life science, medical device, software, and other industries. University-developed technology is typically in a very early stage of development and needs significant market-based input and improvements before it can be commercialized via a start-up. 2. Experienced Management Team The Venture Center facilitates the creation of management teams by bringing together University technology with a start-up team that can successfully bring the technology to market. The role of the University inventor is paramount to the success of any University start-up, but companies need people who have managed new company start-ups, who have close relationships with early stage investors, and have brought similar products to market. University researchers often do not have these experiences or relationships. Our CEO-in-Residence program is designed to allow proven new company CEOs to work with faculty and early-stage technology opportunities for several months prior to actually forming a start-up company. This program is designed to allow faculty to get to know the CEO prior to the need to commit to the start-up, and to allow the CEO-in-Residence to obtain a deep knowledge of the technology and the research team. 3. Financial Capital The final piece is capital to fund the start-up through the early stages of research and development before the company begins to generate revenue. The Venture Center maintains ongoing knowledge and relationships with sources of early stage capital, venture capital for growth, and proven entrepreneurs who have the capability of successfully forming new companies and taking them to commercial success. We maintain a working knowledge of current terms and conditions in the early-stage capital markets so that the start-up company can obtain the most favorable financing structure and pricing. September 10 Office for Technology Commercialization - Venture Center 7

10 Equity Split: Hypothetical Example This hypothetical example is provided only to give an overview of the process and should not be construed as the University s typical terms. The end cash amounts are also not to be perceived as expected gains from a start-up company. The model does not take into account many factors that can influence actual payouts, including investor rights, and valuations. The example is only supplied for educational purposes. Step 1: Pre-company formation The University assesses the technology by evaluating the strength of the intellectual property and establishing proof of concept. The Venture Center assesses the commercialization potential of a start-up by determining market need and size, forecasting five year revenue, and verifying the potential return on investment. The final piece is the drafting of the initial business plan, which will be used later in the licensing negotiations. September 10 Office for Technology Commercialization - Venture Center 8

11 Step 2: A new management team is formed and issues common shares The University has no formal relationship to the company at this point. Assume that the new company is organized with 700,000 common shares, issued to the CEO, initial management team, and any other founders of the company. At this stage, the capitalization of our hypothetical company may look like this: Owner Shares % Ownership Founding Members Full-time CEO 300, % Part-time Chief Technical Officer 100, % Full-time technical employee 100, % Part-time Chairman of the Board (who is also a founder 100, % of the company) Outside consultant (may be a University inventor) 100, % Total Shares 700, % Notes: All founder shares and stock options should be subject to 3 or 4 year vesting provisions. Under this vesting provision, if an option holder leaves prior to full vesting, he or she would lose a percentage of the shares. For example: the fulltime CEO is granted 300,000 shares with a 4 year vesting schedule on January 1, On January 1, 2012, the founder leaves the company. Only 150,000 of the 300,000 shares are then vested and the CEO would lose ownership of the remaining 150,000 shares. The founders of the company should discuss filing an 83(b) election for tax purposes with their legal counsel because this election enables the founder to maximize the tax implications of the transaction. This election could save the founder a significant amount in federal income taxes. September 10 Office for Technology Commercialization - Venture Center 9

12 Step 3: Negotiating the University License Agreement The new company and the University negotiate terms for the intellectual property the start-up would like to license. When the University and the new company execute a license agreement, the company could issue additional shares to the University as a portion of the compensation for the license, as in the example below: Owner Shares % Ownership Founding Members Full-time CEO 300, % Part-time Chief Technical Officer 100, % Full-time technical employee 100, % Part-time Chairman of the Board (who is also a founder 100, % of the company) Outside consultant (may be a University inventor) 100, % Founders TOTAL 700, % Compensation for University License Inventors 100, % Department and Unit 100, % Office of Vice President for Research 100, % University TOTAL 300, % Total shares outstanding after license agreement 1,000, % Notes: Most often, the University will also require the license be structured in a way that will provide future ongoing revenues through royalty payments in addition to taking an equity position in the start-up September 10 Office for Technology Commercialization - Venture Center 10

13 Step 4: Series A Funding - $2MM Our hypothetical company is beginning to establish initial operations and develop a commercial prototype. Assuming the new company is raising external capital; the new company could then negotiate and issue stock to initial investors in exchange for cash to fund the company. Assume that the company sells 1 million shares at $2.00 per share, resulting in a $2 million dollar Series A financing for the company. These initial investors are usually seeking at least a 10x return on their investment. At this stage the company will usually offer additional shares to the management team and the board of directors though an option pool that will incentivize employees over the next 3-4 years. University faculty may also be offered equity or cash compensation for a consulting role in the company in the option pool. Owner Shares % Ownership Founding Members Full-time CEO 300, % Part-time Chief Technical Officer 100, % Full-time technical employee 100, % Part-time Chairman of the Board (who is also a founder 100, % of the company) Outside consultant (may be a University inventor) 100, % Founders TOTAL 700, % Compensation for University License Inventors 100, % Department and Unit 100, % Office of Vice President for Research 100, % University TOTAL 300, % First Round Investors ($2 Million 1,000, % $2/Share)* Options for Future Management 325, % Total shares outstanding after first round of funding 2,325, % *The first round of investors will most likely require preferred stock, which would probably have these characteristics: Priority over common shareholders on earnings and assets in a liquidation event Fixed dividend may be applied that is paid before common stock holders Convertible to common stock Anti-dilution provisions Some preferred shares have special voting rights (ex: approval of the issuing of new shares) The pre-money valuation is the value of the firm prior to the investment. In this model, the company is worth $2 million pre-money, which takes the total shares outstanding after the license agreement multiplied by the share price ($1,000,000*$2/share). The post-money valuation is the value of the company after the investment has been made, so the pre-money number is added to the investment plus the value of the option pool. The post-money valuation is $4.65 million for this example, which takes the pre-money value of $2 million plus the $2 million investment added to the value of the option pool equal to $650,000 (325,000 shares*$2/share). Pre-Money Equity Valuation Ending Shares Outstanding Share Price Post-Money Equity Valuation $2,000,000 2,325,000 $2.00 $4,650,000 September 10 Office for Technology Commercialization - Venture Center 11

14 Step 5: Series B Funding - $5MM After expanding operations in preparation for product launch and demonstrating successful progress, the company may raise additional capital by issuing and selling, say, 1 million new shares at $5.00 per share to new investors. Typically, additional options will be added to the options pool after the second financing to continue to incentivize employees. Second round investors are satisfied with a lower return on their investment if the company has made progress. If progress has not been made it may result in a lower price per share than the first round. Owner Shares % Ownership Founding Members* Full-time CEO 300, % Part-time Chief Technical Officer 100, % Full-time technical employee 100, % Part-time Chairman of the Board (who is also a founder of 100, % the company) Outside consultant (may be a University inventor) 100, % Founders TOTAL 700, % Compensation for University License Inventors 100, % Department and Unit 100, % Office of Vice President for Research 100, % University TOTAL 300, % First Round Investors ($2 Million 1,000, % $2/Share)* First Round Options for Future Management 325, % Second Round Investors ($5 Million 1,000, % $5/Share)** Second Round Options for Future Management 200, % Total shares outstanding after second round of funding 3,525, % *First round preferred shares will become Preferred A shares. **Second round shares are typically called Preferred B shares and generally have senior liquidation preference to Preferred A. Pre-Money Equity Ending Shares Share Price Post-Money Equity Valuation Outstanding Valuation $11,625,000 3,525,000 $5.00 $17,625,000 September 10 Office for Technology Commercialization - Venture Center 12

15 Step 6: A hypothetical sale of the company in 5 years at $20.00 cash per share This would result in the following capital gains: Owner Founding Members Shares % Ownership Value of Stock at Exit Return for Investors Full-time CEO 300, % $5,999,550 Part-time Chief Technical Officer 100, % $2,002,200 Full-time technical employee 100, % $2,002,200 Part-time Chairman of the Board 100, % $2,002,200 (who is also a founder of the company) Outside consultant 100, % $2,002,200 (may be a University inventor) Founders TOTAL 700, % $14,008,350 Compensation for University License Inventors 100, % $2,002,200 Department and Unit 100, % $2,002,200 Office of Vice President for Research 100, % $2,002,200 University TOTAL 300, % $6,006,600 First Round Investors 1,000, % $20,000,850 10X Return ($2 Million $2/Share) First Round Options for Future 325, % $6,500,100 Management Second Round Investors 1,000, % $20,000,850 4X Return ($5 Million Second Round Options for Future 200, % $3,997,350 Management Total Shares Outstanding 3,525, % $70,500,000 Notes: The distribution of cash proceeds from this hypothetical sale would be distributed in cash as ordinary income to the University inventors, as well as their department and college, according to the University of Minnesota policies. If proceeds are received in the liquid securities of another firm, the stock will be sold by Office of Investment and Banking in accordance with the University of Minnesota policies. September 10 Office for Technology Commercialization - Venture Center 13

16 Appendix A: Venture Center Start-up Application Instructions Please answer each question as completely as possible. If there is not enough space on the application form, please attach a continuation of the answer and cite the question number you are answering. After completing, please submit to the Venture Center at venture@umn.edu. Background Information Please provide the following information about the lead entrepreneur. Full Legal Name: Address: Phone: Website: Relationship to Univ. of MN, if any: Univ. of MN Dept.: Univ. of MN Title: Please list any other contacts associated with your efforts to create a start-up company with the technology described above: Name: Title: Phone: Name: Title: Phone: Name: Title: Phone: Name: Title: Phone: September 10 Office for Technology Commercialization - Venture Center 14

17 Business Concept Please provide a brief description of the business concept you wish to pursue through a start-up enterprise. Intellectual Property Please provide a brief description of the University of Minnesota technology/technologies you are seeking to license as well as your role (if any) in developing the technology/technologies. Target Market, Customers, and Competitors Please briefly define the commercial market in which the start-up company will operate, the customers that the company s products or services are intended to serve, and the competitors currently operating in this market. September 10 Office for Technology Commercialization - Venture Center 15

18 Timeline and Milestones Please provide expected critical development milestones and targeted completion dates. Milestone Target Completion Date Financial Capital Needed Please provide initial expectations regarding the magnitude of financial capital resources necessary to achieve critical development milestones. September 10 Office for Technology Commercialization - Venture Center 16

19 Appendix B: Business Plan Questions A business plan that describes a potential start-up s business model is a critical document used by the Venture Center in assessing company viability. The Venture Center is prepared to review and assist with the business plans of start-ups proposed by researchers and external entrepreneurs. The business plan should include answers to the following types of questions. 1. What is the problem or market need to which the company s technology relates? 2. What is the solution offered by the technology? 3. What are the technology solution s features and benefits? 4. What value does your start-up company bring to the technology you hope to license? 5. What are your company's products? 6. What are benefits and value of the products and how will they be priced? 7. Who are the company's anticipated customers, why will they buy and have they been contacted to assist in product design? 8. What are the barriers to entry for your approach? 9. What are the initial markets and size of market? 10. Who are the competitors and what is the company s competitive advantage? 11. What are the technology milestones and costs to make the solution work? 12. What are the product milestones and costs to produce the products? 13. What are the company milestones and the cost of getting through each one? 14. What are your financial projections for the first five years of company operation? 15. How much capital is needed to get a product to market and what is the anticipated pre-money value of the company at each round of financing? 16. What are the comparable companies valued at in the market? 17. Who will manage the company and what is their relevant experience? 18. What is the company's exit plan? More information about business plan assistance can be found here: September 10 Office for Technology Commercialization - Venture Center 17

20 Appendix C: Sample Term Sheet

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23 Appendix D: University Funding Opportunities There are two funding streams available through the Office for Technology Commercialization - Innovation Investments and Ignition Investments. 1. Innovation Investments An Innovation Investment is a development investment provided to a University of Minnesota researcher to help bridge the gap between sponsored research funding and the point where the technology can be commercialized. Innovation investments are distinct from the traditional research funds that researchers receive through government agencies, and are not intended to fund general or basic research. Instead, these funds are targeted to well-defined projects to advance technologies that could address significant markets, offer a potential solution for a unique problem, and have a competitive advantage over existing solutions. Innovation Investments are often used to conduct experiments or acquire data from sources outside the University, such as fee-for service organizations or contract for service labs. The Office for Technology Commercialization (OTC) works closely with investment recipients to fulfill the investment deliverables and ensure that relevant intellectual property is protected. Eligibility Criteria for Innovation Investments Applications for Innovation Investments are by invitation only. Eligible technologies are those disclosed to OTC and determined to have: Significant commercial potential Well-defined technical limitations which if overcome, are likely to maximize the value of a commercial license Research methodology that will successfully address the technical limitations and lessen or remove scientific or technical barriers to licensing High likelihood of producing revenue via licensing payments, milestone payments, or royalties on sales Investments of up to $100,000 per technology may be awarded in a lump sum or in installments. Generally, research should be conducted in 12 months or less. Mid-term and final research reports are due to OTC following initiation of funding. Obligations of Researchers who Receive Innovation Investments When researchers are awarded Innovation Investments, they agree to work closely with OTC to ensure that the Investment deliverables are achieved that any resulting intellectual property is protected, and they agree to use their best efforts to transfer the technology to an outside company for commercialization September 10 Office for Technology Commercialization - Venture Center 21

24 2. Ignition Investments An Ignition Investment is an early stage loan made to a University of Minnesota start-up company to help enable a successful launch out of the University. The first six months are a very risky time in the lifecycle of a start-up company. The bulk of the value of the start-up company lies in the University s Intellectual Property and additional investment is sometimes helpful in leveraging the value of the early-stage technology for the company. In conjunction with its review of a start-up proposal presented by a researcher or external entrepreneur, the University may consider an Ignition Investment to help increase the likelihood of success and value of the start-up. Guidelines Ignition Investments are provided to address critical early-stage needs in forming and launching a start-up company based on University technology. The ignition funding will go directly to a start-up company as a loan before the first outside money is raised. Using these funds, a company could contract for a professional prototype to show potential partners, bring in a regulatory consultant to finalize the regulatory pathway of the business plan, hire expert guidance on applying for Small Business Innovative Research grants, or travel to secure follow-on funding. Repayment All Ignition Investments are made with the assumption that the investment is a loan and will be repaid in whole from the proceeds of the first outside investment in the new company. The University will evaluate Ignition Investment proposals under appropriate circumstances fully cognizant of the risks involved. Oversight The Venture Center will provide oversight of an Ignition Investment in conjunction with its overall monitoring of a University start-up. September 10 Office for Technology Commercialization - Venture Center 22

25 Appendix E: University/Inventor Compensation in Startup Companies 1. University Consideration and Compensation for Start-up Activities Once the Venture Center, management, and the inventors have agreed that a start-up company is the appropriate commercialization strategy for the University s intellectual property, OTC will work to draft a license agreement. This license agreement spells out how the new company will compensate the University for the right to develop the licensed intellectual property. OTC and management work very closely to negotiate and structure terms that provide both the greatest opportunity for success of the start-up, as well as the greatest potential compensation opportunity for the University. The compensation will most likely include a combination of an equity stake in the company and cash payments based on product sales. All proceeds from the intellectual property license are divided according to the method spelled out in the Board of Regents Intellectual Property Policy 2. Considerations and Compensation for University Inventors The inventor receives one-third of the University s negotiated share of the intellectual property proceeds. This rewards the inventor for the work they did at the University. Specifically, the inventors are paid 1/3 of all realized proceeds from the sale of equity securities as well as 1/3 of any license fee payments, which may include upfront, milestone, maintenance, and/or royalty payments. The start-up company may also ask that certain inventors take a further role in the startup company outside of the University. Often, this role would be a position on the Scientific Advisory Board or as a research and development consultant. This role may involve compensation in the form of stock options or additional equity securities to the faculty member for their continued service to the new company. Should a faculty member negotiate such a role in the start-up company, there are University conflict of interest regulations that must be observed regarding future faculty research within the University. Although each situation is different, the Venture Center is available to assist the inventor and provide guidance on ways to address any conflicts of interest (see Appendix F for University of Minnesota Conflict of Interest Policy). September 10 Office for Technology Commercialization - Venture Center 23

26 Appendix F: Additional Resources There are many available sources of information on entrepreneurship and starting companies on the Internet. Below are a few to get started. Small Business Association Start-up Guide ( Bplans.com ( Ewing Marion Kauffman Foundation ( Entrepreneurship Guide ( Research Portal ( Recommended University of Minnesota Resources University of Minnesota Intellectual Property Policy ( University of Minnesota Conflict of Interest Policy ( Recommended News and Media MIT Technology Review ( Red Herring ( Wall Street Journal: Start-up Journal ( Additional Reading Academic Entrepreneurship, Scott Shane, Edward Elgar Publishing Technology Ventures, Dorf and Byers, McGraw Hill September 10 Office for Technology Commercialization - Venture Center 24