i&E Magazine Spring 2009 by Shannon Carr

Spring 2009

iNNOVATORS

Entrepreneurs

Oklahomaâ&#x20AC;&#x2122;s Advanced Technology Magazine

Actioncam

High-definition camera system takes flight

Capacity for Growth

New reactors sought to expand bio manufacturing business

Economic

Survival of the Fittest Recession challenges entrepreneurs and investors

Research Capital Surprising demand for EDGE awards ActionCamâ&#x20AC;&#x2122;s P.J. Bennett.

C o n t e n t s

Client Focused / Instruction Driven / Technology Empowered

iNNOVATORS

Entrepreneurs

Oklahomaâ&#x20AC;&#x2122;s Advanced Technology Magazine

C O N T E N T S Introduction

About i2E

i & E Profiles uvizz NexGenData

6 7

Update Cytovance

Economic Development EDGE Program: Demand Exceeds Expectations Entrepreneurs ActionCam High-definition camera takes flight

Tulsa Tech assists with...

Tulsa Tech has been helping businesses and their workforce for over forty years. Through the combined efforts of our Business & Industry Services department and full-time/evening/weekend class offerings, Tulsa Tech has played a key role in economic development efforts, both locally and statewide through the CareerTech system.

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Industry Training --Human Resources --Manufacturing --ISO & Quality --Environmental, Health & Safety sAdult & Career Development --Open enrollment business-related & short courses

For more information contact Business & Industry Services at 918.828.5400 or visit our website at www.tulsatech.edu

Access to Capital VC Industry Adjusts to Lean Times MyGov- TBFP Payback

18 21

Resource A scenario of two companies

Partners

Calendar of Events

sSmall Business Assistance --Business development & entrepreneurial services --Small business management/self-employment training programs sFull-time Programs --Providing an on-going pipeline of technically competent, work-ready, new & incumbent employees. College credit available for most programs. Open to high school students & adults.

innovators

Cover ACTIONCAM

&Entrepreneurs

is produced by i2E, Inc., manager of the Oklahoma Technology Commercialization Center. For more information on any content contained herein, please contact i2E at 800-337-6822. ÂŠ Copyright 2009 i2E, Inc. All rights reserved.

Cytovance

EDGE Endowment Awards

C o n t e n t s

Client Focused / Instruction Driven / Technology Empowered

iNNOVATORS

Entrepreneurs

Oklahomaâ&#x20AC;&#x2122;s Advanced Technology Magazine

C O N T E N T S Introduction

About i2E

i & E Profiles uvizz NexGenData

6 7

Update Cytovance

Economic Development EDGE Program: Demand Exceeds Expectations Entrepreneurs ActionCam High-definition camera takes flight

Tulsa Tech assists with...

sCustomized

Industry Training --Human Resources --Manufacturing --ISO & Quality --Environmental, Health & Safety sAdult & Career Development --Open enrollment business-related & short courses

For more information contact Business & Industry Services at 918.828.5400 or visit our website at www.tulsatech.edu

Access to Capital VC Industry Adjusts to Lean Times MyGov- TBFP Payback

18 21

Resource A scenario of two companies

Partners

Calendar of Events

innovators

Cover ACTIONCAM

&Entrepreneurs

Cytovance

EDGE Endowment Awards

A B OUT

i 2 E

A B OUT

i 2 E

i2E TEAM a MESSAGE FROM THE PRESIDENT Welcome to the spring edition of innovators & Entrepreneurs, which I am confident will enhance Oklahoma’s reputation as a state built and populated by innovators. You need only to turn to our cover story beginning on Page 14 to read about one of the newest innovations developed in our state. Actioncam is a mobile camera system that is attracting the attention of broadcast networks nationwide. Suspended by five computer-controlled cables and featuring a high-definition video camera, Actioncam provides unique angles and perspectives to sports television viewers. I had the pleasure to watch this hightech camera in action earlier this year at a Tulsa 66ers NBA Developmental League Tom Walker basketball game at the SpiritBank Center in Bixby. Let me assure you that it can race over the court as fast as the players, keeping up with the action from more than 22-feet above the floor. Actioncam is an OCAST Technology Business Finance Program Award recipient and is prepared for a commercial launch of its technology. More innovators are found in other companies we profile in this edition. Tulsa’s NexGenData, Oklahoma City-based uVizz and Ada-based myGov – each identified a problem and created a solution. My hope is that their stories will inspire others to follow with their own innovative companies. For instance, myGov discovered a pent-up demand for its Web-based licensing and permitting applications for municipal governments. Almost 30 cities have signed on as clients merely from word-of-mouth advertising. The new business has allowed myGov to begin repayment of its OCAST TBFP, which will help provide funding for the next generation of Oklahoma innovators. Meanwhile, a turbulent and uncertain economy has emerged as a new dynamic to challenge the business savvy of Oklahoma business owners. What does that mean in terms of access to capital over the next 18 to 24 months for the state’s community of tech-based entrepreneurs? We went right to angel investors and venture capitalists to gain some perspective, talking to industry professionals inside Oklahoma and beyond the state’s borders about the recession and its impact on access to capital. You will be intrigued by how they assess the economic landscape. The message is one of hope, accompanied by solid advice from experts to help entrepreneurs survive the recession. I’m proud to lead a team of professionals who are helping these innovators and entrepreneurs achieve their dreams of commercial success. Their work is reflected in the pages that follow. Enjoy.

The i2E management and staff is composed of professionals with extensive experience in technology commercialization, technology transfer, business development, venture investing, finance, organizational management, and marketing. Tom Walker

President and Chief Executive Officer

David Thomison

Vice President, Enterprise Services

Rex Smitherman

Vice President, Strategic Development

Tom Francis

Vice President, Investment Funds

David Daviee

Vice President, Finance and Human Resources

Sarah Seagraves

Director, Marketing and Events

Richard Gajan

The Oklahoma Seed Capital Fund (OSCF), an innovative, public-private partnership established in 2007, is a $7 million venture capital fund that provides seed and start-up stage equity financing to small, advanced technology, Oklahoma-based companies. In 2008, the i2E Angel Fund and the SeedStep Angels group was created to meet the early stage funding needs of these emerging companies. Also, the Entrepreneurial Leadership Program, a statewide fellowship program, was developed to match start-up technology businesses with talented students to further commercialization projects. The success of all these programs, managed by i2E, provide Oklahoma entrepreneurs, college students and researchers with the knowledge, skills and access to capital for turning innovations into enterprises………i2E.

Richard Rainey

Director, Enterprise Services Director, Enterprise Services

Jim Rogers

i2E BOARD of DIRECTORS

Casey Harness

Steve Cropper, Chairman Roy Williams, Vice Chair Mike LaBrie, Secretary

Commercialization Associate

Scott Thomas

Robert Barcum

Steve Cropper

Merl Lindstrom, PhD

Craig Shimasaki, PhD

Entrepreneur & Investor

Investor

ConocoPhillips, Inc.

InterGenetics, Inc.

Grady Epperly

Howard Barnett, Jr.

Philip Eller

Dan Luton

Sheri Stickley

TSF Capital, LLC

Eller Detrich, P.C.

OCAST

Jim Stafford

Sean Bauman, PhD

Marilyn Feaver

Michael Neal

Immuno-Mycologics, Inc.

Southwestern Oklahoma Impact Coalition

Tulsa Metro Chamber

D.C. Bass & Sons Construction Co.

Barbara Hisey

iThryv

C. James Bode

David Hogan

Bank of Oklahoma, N.A.

Hogan Taylor, LLP

Michael Carolina

Philip Kurtz

Network Administrator Marketing Specialist

Communications Specialist

Scott Thomas Network Administrator

Michelle Odom

Meeting and Event Specialist

Kelly Ruyle

Administrative Assistant Administrative Assistant

www.i2E.org i2E was created in 1997 in response to the Oklahoma Center for the Advancement of Science & Technology’s (OCAST) initiative to establish a center to support technology commercialization in our state.

i2E was created in 1997 in response to the Oklahoma Center for the Advancement of Science and Technology’s (OCAST) initiative to establish a center to support technology commercialization. A year later, a program was formed to assist researchers, inventors, entrepreneurs and companies to turn advanced technologies and high-tech start-up companies into exceptional business opportunities for Oklahoma. This program is the Oklahoma Technology Commercialization Center (OTCC). This initiative was taken even further when the OCAST Technology Business Finance Program (TBFP) was created to meet the capital needs of early technology-based enterprises. In 2005, i2E received a grant to manage an annual statewide business plan competition for college students with cash prizes over $100,000. The Donald W. Reynolds Governor’s Cup was designed to encourage students to act upon their ideas and to promote the development and commercialization of technologies being discovered in our universities.

Director, Enterprise Services

Cindy Williams

Tom Walker i2E CEO and President

ABOUT

Bob Berry

OCAST

Hiram Champlin Chisholm Trail Broadcasting

Bob Craine TSF Capital, LLC

Retired Executive

Benefit Informatics

Hershel Lamirand, III Oklahoma Health Center Foundation

Gary Nelson David Pitts Stillwater National Bank

Oklahoma Department of Commerce

Kay Wade

Logan City Economic Development Council

Rainey Williams, Jr. MARCO Capital Group

Roy Williams

The City of Tulsa

Greater Oklahoma City Chamber of Commerce

Steven Rhines

Dick Williamson

Amy Polonchek

The Noble Foundation

Richard Rush The State Chamber

Darryl Schmidt BancFirst

TD Williamson, Inc.

Duane Wilson LDW Services, Inc.

Don Wood NEDC

A B OUT

i 2 E

A B OUT

i 2 E

President and Chief Executive Officer

David Thomison

Vice President, Enterprise Services

Rex Smitherman

Vice President, Strategic Development

Tom Francis

Vice President, Investment Funds

David Daviee

Vice President, Finance and Human Resources

Sarah Seagraves

Director, Marketing and Events

Richard Gajan

Richard Rainey

Director, Enterprise Services Director, Enterprise Services

Jim Rogers

i2E BOARD of DIRECTORS

Casey Harness

Steve Cropper, Chairman Roy Williams, Vice Chair Mike LaBrie, Secretary

Commercialization Associate

Scott Thomas

Robert Barcum

Steve Cropper

Merl Lindstrom, PhD

Craig Shimasaki, PhD

Entrepreneur & Investor

Investor

ConocoPhillips, Inc.

InterGenetics, Inc.

Grady Epperly

Howard Barnett, Jr.

Philip Eller

Dan Luton

Sheri Stickley

TSF Capital, LLC

Eller Detrich, P.C.

OCAST

Jim Stafford

Sean Bauman, PhD

Marilyn Feaver

Michael Neal

Immuno-Mycologics, Inc.

Southwestern Oklahoma Impact Coalition

Tulsa Metro Chamber

D.C. Bass & Sons Construction Co.

Barbara Hisey

iThryv

C. James Bode

David Hogan

Bank of Oklahoma, N.A.

Hogan Taylor, LLP

Michael Carolina

Philip Kurtz

Network Administrator Marketing Specialist

Communications Specialist

Scott Thomas Network Administrator

Michelle Odom

Meeting and Event Specialist

Kelly Ruyle

Administrative Assistant Administrative Assistant

Director, Enterprise Services

Cindy Williams

Tom Walker i2E CEO and President

ABOUT

Bob Berry

OCAST

Hiram Champlin Chisholm Trail Broadcasting

Bob Craine TSF Capital, LLC

Retired Executive

Benefit Informatics

Hershel Lamirand, III Oklahoma Health Center Foundation

Gary Nelson David Pitts Stillwater National Bank

Oklahoma Department of Commerce

Kay Wade

Logan City Economic Development Council

Rainey Williams, Jr. MARCO Capital Group

Roy Williams

The City of Tulsa

Greater Oklahoma City Chamber of Commerce

Steven Rhines

Dick Williamson

Amy Polonchek

The Noble Foundation

Richard Rush The State Chamber

Darryl Schmidt BancFirst

TD Williamson, Inc.

Duane Wilson LDW Services, Inc.

Don Wood NEDC

P r o f i l e s

T NexGenData, LLC UVIZZ Marketing Director Matt Johnson Year Started: 2008 Number of employees: 6 Office Location: Edmond, Oklahoma Product or technology: A social network advertising platform that eliminates the problem of “click fraud” that has plagued the online advertising industry. Market: The social network users, of which hundreds of millions are registered at online networks such as Facebook, MySpace, Twitter and popular services. Future Plans: We want to create revenue-sharing partnerships with blogging services, search engines and other emerging Web 2.0 companies. The nature of our platform allows us to work seamlessly with other social networks. Funding: More than $100,000 from local investors; $100,000 OCAST Technology Business Finance Award Successes: Recognized by the Journal Record as a 2009 Innovator of the Year “On the Brink” honoree. We plan to launch the full UVIZZ service in June 2009. Website: www.uvizz.com

att Johnson thought he had discovered the Holy Grail of online advertising about a decade ago: search engine ads targeted at specific audiences. Johnson sold measuring tools online and paid a fee to the search engines every time someone clicked on his online ad placed on a search page. “For a very low cost I was able to reach people who wanted to buy the products I sold,” Johnson said. “The advertising campaign was easily managed and my sales dwarfed my expenses. Profits were high and I felt like a genius.” But a then-new phenomenon upended his vision of online advertising utopia: click fraud. People who were not potential customers — possibly business competitors — began clicking the ads at an alarming rate, driving up his cost of doing business. “Ever since that day I’ve felt strongly that Internet advertising needs to be ‘transparent,’” he said. “Advertisers need to know who’s clicking on their ads and driving up the costs.” Click fraud has continued to plague the online advertising industry, with Click Forensics estimating the overall click fraud rate was 17.1 percent in the fourth quarter of 2008. That’s why uVizz came into being last year. Johnson and three founding partners — Val Popov, Filip Koutzev and Mike Katchourine – brainstormed a solution to the problem of click fraud and created a company to develop it. The big idea behind uVizz is targeted advertising created by the registered users of social networks such as Facebook,

Co-Founder MySpace and other popular online communities. The uVizz team has developed a platform in which advertisers can launch an online ad campaign with a specific budget and the users will actually create video advertising that will be forwarded to and viewed by their online friends. Both the creators and referrers of the ads earn money for participating. “We feel like what we’ve done here is really put the users in control,” Johnson said. “It is targeted ad delivery, and the advertisers really stand to benefit from it.” uVizz used a $100,000 OCAST Technology Business Finance Program award and matching funds to support development of its technology. The company has maintained a low-profile while working toward beta testing in May and a June launch of its new advertising platform. Along the way, the founders have developed a close bond as they moved their concept toward commercialization. “After 12 months, the four of us are really great friends and work well together,” Johnson said. “We all share that ‘team mentality.’” uVizz is currently approaching potential advertisers and ramping up plans to engage users on various social networking services for the summer launch of its platform. “It’s going to be good for advertisers because they are going to put profit back into their company through targeted advertising,” Johnson said. “They will know exactly who is viewing the ads created for them by registered social network users.”

George Schaefer Year Started: 2008 Number of employees: 4 Office Location: Tulsa, Oklahoma Product or technology: NexGen Navigator, a software solution for major enterprises that allows the company to quickly and seamlessly access the full range of customer information. The software will save companies millions by enabling immediate solutions to customer problems as well as better asset management. Market: Large enterprises with millions of customers and multiple product offerings. The immediate focus is on banking and finance, telecommunications, and healthcare. Future Plans: Sign on our second Beta Customer and close on our first paying customer within the next couple of weeks. The current round of equity fundraising will allow us to hire additional programmers and expand NexGen Navigator’s capabilities. Funding: Raised over $100,000 in equity investment and received an additional $100,000 in an OCAST Technology Business Finance Award. Currently, we are working to close our Series A round. Successes: Successfully completed first user installation with True Digital Security and a state agency. We were recognized by the Journal Record as a 2009 “On the Brink” honoree. And we recently signed a reseller partner, Government Solution Providers, for Federal Government customers. Website: www.nexgendata.com

he software business has been the tie that binds the four founding partners of Tulsa-based NexGenData, LLC The four — Steve Dotolo, Devin Venable, Scott Kelly and George Schaefer — all worked for another Tulsa-based software company called Visionael Corp. in the 1990s and early 2000s. Eventually, the four software veterans went their separate ways, working for other high-tech firms. “We all kept in touch and looked for opportunities to work together,” Schaefer said. “Scott Kelly and I began discussing concepts in mid-2007, and we brought Devin Venable and Steve Dotolo into discussions in early 2008.” The quartet identified a problem that has vexed many corporations over the years: data is stored in company computer servers yet is largely inaccessible to employees. Corporate America loses millions of dollars monthly trying to access and manipulate critical data that can’t easily be accessed. Why? Key information is stored in systems that don’t communicate or interrelate with each other. Business processes are slowed; opportunities are lost. So, NexGenData was created to address the issue. The company developed a unique application — the NexGen Navigator — that looks and behaves much like a traditional search engine. “NexGen Navigator goes far beyond simple keyword searches, however, by providing advanced data navigation, tagging, consolidated views through data mashups and data integrity rules,” Schaefer said. “NexGen Navigator allows staff to find information wherever it resides in the organization, and makes this information accessible as Web services that can be used by other systems and applications.”

Schaefer described the NexGen Navigator as enabling a “Corporate Wide Web.” In other words, information is no longer held hostage by a corporation’s collection of “silos,” applications and systems that perform a function but do not support the broader corporate needs. The inability to access information quickly and in an easy-to-read format costs companies both in terms of dollars and in worker hours. NexGenData recently was awarded $100,000 OCAST Technology Business Finance Program funding that it is using to carry its technology from prototype to software that is ready to install in realworld customers. The NexGenData team possessed outstanding skills to develop the technology, yet was challenged by the prospect of accessing critical capital and developing a business plan “None of us were experienced in the process of raising capital — finding investors, creating business plans and investor presentations, structuring business and so on,” Schaefer said. “That’s why i2E and the resources and services it provides have been so important to us.” The NexGen Navigator has been installed with the first customer, which will serve as a pilot installation. The company plans a commercial release by late spring and has identified telecommunications, government, finance, energy and health care industries as target markets for its product. “The business and investment community here in Tulsa has been absolutely wonderful in their willingness to guide us and help us through a new and difficult process,” Schaefer said. “We are thrilled to be a part of the business community in this city and state, and we are committed to growing in Oklahoma.”

P r o f i l e s

U p d a t e

“ I’m seeing the competitive advantage of being located in the center of the United States.” Darren Head, President and CEO

Bio Manufacturing: High Growth Forecast D

arren Head leaned over a color-coded printout that showed sales projections for Cytovance Biologics, the Oklahomabased biopharmaceutical contract manufacturing organization that develops cell lines for human clinical trials using two reactors that have 100-liter and 500-liter capacities. His finger traced a line atop a bright blue shaded area that rose from bottom left to upper right at a steep angle. It ended in a number: $65 million. That represents the potential annual revenue if Cytovance installs a 3,000-liter reactor at its cGMP manufacturing facility on the west end of the Presbyterian Health Foundation Research Park in Oklahoma City. The Challenge for Head, Cytovance CEO: raise the $8 to $10 million in capital it will take to buy and install a piece of equipment that will greatly increase

Cytovance’s capacity to a point where it could produce cell lines at a commercial level. “We are in the process of trying to raise money for an 800-liter reactor within the facility,” he said. “It will cost roughly $800,000 to $1 million. My biggest fear is turning people away because we don’t have capacity.” Cytovance weathered a long – and financially lean – build out of its 45,000 square foot plant, for which ground was broken in 2004. The company bridged its own “Valley of Death” while the plant was built and validated with an infusion of $17 million from a trio of angel investors. Cytovance has emerged as a major player in Oklahoma’s biotechnology sector, employing 50 people in high paying product development and engineering jobs and signing collaborative deals with local

companies. This past October, Cytovance partnered with Hyalose and University of Oklahoma Health Sciences Center scientist Dr. Paul DeAngelis in a research proposal that was awarded more than $1.2 million over two years in EDGE Endowment funds. The project includes production of sugar-based therapeutics. The funding will pay for equipment to produce the new sugar-based molecules. In January, Cytovance and Oklahoma City-based Selexys Pharmaceuticals announced a major contract in which Cytovance will provide product development and manufacturing services. Selexys has two drug candidates in development that show promise in treatment of Crohn’s and sickle cell diseases. “These are full-blown projects for the facility,” Head said. “By the end of the year one should be in the 500-liter reactor.

These projects are worth several million dollars.” In developing a growing business for its contract manufacturing services, Cytovance is dispelling some stereotypes about its Oklahoma location. It is proving that contract manufacturing of therapeutic proteins, cell line development, cell banking and product development for the life sciences industry can be successfully accomplished here. “We’ve heard a lot of clients talk about the proximity to being in the Midwest, that they have a great option without having to fly to the two coasts,” Head said. “I’m actually starting to see the competitive advantage of being located in the center of the United States.” Head turned a page on the list of

financial projections he was holding and pointed to a new set of numbers: employees. “We have seen a lot of success in Cytovance the last six to eight months, but looking ahead to 2010, by adding a 3,000-liter reactor and more product development staff and management, we plan to have about 140 people here in the park,” he said. And without the expanded capacity? “We are not going to hit that home run.” On the bright side, he said, “We have a state-of-the-art manufacturing facility that is comparable with anything in the world right here in Oklahoma, in the research park and we plan to let a lot of people know about it.”

U p d a t e

“ I’m seeing the competitive advantage of being located in the center of the United States.” Darren Head, President and CEO

Bio Manufacturing: High Growth Forecast D

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FIRST WINNERS OF EDGE FUNDING The EDGE Policy Board awarded almost $12 million in to five projects in the first round of funding last October from the $150 million EDGE Endowment. Here are the five winning projects and the two-

The winning proposals covered a broad spectrum of industries, including aerospace, biotechnology and energy.

year funding awarded:

Category:

FIRST EDGE

Biotechnology Project: Oklahoma glyco-

ENDOWMENT

manufacturing facility: going global with Next-gen sugar-based therapeutics -Two companies, Hyalose and Cytovance Biologics will produce sugar-based therapeutics for evaluation, sale and licensing. (Dr. Paul DeAngelis, principal investigator, Hyalose LLC and the University of Oklahoma Health Sciences Center).

AWARDS: Demand Exceeds Expectations

(EDGE) Economic Development Generating Excellence

Funding — Year 1: $687,609 Funding — Year 2: $550,002 Project: Nanoparticle-mediated drug

xpectations were underwhelming when the EDGE Policy Board issued its first request last year for funding proposals from Oklahoma researchers and technology-based entrepreneurs from the EDGE Endowment Fund. Dr. Paul Risser, executive director of the Policy Board, anticipated that perhaps a couple dozen five-page “pre-proposals” might trickle in before the mid-summer deadline. Then something remarkable happened. Pent-up demand for funding for research and development projects by Oklahoma researchers and entrepreneurs unleashed a torrent of proposals, surprising Risser and the seven-member EDGE Policy Board. “What’s astonishing to me is we had 94 pre-proposals,” Risser said. “I thought we would have 25 or 30, and we had 94.” The $150 million EDGE Endowment was created by the state

legislature to provide an ongoing funding source for high-tech research and development projects that will build the state’s technology-based economy and create high-paying future jobs. EDGE is an acronym for Economic Development Generating Excellence, and has its beginnings in a series of statewide brainstorming sessions commissioned by Gov. Brad Henry in 2003. The Governor’s EDGE Committee proposed building a $1 billion endowment to turn Oklahoma into the “Research Capital of the Plains.” The funds, earnings from the EDGE endowment certified by the EDGE Board of Investors, are administered by EDGE Policy Board, for which the Oklahoma Center for the Advancement of Science and Technology is the fiscal agent. The EDGE Policy Board, for which Risser is the executive director, was charged with selecting the first projects to be funded by earnings from the endowment. The board was mandated with the

task of choosing projects that promised the most impact on the state’s future economy through job creation or revolutionary technology development. “Those pre-proposals came from all across the state,” Risser said. “We had proposals from Lawton, for example, from Enid, from Ponca City. I think the fact that the whole state got involved was a very good signal.” The Policy Board ultimately selected proposals from 18 of the 94 pre-proposals, then with the help of a 9-member advisory board and out-of-state technical advisers, winnowed that down to five finalists. The board heard oral presentations from the fi-

nalists in October and awarded them all a combined $12 million in two-year grants awards. The winning proposals covered a broad spectrum of industries, including aerospace, biotechnology and energy. The awardees include new therapeutics for age- and diabetic-related eye disease, the applications of novel sugar-based therapeutics, high-tech prosthetics manufacturing, wind energy development and new engineering techniques for replacement parts for aging aircraft. All the winning proposals included business applications in addition to pure research and development, meaning that the

delivery for the treatment of diabetic retinopathy and age-related macular degeneration - The Charlesson company will develop and produce nanoparticle-mediated drugs for injection into the eye to treat macular degeneration and other eye diseases. (Dr. Jian-xing Ma, principal investigator, Charlesson LLC).

Funding: Year 1 — $1,382,234 Funding Year 2 — 1,498,797 Continued on page 12

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The winning proposals covered a broad spectrum of industries, including aerospace, biotechnology and energy.

year funding awarded:

Category:

FIRST EDGE

Biotechnology Project: Oklahoma glyco-

ENDOWMENT

AWARDS: Demand Exceeds Expectations

(EDGE) Economic Development Generating Excellence

Funding — Year 1: $687,609 Funding — Year 2: $550,002 Project: Nanoparticle-mediated drug

Funding: Year 1 — $1,382,234 Funding Year 2 — 1,498,797 Continued on page 12

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potential is high they will result in new mined from Endowment investment earntechnology jobs for Oklahoma. ings, Risser estimated that it would have “What is really nice about these five about $6 million to award this year. And projects is they are all a little different, the board is not limited to just grants. It they all use different technologies,” Risser can award grants, matching grants or even said. “And they all will create new jobs, awards that are considered loans. which is just exactly what EDGE is sup“If we fund a private company and posed to do.” that company becomes very successful, Dr. Scott Greene, a University of Okla- one might argue that some of that money homa geography professor and director of ought to come back to EDGE to reinvest,” the Oklahoma Wind Initiative, rolled re- Risser said. search, job creation and a new technologyDespite the economic turbulence enbased company into one EDGE proposal dured by both the state and national econthat involved both OU and Oklahoma omies in the past year, legislative commitState University and private companies ment to the EDGE Endowment appears such as Norman-based Weather Decision to be strong, he said. Gov. Henry has said Technologies. that funding the EDGE endowment is the Entitled the Renewable EDGE, “No. 1 thing we can do” to grow the state’s Greene’s proposal won two-year funding of future economy. about $1.75 million. “I think that people, while they might “We’ve got what we think is a better not all understand it to the same degree, mouse trap in terms of they all are recognizour ability to develop ing how important models and tools to Gov. Henry has said technology is,” Rishelp developers deterser said. “I would that funding the mine both on a macro say that 10 years ago EDGE endowment scale what area you people wouldn’t have should be targeting, seen the connection is the “No. 1 thing but also on a micro between research we can do” to grow and technology and scale exactly where you should put wind the economy. But the state’s future turbines,” Greene said. now, new technoleconomy. “Our plan is to have a ogy, whether it’s your spin-off company foiPhone or whatever cused on this wind resource it is, people can see assessment, wind-siting component. Zeph- the connection between research and the yrBox is what we’re calling it.” economy.” Eventually, the wind industry is expectSo, when will Oklahoma be able to take ed to employ thousands of Oklahomans, the legacy built by the EDGE Endowment and Greene hopes that ZephyrBox will and claim the title of “Research Capital of some day employ about two dozen highly the Plains?” educated, highly paid scientists. “Who knows when we will be the Re“These are kids who are going to (most search Capital of the Plains or even who likely) be OU graduates, and that’s good decides who is the Research Capital of the because it keeps Oklahomans in Oklaho- Plains,” Risser said with a laugh. “But it is ma,” he said. certainly a nice theme to have in the sense Now EDGE Policy Board is preparing to that it recognizes how important research do it all over again with the second round is to our economy, especially technologyof selecting proposals for EDGE Endow- based economic development. ment grants. The process remains largely “Clearly, the more we invest the betthe same, except that the EDGE board ter chance we have of really being able to has added another category – information claim the title of Research Capital of the technology and telecommunications – Plains.” from which it is seeking proposals. While the final dollar totals that the EDGE board can award will be deter-

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Project: Restored education, science and technology for orthopedic rehabilitation and economic development (RESTORED) - OrthoCare Innovations will develop the Limb Restoration Institute and large manufacturing capacity to produce advanced prosthetic devices. (Dr. David Boone, principal investigator, OrthoCare Innovations LLC).

Funding: Year 1 — $800,000 Funding Year 2 — $800,000

Category: Weather Science Project: The renewable EDGE - The project will assist the wind energy industry in Oklahoma and elsewhere by producing high-precision wind power assessments and forecasts in a highly integrated information system. (Dr. J. Scott Greene, principal investigator, University of Oklahoma).

Funding: Year 1 — $996,395 Funding Year 2 — $753, 424

Category: Aerospace Project: Shape engineering toward advanced manufacturing (SEAM) - By using innovative hardware and software, the project will offer advanced testing and manufacturing of replacement parts to military aviation and the commercial aerospace industry. (Dr. Shivakumar Raman, principal investigator, University of Oklahoma).

Funding: Year 1 — $1,500,000 Funding Year 2 — $1,500,000

Source: EDGE Policy Board

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Funding: Year 1 — $800,000 Funding Year 2 — $800,000

Funding: Year 1 — $996,395 Funding Year 2 — $753, 424

Funding: Year 1 — $1,500,000 Funding Year 2 — $1,500,000

Source: EDGE Policy Board

A B OUT

i 2 E

E n t r e p r e n e u r s

You Will See the Action Like You’ve Never Seen It Before

ACTIONCAM No sight unseen by sports fans with new ‘flying’ camera system

Actioncam founder and CEO P.J. Bennett has developed a suspended, high-definition camera system that is both fast and agile, bringing new perspectives to viewers of televised sporting events.

omething unusual was in the air at a Tulsa 66ers basketball game in late February at the SpiritBank Event Center in Bixby. And it wasn’t a basketball. Suspended 22 feet above the court by five cables was a high definition camera that swooped in on the action as it moved up and down the court in the NBA Developmental League game. The camera raced along with the players, unobtrusive, but focused closely on the action. It provided Internet viewers at www. nba.com and the NBA cable television channel a new perspective on the game. Meet the Actioncam, which promises to revolutionize the way that basketball games and a myriad of other sporting events are broadcast and viewed. Almost three years in development, the Actioncam is a product of its namesake Tulsa company, founded in 2007 by its Chief Executive Officer, P.J. Bennett. Bennett is an electrical engineer and veteran of the flying camera industry. He left his previous company to implement technology that television network producers and directors were asking for in a new system. Flying camera technology has been used for almost a decade by network broadcasters at major college and NFL football games and other sports venues. “I wanted to take it to the next level,” Bennett said as he sat at a table in the

concourse of the Spirit Center. “Producers and directors were asking ‘why can’t you be faster? Why can’t we have a more stable shot? Why can’t you move the camera into this position? Why do we have to provide you with all this support?’” The Actioncam answers all those questions, Bennett said. It is fast, stable, precise, and able to turn and shoot action from almost any angle. The camera itself is packed with more technology than any other industry competitor. So how does Actioncam get the right shot at the right time? The secret is in the high-tech software and Actioncam’s engineering that resulted in a system in which an HD camera is suspended by five computer-controlled cables. The camera unit is filled with electronics that allow operators to plot its precise location in “3-D” space as it races along at speeds up to 50 miles per hour.. In addition, the fifth cable truly distinguishes the Actioncam from Skycam and Cablecam, two major competitors that currently provide most of the aerial shots at major sporting venues. That fifth cable delivers the high definition signal to the television production unit via fiber optics and also ensures that the camera won’t fall if one of the four maneuvering cables breaks. “Our focus was to make sure that we have a system that has no chance of hitting the ground,” Bennett said. “We have this Continued on page 16

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You Will See the Action Like You’ve Never Seen It Before

ACTIONCAM No sight unseen by sports fans with new ‘flying’ camera system

Actioncam founder and CEO P.J. Bennett has developed a suspended, high-definition camera system that is both fast and agile, bringing new perspectives to viewers of televised sporting events.

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The Actioncam focused on the action of a Tulsa 66ers basketball game on the court below at the SpiritBank Event Center in Bixby. Continued from page 15

redundant safety cable so that even if we break one of the lines our camera will go up instead of down.” In the indoor Spirit Center, the cables were connected to arena supports high above the floor, ensuring the HD Panasonic camera did not intrude on the court as the game was played. Bennett worked for the company that owned Skycam before leaving to create Actioncam. He then hired Alex MacDonald, a former co-owner and codeveloper of Cablecam, as system design consultant. “My emphasis is on safety,” MacDonald said as he sat in a booth high above the Spirit Center arena the day before the camera’s first live basketball game test. “There are a lot of things I didn’t have a chance to implement at Cablecam,” MacDonald said. “Building a system from the ground up, having done one already, has enabled me to make suggestions toward safety, toward testing, procedures. These guys are doing it right.” MacDonald served as “pilot” for the

Actioncam basketball debut at the 66ers game. He controlled the position of the camera using a pair of joysticks on a console that looked very much like a video game controller. Sitting next to MacDonald was the camera operator, who also used joysticks to control the HD camera and supply the shots that the director called for throughout the game. At this game, the camera operator was Garret Cook, a senior software engineer who also wrote the software that runs the Actioncam system. That feat took about a year. “I can tell you that’s a staggering accomplishment,” MacDonald said of Cook’s software engineering ability. “In my past, I hired teams of people to do this.” Actioncam’s promise that it will run faster and provide the camera angles demanded by television directors has already won interest from networks that own major contracts with professional leagues. An executive from Turner Broadcasting

flew into Tulsa to watch the camera in action at the 66ers game in late February. Other networks also have indicated they want to see it fly. “They know these systems and they know what they can do and what they can’t do,” Bennett said. “When I tell them we’ve solved that problem, we can be faster, we can be more agile, we can support on-field graphics, they say, great, let’s come see it.” Turner’s TNT national cable network broadcasts National Basketball Association games throughout the season and into the playoffs. Actioncam built a 20,000-square-foot facility in Tulsa that includes about 3,000 of office space with the rest of it proving room to fly the camera as the system was tested. The Actioncam made its first trial run outside the test facility at a local high school football game last fall. Actioncam is designed to be a “turnkey” rental solution for sport networks. The company will install its camera system at a sports venue, provide engineers and camera operators and send the video signal to the network production unit. Cost will be variable, but comparable to the $50,000 to $70,000 networks pay per event for competitors’ cameras, Bennett said. Actioncam has patents pending for its system, and Bennett expects to run into no patent problems with the flying camera. “The concept of having four points and having a camera suspended from four points is in the public domain, so we’re not violating anything,” Bennett said. “We’ve got patent attorneys giving us their opinion; our patent application has already received an opinion on it. We are pretty

confident we have done the right thing.” Development of the Actioncam was financed with capital provided by angel investors, as well as a $100,000 OCAST Technology Business Finance Program award from i2E. Enterprise Director Richard Gajan and i2E played a key role in helping the company stay on track throughout the long development process, Bennett said. “This wouldn’t be where it is today without the help of Richard and i2E,” he said. “Not only did the TBFP get us moving and give us that level of validity so that angel investors were serious about us, but it really helped in getting the business plan fleshed out, making sure we covered everything that was going to be asked by investors as they looked at the company. “Having angel investors like Phil Smauder, who is also our Chief Financial Officer, be closely involved in the company has also made a big difference. Phil has

invested in the success of the company.” With months of successful testing behind them and the camera performing better than expected at the 66ers games, plans are in the works to build two more systems for anticipated demand, Bennett said. “When you see some of these shots you will see something that you’ve never seen before,” Bennett said. “I think the networks will be very happy, amazed at the shots we can get that they’ve never been able to get before just because of the capabilities of our system.” Something unusual was in the air at the Spirit Center when the 66ers tipped off against Albuquerque. It was the Actioncam, and it might just be bringing new viewing angles and camera shots to television audiences nationwide in the very near future. Stay tuned.

Yemi Ogunoye is a 6-9 forward with the Tulsa 66ers, on whose home court the Actioncam has brought live shots of NBA Developmental League games to viewers at www. nba.com and on the NBA network. His reaction to the Actioncam’s presence: “It wasn’t a distraction at all, but was fascinating to see the different angles the camera showed of ball movement during replays on the big screen. It did not interfere with play; the ball didn’t come close to it during the game. I liked it.”

Rod Hartzog, foreground, pilots the Actioncam while Alex MacDonald operates the camera using video game-like controls.

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The Actioncam focused on the action of a Tulsa 66ers basketball game on the court below at the SpiritBank Event Center in Bixby. Continued from page 15

Rod Hartzog, foreground, pilots the Actioncam while Alex MacDonald operates the camera using video game-like controls.

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Global Recession FAQ

can offer big opportunities

What are you telling entrepreneurs to do to survive?

John Huston, Ohio-based chairman of the national Angel Capital Association:

Many of today’s top performing companies were either born or built during lean economic times.

“Really, it’s all about comparing yourself with the others and other opportunities so that the investors who have money to invest will say, ‘relative to all the other opportunities I’ve seen, you folks really appear to understand how capital efficient you have to be, how tough these times are and if anybody is going to survive them, I think you are.’ “So, I think it’s quite important to differentiate yourself. You are tougher on the cash burn, you are more cash efficient and you will do whatever it takes to stay standing and you do not need after this round a whole bunch of brand new investors.” Is everyone nationwide in the same economic predicament with the recession?

John May, Managing Partner, New Vantage Group in Vienna, Va.:

“The recession survivors will be those companies that can stand on their own without needing new investor capital.”

orld financial markets were in the midst of a historic collapse last fall when angel investor John May told statewide audience of about 200 would-be entrepreneurs that it was a “wonderful time” to launch a high-tech venture. Just make sure that no outside investment would be needed for the next 24 months or so. “It’s a great time to start, but you are going to have to cultivate friends and family, bootstrapping, anything you can do to be one of the survivors on the other side,” May told his audience of mostly college students. “You will do very well, but not because you will be able to raise institutional money today, but because you had a good idea that was at the right place at the right time.” May is managing partner of the New Vantage Group of angel venture funds in Vienna, Va., and was the keynote speaker at the Who Wants to Be an Entrepreneur? workshop co-sponsored by i2E and the Oklahoma EPSCoR in October. Four months after his Oklahoma appearance, May’s vision of the economic landscape for both investors and for entrepreneurs

remained unchanged. It promises to be a long, “flat-bottom” recession for the U.S. economy. The current recession is a “once or twice a century realignment of our economy,” May said from his Virginia office. “It’s the perfect storm of no IPOs and a hard merger-andacquisition market for venture and angels to exit,” he said. “That means you will be spending more time keeping alive your current companies rather than spinning them off.” The result of the economic downturn? Reduced net worth of angel investors, which means less available capital and more competition for scarce dollars among what May called “orphan companies.” Those are companies that have lost their venture or angel backing. “There are going to be lots of companies that are going to be non-cash breakeven that thought they had their financing secured but are going on the market because they had the rug pulled out from under them either by their bank or their funder,” May said. “The next six to nine months are going to be tough for the new

“They will be sought-after, highly valued companies by investment professionals, as well.”

company that is looking for outside capital that doesn’t have it already.” Many of those “orphans” won’t survive, said John Huston, founder of the Ohio TechAngels group and chairman of the national Angel Capital Association. “The landscape, I think, is going to be littered with the carcasses of companies that raised a million dollars or two but needed another $5 million to $10 million in order to hit cash flow break-even,” Huston said. “Until the consumer starts to get the sense that ‘gee, I think the worst is over and my job is not on the chopping block in the next few quarters,’ I think we are in for very tough sledding.” A “cash flow breakeven” theme was a common thread among the angel investors

and venture capitalists interviewed for this story. The recession survivors will be those companies that can stand on their own without needing new investor capital. They will be sought-after, highly valued companies by investment professionals, as well. “We refer to it as stand-ability,” Huston said. Companies that achieve stand-ability will offer investors the comfort of knowing they are getting “battle hardened” management teams that have survived tumultuous times, he said. Entrepreneurs are going to be required to do “more with less,” said Tom Walker, President and CEO at i2E. “Companies need to position themselves

“I would say on the big picture perspective, yes. How if affects a particular region or city is going to vary, because angel investing, except for the Silicon Valley type of venture capital, is heavily a local phenomenon. If you are in Illinois and they are doing very well with their cluster of the economy, they would ride this out better than if they are in Detroit. From a macro economic perspective, this niche is hurting, but from how it is going to affect my backyard, you have to do a little more research on what are the resources, what is the infrastructure like, what is the local economy doing, for example. In Northern Virginia we have 5 percent unemployment; in Detroit they have 10 percent. So as an entrepreneur you have to be concerned about macro economic issues, sure, but in the end it’s what is the likelihood of my company getting funded in my backyard (which) is a different set of research.” Continued on page 20

Continued on page 20

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What are you telling entrepreneurs to do to survive?

John Huston, Ohio-based chairman of the national Angel Capital Association:

Many of today’s top performing companies were either born or built during lean economic times.

John May, Managing Partner, New Vantage Group in Vienna, Va.:

“The recession survivors will be those companies that can stand on their own without needing new investor capital.”

“They will be sought-after, highly valued companies by investment professionals, as well.”

Continued on page 20

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to ensure they are still standing in the last half of 2010 or the first part of 2011,” Walker said. “That means that the cash they have in the bank today needs to get them to that point, or if they are out raising capital today to make sure they are raising enough capital to get them to 2011.” Ian Sobieski, managing director of the Menlo Park, Calif.,-based Band of Angels group, said the drop in the financial markets affects the whole investing food chain from top to bottom. “This means a deep drop in making investments into companies not already in the VC portfolio,” Sobieski said. “This means less money for new start-ups, but also a breakdown in the handoffs of start-ups from the seed players to the early stage guys to the mezzanine investors.” So find a way to get cash-flow breakeven, Sobieski said. “Figure out and implement a way to grow without investment capital,” he said. “Ironically, doing so is a good way to attract investment capital.” In fact, said William Paiva, manager of the Oklahoma Life Sciences Fund and a venture partner with the Sevin Rosen Funds, the best defense just might be a good offense. Valuations wane and struggling companies become acquisition values. “Even though it sounds counter-intuitive, a lot of really big successful companies were built during recessionary times,” Paiva said. “That’s why I don’t want my companies to stick their heads in the ground so much they lose sight of opportunities.” Added Tom Shoaf with the Private Markets Group at St. Louis-based Stifel Nicolaus: “I think opportunities are quite good right now. For fund managers, there are a lot of great opportunities out there with companies that have already received financing that will need additional financing in the near future.” Shoaf focuses on the areas of health care, biotechnology and pharmaceutical where new therapeutics and concepts sometimes take years to gain regulatory approval before reaching the commercialization stage. “Therapeutics in particular require the longest time period to build valuation inflection points, so the current environment is especially challenging to private therapeutic companies who are in need of capital,” he said. “I think the best opportunities should be able to raise capital.”

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Paiva points to companies such as Microsoft, Amazon, eBay and FedEx that were either born or built during lean economic times. “Yes, you want to be conservative; yes, you want to conserve cash; yes you want to be prudent; I agree with all those things. But also recessionary times are periods when great companies are built in the U.S. economy. You can’t put blinders on. There are opportunities out there.” That means taking care of your own business first and getting to cash flow breakeven, he said. Of course, it does. “My recommendation to entrepreneurs right now, anywhere in the U.S., keep your burn rate down, don’t over-accelerate your burn rate because cash is king right now,” Paiva said. “Try to get to cash flow breakeven, if possible, so you are self-sustaining.” i2E’s Walker peered across the economic landscape and saw opportunity for entrepreneurs and angel investors. “Venture capital firms will be making fewer first-time investments, which provides more opportunities for angels,” Walker said. OK, the Big Question: how long will this recession last and when will the capital markets come back to life? “We are going to step the economy down a notch,” said Sobieski. “In other words, it’s not going to come back any time soon. After the pain of transition, everything will be fine, albeit at a lower level of activity.” Huston cited past recessions since World War II that lasted an average of 10 months. The two most recent lasted 18 months. The current recession already was 14 months old by January, he said. “I’m highly confident this recession is not going to recede in four or six months, so I think we are going to exceed the 18 months we suffered in the last two because I just don’t see any signs that are positive yet, and I look for them every day,” Huston said. “I’ve been unable to find any short-term evidence that the bottom has been reached and the rebound is going to happen in the next quarter or two.” However, the rebound will happen, because the economy always recovers. “I know it’s out there,” he said. “I’m confident that it will happen at some point. But when is quite elusive to me.”

How might Oklahoma entrepreneurs be affected by the recession?

Tom Walker, President and CEO at i2E: “We know that VCs are tightening their belts and probably are going to do fewer first-time investments. Therefore, in Oklahoma the capital gap has widened. So, entrepreneurs will have to do more with less to reach the point where they are cash-flow breakeven and attract venture capital.”

Tom Shoaf, Stifel Nicolaus Private Markets Group in St. Louis: “What we are experiencing economically is more of a global phenomenon. I doubt many areas are going to escape what is happening. My understanding is that it is already affecting Oklahoma City and the Midwest when they weren’t affected as much in 2007 and 2008. There are some compelling investment opportunities in Oklahoma and throughout the Midwest. It’s a good time for these types of companies that are not located on the coasts to show that they have something unique to offer investors.” Will Oklahoma’s recovery track that of the rest of the nation?

William Paiva, manager of the Oklahoma Life Sciences Fund and a venture partner with the Sevin Rosen Funds: “I do think it’s going to recover slower in Oklahoma; that’s why we need to be very careful and conservative. The reality is most of the large pools of money are resident on the coasts, like New York, Boston and San Francisco. I think when the recovery happens as it relates to venture capital, it will happen on the coasts first before it starts moving inward to the central parts of the U.S.”

TBPF Payback: MyGov Creates Niche with Subscription-based Software That Delivers More for Less Cost to Municipal Clients As a city government development director for several years, Stephen Burnsworth learned some key truths about the software applications that run municipal operations such as code enforcement and licensing: they are expensive and often don’t work as promised. So, Burnsworth created a subscriptionbased alternative that would deliver more for less. Burnsworth founded Ada-based MyGov, LLC, in 2002 and developed a suite of Web-based software applications for use by municipal government agencies. “We do a hosted model, software as a service is what it is normally known as,” Burnsworth said. “By doing it as a subscription service rather than buying something, we can give them a much better price. They get a lot more for their money.” MyGov has tapped into a municipal market that obviously had a lot of pent-up demand for an alternative to software applications that often feature up-front costs of $250,000 or more. Through word-of-mouth marketing, MyGov has won business from 30 cities in five states. MyGov developed its suite of software with the financial assistance of the $100,000

OCAST Technology Business Finance Program proof-of-concept funding the company won in 2004. Armed with the TBFP award and matching financing from other sources, MyGov was able to create a suite of six applications that covered a broad menu of municipal applications. “Basically, the TBFP money gave us the ability to make the whole product,” Burnsworth said. “I was the development director for cities for a number of years, and I had used most of the competitive products. I realized as someone who ran those departments that I couldn’t just make one product and be successful. I needed a suite of products.” MyGov’s revenues doubled in 2008, growth that he described as “very steady.” Burnsworth plans to add sales and marketing staff this year to MyGov’s current employee base of seven. “We can easily sell more than we can service, which is a good thing,” Burnsworth said. “We are very customer centric in that we want them to be successful, so we do a lot more hands-on than most companies would do. We spend a lot more time at the city following up with them, making sure they have everything working like they intend.” MyGov’s Web-based model allows city employers, contractors and others working

far in

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with the municipalities to access different services from field locations using laptops or handheld devices. New software applications offered this year will deliver even more flexibility to its municipal clients. Success of the MyGov suite of applications has allowed the company to begin repayments on the TBFP award, the first which it made in early February. Even in an economic downturn, MyGov continues to expand its municipal client roster because its products offer less risk and less cost than what Burnsworth called the “legacy” software competition. “Government agencies are very risk adverse, which actually gives us an advantage because they don’t have to buy our product; they don’t have to drop a quarter of a million dollars to figure out if they like it or not,” he said. “All of the legacy systems we have replaced have really good, slick marketing materials. They just have really poor performance once you buy the product.” MyGov eliminates the risk and delivers on its promise of ensuring municipal clients are “cities serving citizens.”

the following

companies have received awards:

What’s the most important advice you give entrepreneurs?

Tom Shoaf:

“They need to manage their cash and find

ways to be more efficient in the near term given that they may have difficulty raising capital.”

Ian Sobieski, managing director of the Menlo Park, Calif-based Band of Angels group “Get to cash flow breakeven”

TBFP Exceeds Expectations When companies repay their awards, the money rolls back into TBFP to fund additional companies. More than 18 of the businesses funded have repaid more than $3.2 million enabling the program to become partially self-funding. Operated by i2E, the OCAST TBFP provides proof-of-concept funding for Oklahoma advanced technology companies. This program is funded by state appropriations.

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How might Oklahoma entrepreneurs be affected by the recession?

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the following

companies have received awards:

What’s the most important advice you give entrepreneurs?

Tom Shoaf:

“They need to manage their cash and find

ways to be more efficient in the near term given that they may have difficulty raising capital.”

Ian Sobieski, managing director of the Menlo Park, Calif-based Band of Angels group “Get to cash flow breakeven”

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R e s o u r c e

A scenario of two companies

Efficiently and Affordably reach Oklahoma’s innovators, entrepreneurs and technology leaders by advertising in

Consider Companies A and B. Both have been in business for two to three years. Each has received external funding previously and had planned to raise additional equity capital in 2009. They have very different strategies for surviving this economy.

iNNOVATORS

Entrepreneurs

Oklahoma’s Advanced Technology Magazine

It’s easy. knows that every dollar saved keeps the lights on for another period of time. The founders took a step back when the economy fell last fall, and with the help of the board and outside advisors, developed a revised plan to survive into the second half of 2010 without any additional capital. The entrepreneurs, who didn’t like all the actions that are required, are taking them anyway. The company froze capital acquisitions and travel. The executive team accepted reduced salaries. Open job requisitions were cancelled, and when a key technician left, work was restructured so the position didn’t have to be filled. The executive team holds meetings with all employees to ensure that everyone in the company understands progress and priorities. Even though banks aren’t lending, the founders briefly speak with local bankers every couple of weeks to update them on the company’s progress. Company B’s legal counsel agreed to a reduced hourly rate for the next 12 months. In the last month, a beta test customer who has quantified significant cost reductions from Company B’s product, agreed to share the cost of the next phase of testing. Almost two quarters into its revised business plan, Company B has used less than one quarter’s cash. No one objects to taking their calls. Company B

Company A,

a software firm, continues to doggedly follow its original business plan even though the alpha clients that had expressed strong interest in early releases of planned products have backed down, saying that reduced demand from their customers, tight budgets, and layoffs are making it difficult to consider anything new. In spite of strong advice from both its investors and board, Company A has resisted reducing payroll through layoffs, salary cuts, or both; continues to fly weekly to alpha client locations to convince them to change their minds, and just placed an order for a new IT server. Company A’s founders contact current investors every few days, making a case that an infusion of capital is the only way to save the company. The investors are growing weary of answering the phone.

Just email amyd@langdonpublishing.com for complete information.

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Survival Tips for Entrepreneurs Make 18 months of cash last for 24. •

Find early adopters who can pay.

•

Focus on receivables.

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Delay capital purchases.

Co-locate with another company or move to a business incubator. •

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Share office services and equipment.

•

Use the computers and servers you have.

Save thousands on travel by smart scheduling and using Internet sites, such as pricepoint.com. •

•

Negotiate fees and terms with service providers.

When hiring, recognize that these days many highly qualified people care more about having a paying job than how much the salary or benefits are. •

If capital is required, do not delay. •

Consider bootstrapping or friends and family first.

•

Micro-lenders will loan from $5,000 to $50,000.

Build a relationship with local banks; when credit eases up, they may offer more than national lenders. •

Be prepared to provide extensive information to prove credit-worthiness. •

Be realistic about valuation, terms, and compensation. Businesses and investors aren’t worth what they were six months ago. • •

Be alert for new federal or state tax credits or stimulus incentives for startup or high technology businesses. •

There are large companies looking for acquisition candidates; an early, less attractive exit may be better than folding for lack of cash. •

Never forget, there are always investors for the best deals. •

Keep your head. If you have a day job, keep it until you are concretely certain your entrepreneurial idea has enough traction to become cash flow positive. •

Ask experienced business people and entrepreneurs who have weathered difficult economic times for advice and mentoring. •

•

Communicate frequently and honestly with employees.

Carve out some time every week to de-compress. A rock-sure way for a company to fail is to have the found suffer a heart attack. •