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KICKSTART SEED FUND:IGNITING INNOVATION
KICKSTART SEED FUNDOVERVIEWGAVIN CHRISTENSEN, MANAGING DIRECTOR, KICKSTART SEED FUND
Aug, 2009
Agenda
High-Level Overview Kickstart Seed Fund
The Opportunity Fund Strategy Fund Structure
2
High-level concept3
The Mountain West is a innovative and entrepreneurial region with tremendous potential
The Kickstart Seed Fund is a unique seed fund that can help catalyze entrepreneurship in the region through: Aligning key ecosystem participants Supplying seed capital Providing investment leadership Educating all participants Facilitating access to follow-on capital and strategic
partnerships
By accomplishing this, Kickstart Seed Fund will create outsized strategic and financial rewards for all participants
3
Strong Partner is critical to successKey role in communityTrusted agentLong history of exitsThird FundManages front and back end
Economics don’t work wellVenture Capital is sitting at Table
vSpring Overview4
Traditional Funding Continuum5
SEED/START-UPFUNDING
DEVELOPMENTFUNDING
EXPANSIONFUNDING
OPPORTUNITYDEVELOPMENT
CONTINUEDGROWTH
ANGELS, FOUNDERS & SEED FUNDS
VENTURE CAPITAL – GROWTH EQUITY
PE - PUBLIC MARKETS
VALUATIONS INCREASE
BUSINESS RISKS DECREASE
MENTORING NEEDS DECREASE
$5M-20M$500K-5M$50K-500K >$20MSweat
Opportunity6
Rocky Mountain Innovation
Regional innovation clusters in
Management Software, Internet and
Communications, and Life Sciences
15,000 technology companies,1
300 public technology companies2
Over $16B in total R&D spending3
Well-funded research universities
in region
7
Source: 1. US Economic Census, 2002 2. Credit Risk Monitor Website (www.crmz.com) 3. AAAS Survey, 2005 (www.aaas.com)
Startup creation from universities
8
Since 2004, schools in UT, AZ and NM are creating startups at record levels
Source: AUTM
Startups created from licensed university technology by year
Top start up creation universities
9
In 2006, University of Utah was 2rd in the nation in startups created from licensed technology
Source: AUTM
Startups created from licensed university technology
The Case for University Spin-Outs
10
1. More likely to have large outcomes• Go public at 114x the rate of other startups
2. Less likely to fail
Rate of Going Public Failure Rate
Source: National Council Of Entrepreneurial Tech Transfer
.07%
History of success for University spinouts…
11
Kickstart Seed Fund12
R&D relationships
15-20 Seed Companies
5-10 VC-backed Startups
Fund I ~ $10MM of seed capital
Post- Bubble Seed Capital13
Source: Venture Source, NASVF
Seed Capital hasn’t recovered14
Regional Gap in Seed Funding15
Investments in UT and NM since 2003
Source: Venture Source, Utah Angels
Bridging the Technology Commercialization Gap
16
R&D Institutions Mission Commercial Sector
Basic Research Applied R&D BusinessDevelopment
Full-ScaleCommercialization
• Early-Stage Capital• Market Insight• Human Capital
Kauffman FoundationKauffman Foundation
Kickstart Ecosystem Alignment17
Capital, value add, syndication
Technology transfer, student opportunities, economic development
Deal flow, “clean” deals
Deal flow, economic alignment, coinvestment and follow-on rights
Deal flow, outsourced R&D, executive involvement & education
Financial Investor
s
Kickstart – Aligning Utah’s Ecosystem
18
University Alignment19
Value to the students
Kickstart Seed Fund Class vSpring/ Kickstart Seed Fund has partnered with BYU/ Nathan
Furr to create a innovative new class to prepare students to actively participate with the fund in due diligence/ working with seed-stage companies
Internships vSpring/ Kickstart Seed Fund operates a summer intern
program of 25+ students. Including three international internships this year.
Entrepreneurship KSF actively sponsors and supports every business plan
competition Create an information marketplace that actively connects the
right talent and technology in our network
20
Fund Strategy21
Kauffman Study: Mitigating Risk
Strategic Choices Due diligence: venture capital-
style due diligence pays off
Experience: engaging individual with direct industry experience
Participation: High participation is interacting with the company 1 or 2 times per month, Low is 1-2 times per year
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1HIgh due diligence was defined as > 20 hours spent
Source: Kauffman Study: Returns to Angel Investors in Groups, 2007
Average Return Impact
High1 due diligence: 5.9X
Low due diligence: 1.1X
High experience vs. low experience nearly 2X
improvement:
High participation: 3.7X
Low participation: 1.3X
Potential Portfolio Composition
0123456789
Clean Tech Software/ Internet Life Sciences
# of
Com
pani
es
Sample 20 deal Portfolio By Stage and Sector
Early-StageSeedCommercialization
23
Deal Types24
Fund Structure25
The Fund Structure26
Kickstart L.P.
Kickstart, LLC
Investment
Committee
Investors (LPs)
GP LPs that invest > $1 MM
LPs that invest > $.5 MM
Invested Capital
Management Fee
ROIC
Carry
Managing Member
Portfolio Investmen
ts
Non Managing Member
Next Steps
Expansion Model has wide applicability in multiple
regions A local sport Alignment first, collaboration second
Tying this to a new model for commercialization
Exploring right model for addressing multiple regions
27
