Zell Lurie Commercialization Fund - 2018 Progress Report

2018 Progress Report

Entrepreneurial Studies (ES 702)

ZELL LURIE COMMERCIALIZATION FUND THE BEST WAY TO LEARN ABOUT INVESTING? INVEST.

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Zell Lurie Commercialization Fund

hanks to the generous gift of John and Nancy Kennedy, students at the University of Michigan’s Ross School of Business learn all the ins and outs of early-stage investing and startup commercialization the most effective way possible: hands-on experience.

This is made possible through a unique, action-based course called ES 702: Zell Lurie Commercialization Fund (ZLCF). This experiential course­—which was launched in 2006 as the Frankel Commercialization Fund—combines classroom education with real-world experience managing an investment fund. Under the faculty direction of Mike Johnson, MD/MBA, the course focuses on investments in innovative startups from the University of Michigan community and surrounding area.

Students who participate in this graduate-level course are known as Fund Fellows. They commit to the fund for two years.

LEARNING BY DOING After receiving an introduction to venture capital and the investment process, Fund Fellows quickly move to the actual process of early-stage investing, with a focus on the areas of technology, healthcare, cleantech, and consumer products. Throughout the course, and with close interaction with an advisory board of entrepreneurs, investors, and executives, Fund Fellows actively pursue these four core aspects of the investment process: 1. Deal Sourcing and Screening: Fund Fellows source deals through advisors, networks, and events.

Companies are screened and reviewed, and a team of fellows meets with the founding teams. If a potential investment moves forward, founders are asked to present to the group.

2. Evaluation: Fund Fellows initiate a due diligence process to evaluate the firm’s investment potential.

This process examines all aspects of the company, product, market, team, and investment. Fund Fellows present diligence findings and their recommendation to the fund team.

3. Investing: Following a presentation, and with all due-diligence research completed, Fund Fellows vote on the potential investment.

4. Portfolio Management: Fund Fellows monitor and manage the portfolio of investments and engage with the management of portfolio companies about their progress. They also consult with companies about opportunities to add value to their venture.

“I’m thrilled to be at Ross working with such outstanding students in this course,” said Dr. Johnson, who earned his medical degree and MBA from U-M in 2011 and returned to Michigan after several years in venture capital with Flagship Ventures. “The course epitomizes the Ross approach of action-based education. Our students are learning by doing—and building an incredible knowledge base in the process.”

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People & Progress

uring the 2017-2018 academic year, the Zell Lurie Commercialization Fund had 35 active fellows (see back section for bios), including 32 MBA students, two PhD students, and one MD/PhD student. With diverse backgrounds across many disciplines and work experiences, this past year’s fellows sourced and screened more than 125 companies (a fund record), conducted due diligence on 10 companies, and (so far) have invested in one compelling company: Neurable.

A startup venture out of U-M, Neurable, is developing brain-computer interface (BCI) technology that allows users to control real and virtual worlds using their mind. This technology has application in gaming in the rapidly growing virtual reality, augmented reality, and mixed reality markets and could be an important part of interface control as these markets expand. Neurable is an example of a visionary team bringing a differentiated technology to a compelling market­—and of Fund Fellows at Ross helping to provide the capital for them to do so.

INVESTING IN U-M INNOVATION One of the most substantial benefits of Fund Fellows being at U-M is that it gives them access to a vast network of world-class innovation across disciplines, such as Engineering, Medicine, and Information Technology.

Two notable companies in the fund’s portfolio that started at U-M include: 1) nLight (formerly Arbor Photonics), a semiconductor and fiber laser provider with application in microfabrication, industrial, and defense sectors and 2) Ambiq Micro, which develops ultra low-power microcontrollers and real-time clock products to enable wearables, smart cards, and more.

Both of these companies (which have been in the fund for several years) are making substantial strides in their growth and success. For example, nLight has received several rounds of venture capital, including from Mohr Davidow. They also recently filed for an IPO. Likewise, Ambiq Micro­recently raised venture capital from prominent investors, such as Kleiner Perkins and Tsing

Capital. They have also earned a reputation as a leader in the ultralow power segment.

COMMUNITY ENGAGEMENT Over the past year, Fund Fellows worked to improve engagement with the entrepreneurship/ investment community and to increase interaction with course alumni. For example, they launched a student blog, so those interested and/or involved can stay abreast of activities and updates about the fund and its investment portfolio. They established and managed a dedicated a LinkedIn group, so various stakeholders can engage with each other, and they surveyed fund alumni and outgoing fellows. All of these activities contributed to an ongoing effort to formalize and leverage an ever-expanding network of university groups, early-stage investors, and accelerators.

FOSTERING LEADERS & BEST The hands-on experience, skills, and knowledge that students gain through the Zell Lurie Commercialization Fund resonate throughout their careers. After graduating, Fund Fellows have moved on a variety of impactful roles in large companies, consulting firms, startups, and investing groups, such as: • Amazon • AthenaHealth • CISCO • Deloitte • Fidelity • Flagship Pioneering • Google • General Mills • Johnson & Johnson • McKinsey & Company • Neurable • SunEdison • Takeda • Target • Tyson • Verizon • And others!

A Message from the Fund’s Student Leadership Co-Managing Directors of the Zell Lurie Commercialization Fund Daryl Brown (MBA ‘19) and Matt Raskind (MBA ‘19) share their collective comments about what their involvement in the fund has meant to them over the past two years.

ABOUT THE EXPERIENCE The Zell Lurie Commercialization Fund means a lot to us because we have truly grown as leaders through this experience. The power of this fund is that its structure and mission gives each of the 35 fellows full ownership in the experience. Fund Fellows learn how to value and analyze companies in their infancy by gaining a deep understanding of the product, the management team, and the market.

Our fellows are all fully invested in the current and future success of this fund, so we continue to innovate on how to improve this amazing experience.

OUR LEADERSHIP ROLE As Managing Directors, we challenged every fellow to come to meetings with opinions. We expected that the members of the ZLCF would sift through those facts and think through the implications and logical conclusions, being ready to voice their opinion and defend their opinion to others.

Leading the ZLCF has dramatically helped us in several areas that we didn’t initially expect. While we expected to learn (and did learn) all about evaluating tech trends and building financial models, the unexpected learnings were all around people­—both building relationships with entrepreneurs and leading the Fund Fellows. Throughout our experience in the ZLCF, each member received a crash course in building and maintaining relationships that are oriented toward building mutual value.

MOVING FORWARD Over the course of our time with the fund, we’ve built relationships with entrepreneurs, advisors, key community resources, local venture capitalists, and the ZLI staff. The skills we’ve learned through ZLCF will be major assets for us as we continue our careers, and we will be forever grateful for the opportunity to lead the fund!

RECENT FUND INVESTMENT HISTORY

2014-15 2015-16 2016-17 2017-18 Companies 75+ 100+ 100+ 125+ Sourced Due 8 10 8 10 Dilligences

Investments

2 1 0 1

PHASIQ & Reveal ContentOro Neurable (one due diligence ongoing)

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In Their Own Words The Zell Lurie Commercialization Fund was a unique learning opportunity at Ross that allowed me to put theory into practice. After Ross, I went on to raise money for my own startup, and the insights I gained on startup investing through ZLCF proved invaluable.”

— Michael Thompson, MBA ‘17 Vice President, Neurable

“Evaluating startups allowed me to practice how to effectively size a customer segment base, understand market size and competition, and take into consideration risks I wouldn’t normally think about. That has been invaluable as I help Amazon/Alexa decide how to share current products, as well as decide which new markets we should enter into.” ­— Udai Mody, Ross MBA ‘17 Senior Product Manager Technical, Alexa at Amazon “ZLCF served as a critical building block in my entrepreneurial endeavors. More than theory, ZLCF’s hands-on approach to engaging with startups gave me invaluable insight on how to assess the prospects for a business using a framework that I since have applied countless times in my launch and growth of Dear Black Women.” ­— Flo Noel, Ross MBA/MSI ‘18 Founder, Dear Black Women

“ZLCF was the defining experience of my time at Ross. As a student on the fund, I was provided with numerous encounters and learnings that I have applied in managing and developing my team at athenahealth, helping my clients make informed decisions, and pushing our internal product development team down the path with the best return on investment.”

­ Andrew Brecher, MBA ‘17 — Engagement Manager, athenahealth

MEET THE LATEST COHORT OF FUND FELLOWS Unless otherwise specified, all 35 Fund Fellows listed here are 2018 or 2019 MBAs at U-M’s Ross School of Business.

Amrit Ahluwalia, who is focusing on Investment Banking, holds a bachelor’s in Finance from Michigan State University.

Prior to business school, he spent three years as a part of General Motors’ Financial Leadership Development Program (TRACK). He held multiple high-impact finance roles in his time at GM, with roles ranging from risk management to cash management.

Ramu Annamalai is interested in the intersection between Technology and Strategy, specifically new business models innovating the traditional banking industry. He has a B.S. in Industrial Engineering from Georgia Tech in Atlanta, Georgia Prior to Ross, he spent four years at Deloitte Consulting in Strategy & Operations, where he focused primarily on banking operations for regional, national, and multinational banks.

Steffan Bankier is focusing on General Management and Strategy, with an emphasis on technology. Prior to attending Ross, Steffan was advising food, beverage, and hospitality entrepreneurs on their go-to-market and sales strategy.

Kae Bradford enjoys bringing innovation and emerging technology to brands in order to produce original and disruptive tactics that speak to the hearts of consumers and to the bottom lines of stockholders.

Daryl Brown, who is concentrating on Healthcare and General Management, received his bachelor’s in Political Science and Spanish at the College of the Holy Cross in Worcester, MA. Prior to attending Ross, Daryl worked for General Electric (GE).

Connor Burleigh is focusing on Entrepreneurship and Venture Capital. Connor received his undergraduate degree from Middlebury College in History and Economics. He then became a ground-floor employee at a rapidly expanding whiskey company, first holding a variety of positions in Sales and Marketing, before spending two and a half years as Operations Manager.

Joe Cabral is a scientist-turned-MBA who is passionate about using business as a vehicle to translate scientific innovation to improved human health. Prior to business school, he completed a bachelor’s and master’s in Biology and Genomics, respectively, at the University of Connecticut.

From there, he spent four years as a research scientist at Moderna Therapeutics.

Kettianne Cadet, who is focusing on Management and Organizations, received her bachelor’s in Sociology and French from Boston College. She also holds a master’s in International Relations from King’s College, London. Prior to Ross, Kettianne worked in the nonprofit sector, specifically in international development.

Parker Caldwell moved to Ann Arbor from Chicago, where he worked for Allstate Insurance in product management, finance, internal consulting, and data strategy. At Ross he is focusing on the tech industry, entrepreneurship, and strategy.

Scott Collins, who is concentrating on Strategy and Healthcare, attended Boston College and received his degree in Economics and Chinese Language and Literature.

Prior to attending Ross, he worked in management consulting at Accenture in San Francisco and Boston.

Caitlin Cordell is focusing on Entrepreneurship, Strategy, and Technology. She received an undergraduate degree from Yale University. Prior to attending Ross, Caitlin founded and managed a marketing and technology consulting business, working with companies in the private wealth management space to improve client experiences and to streamline processes using customized technology solutions.

Paul Cashman received his BBA from Villanova University with a major in Marketing and minors in Finance and International Business. Before coming to Ross, Paul Cashman was a project manager at ecoATM Gazelle, which purchases used electronics back from consumers via a network of fullyautomated kiosks and an e-commerce website.

Abhi Das, whose business studies focus on Strategy, holds a bachelor’s in Mathematics and Economics from Brandeis University. Prior to Ross, Abhi worked as an economic consultant where he assisted Fortune 500 clients in developing tax-efficient pricing strategies to generate long term cost savings.

Jasmine Hughes is focusing on Strategy and Marketing.

She received her bachelor’s from Lehigh University, where she studied Marketing and Psychology. Jasmine started her career as a Strategy & Transformation Consultant focused on technology implementations at large retail and life sciences companies.

Brian Iezzi is a first year PhD student in Materials Science and Engineering. He completed a dual degree in Textile Engineering and Materials Science Engineering at North Carolina State University. While there, he helped patent a low-cost method to produce hydrogen fuel catalysts and cofounded a startup with his professor.

Dale Jarosz is focusing on Entrepreneurship and Marketing.

Dale attended the University of Illinois Urbana-Champaign, where he received his degree in Mechanical Engineering.

Prior to attending Ross, Dale worked for Caterpillar as a Lead Design Engineer.

Stefan Kapelac previously worked for a multi-billion dollar healthcare system in strategic planning and analytics. His experience includes leading projects on growth strategy, consumer segmentation, and using big data to provide insights into business investments.

Hiroaki (Koby) Kobayashi, who is concentrating on Strategy and Healthcare, received his medical degree from the University of Tokyo School of Medicine. Prior to Ross, Koby worked as medical director at JOMDD, Inc, a medical device startup in Tokyo, Japan, leading the commercialization of an innovative cardiovascular device and incubating several other early-stage medical technologies.

Charles Lu is an MD/PhD candidate with a research focus in Neural Engineering. He is an Ann Arborite, having grown up in the city and graduated from U-M with both his bachelor’s and master’s degrees. Charles has a passion for medical innovation, splitting his time between research and working with local commercialization groups.

Leah Josephson is focusing on Technology, Innovation, and Strategy. Prior to Ross, she worked as a consultant for Deloitte Strategy & Operations, helping to transform federal agencies’ business models and streamline processes.

Catalina Kaiyoorawongs studied Environmental Policy at Barnard College of Columbia University, during which time she worked on water and sanitation projects in the Ecuadorian Amazon. Prior to coming to Ross, Catalina worked in victim advocacy at the Manhattan District Attorney’s Office and served in the Peace Corps as a Health Educator.

Nicole Litvak is interested in Renewable Energy/ Cleantech and Entrepreneurship. She holds a bachelor’s degree in Economics and Psychology from Brandeis University. Prior to Ross, she spent five years at the market research and advisory firm GTM Research.

Olivia Ma is focusing on Strategy, Technology, and Operation. She has a Master of Science degree in Marketing Research from Michigan State University and a dual bachelor’s in Finance and Journalism from Southwest University in China.

Prior to attending Ross, Olivia worked in the robotics industry at ABB Robotics in Auburn Hills, Michigan.

Kyra Mahoney is also a fellow at the Tauber Institute for Global Operations at Michigan Ross. She holds a degree in Economics from Spelman College Prior to Ross, she worked with Deloitte Consulting as a Strategy and Operations Consultant in the company’s commercial practice.

Ishan Malhotra is interested in Technology, Strategy, and Entrepreneurship and holds a bachelor’s in Mechanical Engineering from Delhi University. Prior to Ross, Ishan worked has worked in a Healthcare Startup based out of New Delhi, aiming to create an online delivery platform for prescription medicines.

Taylor Mattson, who is concentrating on Technology and Operations, holds her BA in Marketing and Professional Sales from the University of Toledo. Prior to Ross, she worked for 3M Company as an Industrial Solutions Specialist.

Aisha Miller is concentrating on Strategy & Management and Organizations at Michigan Ross. She holds a BBA with a focus on Computer Information Systems from Howard University. Prior to Ross, Aisha worked as a Senior Technology Consultant at Deloitte Consulting in Washington, D.C. Iuliana Mogosanu is a dual-degree MBA/MS student at Michigan Ross and the School of Environment and Sustainability, with her studies centering on Entrepreneurship, Venture Capital, and Cleantech. She holds a degree in Economics. Prior to Ross, she worked for several years in corporate banking in Europe.

Ayse Muniz is a PhD student in the Macromolecular Science and Engineering program. She received her bachelor’s in Biochemistry from the University of New Mexico, where she worked on developing nanoparticle therapies for genetic engineering applications. She is motivated by finding translational medical innovations.

Tobi Ogundipe is focusing on Technology and Entrepreneurship and received an undergraduate degree in Music Industry and Marketing from the University of Southern California. Prior to Ross, she spent time working with Target; a food non-profit; Mattel; and a micro-winery in Colorado.

Ravi Patel, who is concentrating on Strategy and Technology, graduated with a degree in Chemical Engineering from Northeastern University. Prior to Ross, Ravi joined Teach for America, teaching High School Sciences near Seattle.

Matt Raskind is focusing on Innovation, Technology Commercialization, and Strategy. He holds a bachelor’s in Environmental Economics from Dartmouth College. Before Ross, he spent two years as a data analyst for JumpStart Inc., a non-profit startup accelerator in Cleveland, OH. Pavneet Ahluwalia is interested in technology and techstrategy consulting. Before coming to Ross, he worked at Google, where he was a digital marketing consultant and product specialist in the sales organization.

Athena Stevenson is concentrating on Marketing and Entrepreneurship. Before coming to Ross, Athena lived in Boston, MA, where she worked in Operations at Liberty Mutual Insurance.

Mei Yue is focusing on Strategy, Healthcare, and Finance.

She received her bachelor’s and medical degree from Peking University, Health Science Center. Before business school, Mei spent five years working as an eye surgeon at Peking University affiliated hospitals.