Creative venturing creative funding v2 12 06-2013 for distribution

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

Rights to trademarks referenced

herein, other than Kanzatec

trademarks, belong to their

respective owners. We disclaim

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and names of others.

UNLOCKING THE VALUE OF YOUR IP

• Introduction

• Panelist views

• Prepared questions

• Open session

Agenda

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.

Here it Comes

– 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

Funding Examples- where I worked

5 UNLOCKING THE VALUE OF YOUR IP

$100M $40M

>$30M $2B

>$100M

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

What Kanzatec Does – R&R

IP M&A and Patent Sales

Drive greater business success through high-performance patent strategies

Example Industries We Serve

Energy

Transport

Networking Medical

Imaging

Mobile

Data Center Semiconductor Cloud

Social Web E-Commerce Software

• Patent sale, licensing, secured loan

• Services/bootstrapping

• FFF

• Bank/credit/secured loan

• VC/Angels

• Crowdfunding

• Government

Raising funds

• 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

Example 1 – IP Funding

• 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

Example 2 – IP Income

• 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

Example 3 – IP Boost

Equalizer

Comparing Standard vs. Syndicated

Source: Intellectual Asset Magazine November 2013 (Fas Mosleh)

Patent Based Monetization Approaches

Effort/Risk

Time Taken 2 months 6 months

12-18 months

>=$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

License

A Look at Crowdfunding

$5B Raised through CFP in 2013

Types: Donation Equity Reward Lending

10 Most Active Crowdfunding Categories

Top: Hardware Software Games Music

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

Factors To Consider

UNLOCKING THE VALUE OF YOUR IP 19

Types of Funding by Ease & Speed Hard (effort required by Owner)

Slow Quick

Bootstrapping

Patents

Crowdfunding

VC/Angel

Note: Positions above are exemplary, not necessarily accurate

Stefan Lindsay

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

The gTar is the first App-Enabled

Smart Guitar

An Interactive and Socially Connected Music

Experience

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:

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

Competition

Education

Entertainment

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

Social Creation and Consumption

Creation

Collaboration

Consumption

Social Interaction / Content

Example: Education ROI Analysis

Cost Value Prop

$1000-1500*

- Painful learning curve

- Most students quit after first year

- Expensive and inconvenient setup

- Immediate, out-of-the-box gratification

- Positive reinforcement

- Applications and Content Platform

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

Andre Gueziec

Creative Venturing

Mission: To help drivers beat the Traffic®

Triangle Software LLC d.b.a

12/9/2013

Real-time data, analytics, prediction, multimedia platform

Andre Gueziec, Founder and former CEO

12/9/2013 2/16

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

Beat The Traffic App Presentation

12/9/2013 13/16

UNLOCKING THE VALUE OF YOUR IP 12/9/2013 14/16

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

Quality Data

• comparing estimated travel speeds with leading source

RMSE 5.3 mph

12/9/2013 11/16

Strategic acquisition by The Weather Network in Canada

Successful Exit in 2012

12/9/2013 16/16

Bill Jackson

Creative Venturing

UNLOCKING THE VALUE OF YOUR IP UNLOCKING THE VALUE OF YOUR 41

Creative Venturing: Creative Funding

Bill Jackson Co-founder & CEO

Sinovia Technologies bill@sinoviatech.com

High development cost

High capital costs

Long time horizon

Funding HW is REALLY HARD!

VC: “We like software companies, they fail quickly and cheaply” Find ways to minimize or remove these costs

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

I’m from the Government and I’m here to help you…

National/State/Local

Doesn’t pay for “all”

Reports/oversight/rules

NRE/JDA’s with potential customers

Emerging HW incubators

License of technology

Friends, Family & Fools

Other Sources

NSF Grants ~$1M

Outsourced Mfg

Partnerships

JDA, NRE & Samples

Sinovia Tactics to Date

Thank you

Creative Venturing

Prepared Questions and Open Q&A

• 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?

Questions

Thank You

Creative Venturing

Creative Venturing …2014

?? Negotiating a Term Sheet Funding your Patent Ideas

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.

Three ‘Secrets’ of Successful Fundraising

Adapted from Source: Forbes, Bryan Johnson

What’s Your V?

Customers Employees Shareholders Investors

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