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Appendix B. Teri Willey Presentation
Pages 26-40

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From page 26... ... It was formed in 1986 to commercialize certain research results from the University and Argonne National Laboratory (STide 3~. ARCH originally had a $9 minion venture fund and formed and invested in 18 companies from the time it was formed until 1995. Read the entire page →
From page 27... ... Note that both these "exiting" companies were formed in 1988. If you look at our returns and where they come from, in addition to the rare but celebrated equity spikes, we have very predictable and steady growth in our royalty returns from licensing agreements.These royalty returns are based on a portfolio of about 100 active license agreements.These license agreements are most often based on inventions disclosed six to eight years ago. Read the entire page →
From page 28... ... ARCH is unusual in that we take it one step further and sometimes create our own licensees (Slide 7~. In doing this we provide what we cap a "walk-around 1 '' 1 1 round to launch company projects, as well as provide part of the first seed round offunding.We have a strong; relationship with our graduate school of ~� . Read the entire page →
From page 29... ... This is a tuna we use to buv preferred stock when we -- - -- -- -- - -- if r - - -- - -- - - -- invest in the first seed round of financing (Slide 13~.We often find it helpful to use these funds to provide matching funds to our state venture fund. Returns from the preferred shares acquired by ARCH (on behalf of the university) Read the entire page →
From page 30... ... AUTM is an organization of individual professionals.AUTM sponsors programs on licensing principles, marketing, and contract law, with a focus on public benefit (Slides 19 and 20~. 30 Overcoming Barriers to Collaborative Research Read the entire page →
From page 31... ... When my kids ask me what I do for a living, I ted them that my job is to make sure that certain smart people play nice together.We ah have divergent interests, and my job is to help everybody stay focused on where we have a common interest, so we can reach agreements and get this work done if it's worth doing (STide 22~. We are working in a very complex playing field (STide 23~.The amount of litigation is increasing between universities and between university and industry partners regarding patent issues and contract issues.We are subject to more and more public scrutiny. Read the entire page →
From page 32... ... Another ongoing experiment is performance-based compensation. A unique aspect of ARCH is that ah the professionals in the ARCH organization participate in a bonus pool where a share of the returns from licensing and cash from equity go into a bonus pool.This is distributed based on the overall performance of the organization, which includes financial per r rormance and also incorporates goals that the university wants us to focus on, such as faculty service, and facilitating and bringing in industry-sponsored research. Read the entire page →
From page 33... ... We have to have flexibility with staffing.We have to be able to take more of our returns and invest them into making sure the office is staffed and stays staffed. It has been reported that sponsored research at universities yields four times as many patent applications per dollar as corporate research funds spent internally (Slides 31 and 32~. Read the entire page →
From page 34... ... So we have to continue to examine these things in a way that is focused on the principle of ensuring that the research results are commercialized. We have to continue to think creatively about solutions (STide 33~. Read the entire page →
From page 35... ... � Argonne National Labs: - $500M Budget -- Emphasis Environmental, Energy, Physics, Chemistry, Biology, CS Slide 5: Direct Returns from Technology Transfer - 1996 AUTM Survey � 1. Read the entire page →
From page 36... ... Slide 7: What May Set ARCH Apart � Licensing and start-up business emphasis � "Walk-Around-Round" funds � Seed capital availability � Ties to University of Chicago GSB � Entrepreneurial culture and focus of BOD � Self supporting � Compensation System Slide 9: ARCH Process Flow Chart COMME,~I6TIO - RATEGIES \| License to an \| \| License to a non- \| \| Create a start-up \| \| Existing Company\| \|ARCH start-up \| \|andlicensein \| Slide ~ 1: Some Characteristics of our Start-ups � Light initial capitalization � Senior management compensated w/stock � Government co-funded IDEA and SBIR � Outsourcing some R&D � Exit strategy flexible but we like buy out � Licenses into company include royalties, milestones 36 Slide 8: The ARCH Company Start-up Portfolio Estimated Composition and Turn Over Required to Meet Financial Goals ~ 12 - 15 Start-up Projects 3 New Projects _ 4 - 7 Companies Evolve _ 3 Companies "Graduate" added each year each year each year through venous stages of formation \| ~ a cost of about \| 1 350k cost per year each I 2 Companies Exit each year Slide 10: New projects are identified via the prospecting efforts of: � ourlicensingLusiness: � at the UC � at Argonne � our start-ups: � to identify technology that compliments our competencies at other top research institutions � our consulting network: � to identify hot emerging technologies/markets Slide 12: "Walk-Around-Round" via ARCH may include all or part of: � Out of pocket expenses of "S.E. CEO's" � Consulting Fees � Formation Legal Expenses � Rent � Carry on patent expenses - about 30,000/year/company for 2-3 years and does not include cost of ARCH personnel/indirect costs Overcoming Barriers to Collaborative Research Read the entire page →
From page 37... ... ,:~, Slide 17: AUTM A nonprofit professional organization devoted to continuing education to its members, as well as policy makers, in a manner that will enhance the timely commercialization of research results from academic laboratories. Appendix B Slide ~ 8: The Bayh-Dole Act A reliance on rlorl-profit research . Read the entire page →
From page 38... ... Slide 24: Deal Complexity: Intellectual ~ ~ Number of Property ~ Interests Overcoming Barriers to Collaborative Research Read the entire page →
From page 39... ... Slide 25: Industry - University Issues: Ownership and management of I.P. rights Commercialization of research tools Dissemination of information/publication Continuity of research programs Control of direction of research programs Conflicts of interest and commitment Slide 27: The Compete vs. Read the entire page →
From page 40... ... / 14:1996; 441442 Slide 33: Innovation in more than the laboratory Solutions through strong relationships, optimism and creative problem solving Slide 32: $10 Million Invested In University Alliances In Fortune 500 Companies' internal research 22.6 Patents 13.1 Patents Haber E., "Industry and the University," Nature Biotechnolog) / 14:1996; 441-442 Slide 34: Constantly question Consider the criticism and continue to revisit assumptions Slide 36: How we work Slide 35: Embrace ambiguity end \| \| It's afieMoflu7nan endeavor complexity and human behavior How we carry out our business Believe in the paradox and treat one another wiR set the torzefior these important reb~tionships 40 Overcoming Barriers to Collaborative Research Read the entire page →

From page 26...

... It was formed in 1986 to commercialize certain research results from the University and Argonne National Laboratory (STide 3~. ARCH originally had a $9 minion venture fund and formed and invested in 18 companies from the time it was formed until 1995.

Appendix B. Teri Willey Presentation Pages 26-40

Appendix B. Teri Willey Presentation
Pages 26-40