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As part of the Kanzatec Creative Venturing Series, we held Part 3 - Creative Funding in Silicon Valley Did you know that there are many creative ways to fund your company that don't need Venture Capital or Angel Investments. Join us to learn what other sources are available to you and how to take advantages of these resources, such as government loans, leveraging your intellectual property and crowdsourcing.
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UNLOCKING THE VALUE OF YOUR IP UNLOCKING THE VALUE OF YOUR
Creative Venturing: Creative Funding, Dec 6 2013 Moderator: Fas Mosleh, SVP, IP M&A Panelists: Stefan Lindsay, Director Sales, Incident Andre Gueziec, CEO, Beat the Traffic Bill Jackson, Former Kodak Executive, CEO Sinovia
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Rights to trademarks referenced
herein, other than Kanzatec
trademarks, belong to their
respective owners. We disclaim
proprietary interest in the marks
and names of others.
UNLOCKING THE VALUE OF YOUR IP
• Introduction
• Panelist views
• Prepared questions
• Open session
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Agenda
UNLOCKING THE VALUE OF YOUR IP
Kanzatec is a leading Patent Research and Transaction Advisory firm serving private and public high tech companies to help drive greater business success through high-performance patent strategies. Our senior consultants combine operating company experience in business management, information systems, patent strategy and operations, with analysis and research capabilities spanning many high tech segments. The company collaborates with a wide range of high tech companies, from startups to the Fortune 500.
UNLOCKING THE VALUE OF YOUR IP
Here it Comes
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UNLOCKING THE VALUE OF YOUR IP
– Global High Tech GM/Sales/Marketing/BD executive • Spanned chip to software
– IP Monetization executive at Kanzatec IP Group (sell ‘000’s patents/year) • 100+ buy/sell transactions over $200M • VP Global Acquisitions – Intellectual Ventures • Executive Director Patent Sales Group – HP
– Manager, founder HP’s 1st Venture fund in 1998 ($2B+ M&A)
My Background - Fas Mosleh
Experienced at building new businesses - Executive at venture funded startups - Agiliti, Vernier Networks, Jamcracker Executive at Hewlett-Packard, Eastman Kodak, Agilent, Avago Technologies and Micron; IBM UK labs & sales management
UNLOCKING THE VALUE OF YOUR IP
Funding Examples- where I worked
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$100M $40M
>$30M $2B
>$100M
UNLOCKING THE VALUE OF YOUR IP
Corporate Introduction
• Founded in 2008 to focus on IT analysis and research – grew into IT product and system research, prototyping for F500 for IP projects – IT systems heritage
• Emerging, SMB & Fortune 500 companies in high tech – imaging, web, software, enterprise datacenter, systems, semiconductors, mobile/wireless telecom
• IP Brokerage Palo Alto, CA - Sales, Acquisitions, Valuation, Research/Analysis
• Global team members and Subject Matter Expert network – Silicon Valley, NY, Kansas, San Diego, London, Netherlands, Korea, China
– India, Europe, SMEs
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UNLOCKING THE VALUE OF YOUR IP
What Kanzatec Does – R&R
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IP M&A and Patent Sales
Drive greater business success through high-performance patent strategies
UNLOCKING THE VALUE OF YOUR IP
Example Industries We Serve
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Energy
Transport
Networking Medical
Imaging
Mobile
Data Center Semiconductor Cloud
Social Web E-Commerce Software
UNLOCKING THE VALUE OF YOUR IP
• Patent sale, licensing, secured loan
• Services/bootstrapping
• FFF
• Bank/credit/secured loan
• VC/Angels
• Crowdfunding
• Government
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Raising funds
UNLOCKING THE VALUE OF YOUR IP
• Situation – Need another round of funding
• Challenges – Business doing poorly – New funding hard to get at reasonable valuation
• Action
– Divest patents with a license grant back
• Results
– Obtained $2M to extend runway another 18 months
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Example 1 – IP Funding
UNLOCKING THE VALUE OF YOUR IP
• Situation – $1B+ revenues semi company
• Challenges – Unnecessary IP found every year
• Action – Create a regular revenue stream
• Results – Sell $1M of patents every quarter garnering 75% margins
– Healthy, dynamic IP strategy
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Example 2 – IP Income
UNLOCKING THE VALUE OF YOUR IP
• Situation – Seeking Funding/IPO
• Challenges – Must maximize $$s
• Action – Explore high return IP acquisition to boost valuation
• Results – Bought ~$2M of patents = valuation boost of additional $3-5M
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Example 3 – IP Boost
Equalizer
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Comparing Standard vs. Syndicated
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Source: Intellectual Asset Magazine November 2013 (Fas Mosleh)
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Patent Based Monetization Approaches
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Effort/Risk
© Copyright Kanzatec LLC 2013
Time Taken 2 months 6 months
12-18 months
$1-2M
~$5M
>=$10M
Key: PLoan=Patent Secured Loan PSEI=Patent Secured Equity Investment Sale=Patent Sale SynSale=Syndicated Patent Sale Licensing=Patent Licensing Size of funds
Loan/Equity
Sale
License
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A Look at Crowdfunding
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$5B Raised through CFP in 2013
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Types: Donation Equity Reward Lending
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10 Most Active Crowdfunding Categories
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Top: Hardware Software Games Music
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When assessing methods of fund raising
• Quality/Quantity
• Time to raise
• Difficulty to raise (resources needed)
• Constraints or conditions with money
• Smart vs. dumb money
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Factors To Consider
UNLOCKING THE VALUE OF YOUR IP 19
Types of Funding by Ease & Speed Hard (effort required by Owner)
Easy
Slow Quick
Bootstrapping
IPO
Patents
Crowdfunding
Govt.
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© Copyright Kanzatec LLC 2013
FFF
VC/Angel
Note: Positions above are exemplary, not necessarily accurate
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Stefan Lindsay
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Creative Venturing
Upping Valuation Creative Exits Creative Funding
UNLOCKING THE VALUE OF YOUR IP UNLOCKING THE VALUE OF YOUR
Making music easy and accessible with
technology
UNLOCKING THE VALUE OF YOUR IP
The gTar is the first App-Enabled
Smart Guitar
An Interactive and Socially Connected Music
Experience
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Company Milestones
• Won 2nd Place at TCDisrupt
• Reached $100K KS goal in 11 hours * Grand total of ~$355K in a month
• Then, the real work began...
• Fall 2013 - Units shipping • All Pre-order Fulfillment Complete
• Orders ship in under a week
• Appearances
• CNN Money
• NBC
• TechToys 360
• CCTV (China)
• Discovery News
Launched through a Kickstarter Campaign at TC Disrupt NY 2012
Wide Press Coverage:
UNLOCKING THE VALUE OF YOUR IP
TAM
Music Industry ($168B+) • User generated content
• Automated attribution
• Metrics / Analytics
• Platform for innovative content
use cases
Entertainment ($70-80B) • Casual
• Interactive
• Social
Education ($10-20B) • Fun
• Quick
• Convenient
UNLOCKING THE VALUE OF YOUR IP
Competition
Education
Entertainment
Music
Guitar Hero Tapulous Smule
Fretlight Ovelin Traditional*
Roland Jamstik Ableton
The gTar and Incident Platform breathe unity into a fragmented competitive landscape
*See education ROI analysis
Garageb
and
UNLOCKING THE VALUE OF YOUR IP
Social Creation and Consumption
Creation
Collaboration
Consumption
Social Interaction / Content
UNLOCKING THE VALUE OF YOUR IP
Example: Education ROI Analysis
Cost Value Prop
$1000-1500*
- Painful learning curve
- Most students quit after first year
- Expensive and inconvenient setup
$400
- Immediate, out-of-the-box gratification
- Positive reinforcement
- Applications and Content Platform
UNLOCKING THE VALUE OF YOUR IP
If you've ever picked up the guitar for the first time and tried to play a favorite song, you know how discouraging it can be. The gTar completely changes that.
-Drew Houston, Dropbox co-founder and CEO
UNLOCKING THE VALUE OF YOUR IP
Andre Gueziec
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Creative Venturing
Upping Valuation Creative Exits Creative Funding
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Mission: To help drivers beat the Traffic®
Triangle Software LLC d.b.a
1/16
12/9/2013
12/9/2013
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Real-time data, analytics, prediction, multimedia platform
Andre Gueziec, Founder and former CEO
12/9/2013 2/16
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Intuitive Presentation Interface
• Automated, animated visualization
• Ease of use and operation
• Auto-populates with latest data
• Customized for each affiliate
12/9/2013 3/16
UNLOCKING THE VALUE OF YOUR IP 12/9/2013
60 TV stations and cable providers, radio stations in North America
5/16
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Beat The Traffic App Presentation
12/9/2013 13/16
UNLOCKING THE VALUE OF YOUR IP 12/9/2013 14/16
UNLOCKING THE VALUE OF YOUR IP
12/9/2013
12/9/2013 15/16
UNLOCKING THE VALUE OF YOUR IP 12/9/2013
• Valuable crowd-sourced GPS data
• Monetization: ads +premium payments
Mobile traction Community Data
• iPhone & iPad, Android, BBerry apps
• >3 000 000 downloads
• Rated top 10 navigation
• approx. 500,000 active, regular users
6/16
UNLOCKING THE VALUE OF YOUR IP
Quality Data
• comparing estimated travel speeds with leading source
RMSE 5.3 mph
12/9/2013 11/16
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Strategic acquisition by The Weather Network in Canada
Successful Exit in 2012
12/9/2013 16/16
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Bill Jackson
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Creative Venturing
Upping Valuation Creative Exits Creative Funding
UNLOCKING THE VALUE OF YOUR IP UNLOCKING THE VALUE OF YOUR 41
Creative Venturing: Creative Funding
Bill Jackson Co-founder & CEO
Sinovia Technologies [email protected]
UNLOCKING THE VALUE OF YOUR IP
High development cost
High capital costs
Long time horizon
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Funding HW is REALLY HARD!
VC: “We like software companies, they fail quickly and cheaply” Find ways to minimize or remove these costs
UNLOCKING THE VALUE OF YOUR IP 43
Align with business unit
Fit w/ strategic direction
Watch for impedance mismatch
The adage that you don’t talk to strategics until Series B is gone
However: many still think “seed” companies are too early, there is activity at Series A
UNLOCKING THE VALUE OF YOUR IP 44
I’m from the Government and I’m here to help you…
National/State/Local
Doesn’t pay for “all”
Reports/oversight/rules
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NRE/JDA’s with potential customers
Emerging HW incubators
License of technology
Friends, Family & Fools
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Other Sources
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NSF Grants ~$1M
Outsourced Mfg
Partnerships
JDA, NRE & Samples
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Sinovia Tactics to Date
UNLOCKING THE VALUE OF YOUR IP 47
Thank you
UNLOCKING THE VALUE OF YOUR IP 48
Creative Venturing
Upping Valuation Creative Exits Creative Funding
Prepared Questions and Open Q&A
UNLOCKING THE VALUE OF YOUR IP
• What is the most creative funding you ever put together?
• How would you fund your next venture and why?
• What factors should be considered when funding their venture?
• How do you price your company for a funding?
• How did you decide what was offered was the right amount?
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Questions
UNLOCKING THE VALUE OF YOUR IP
UNLOCKING THE VALUE OF YOUR IP
Thank You
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Creative Venturing
Creative Venturing …2014
?? Negotiating a Term Sheet Funding your Patent Ideas
UNLOCKING THE VALUE OF YOUR IP
1) People buy on emotion, and support the decision with logic. Must make an emotional connection with investors. E.g. — Make them feel smart, enhance their reputation. — Keep it simple. Complexity = headaches ; Governing equation for high-net-worth
types (and everyone else, too). Use the five C’s: “Be concise, clear, consistent, compelling and compliant.” 2) Effective fundraising requires effective, marketing, replicable process Don’t lose prospects during the marketing process. Hunting for capital demands the
same precision as your core business. One hiccup and the tenuous trust you’ve built with prospects could evaporate.
3) People invest with people they know. Referrals are critical - you never know which “intermediary” will lead to pay dirt.
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Three ‘Secrets’ of Successful Fundraising
Adapted from Source: Forbes, Bryan Johnson
UNLOCKING THE VALUE OF YOUR IP
What’s Your V?
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VALUE
V
V V
V
Customers Employees Shareholders Investors
© Copyright Kanzatec LLC 2013
UNLOCKING THE VALUE OF YOUR IP
Most Popular CFPs
• Kickstarter
• Indiegogo
• Crowdtilt
• Angellist
• Razoo
• Petridish
Most Successful
• Pebble Watch
• Star Citizen
• Lets Build a Goddamn Tesla Museum
• Recaptcha
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