2015 SC Launch Annual Report

Annual Report

Table of Contents Figures 8 Client Companies 12 EZ Waves 14 Grant Matches 16 NUBAD 18 Leukogene 20 Portfolio Companies 22 ActivEd 24 CharlestonPharma 26 KIYATEC 28 Good Done Great 30 Servosity 32 Landing Parties 34 Pandoodle 36 Positive Exits 38 CreatiVasc 40 2015 by the Numbers 42 SC Launch Board 44 SC Launch Team 44 Resource Partners 45

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SCRA Technology Ventures’ SC Launch Program is growing South Carolina’s high-tech economy.

SC Launch fosters the growth of South Carolina’s high-tech economic ecosystem. The program enables research commercialization, provides mentoring and support services and makes investments in technologybased start-ups.

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How it Works SC Launch is able to invest in and support South Carolina startups through the Industry Partnership Fund (IPF), which was established in 2006 under the Industry Partners Act. South Carolina taxpayers who contribute to the IPF are eligible for a 100% tax credit against South Carolina income taxes, insurance premium taxes and certain license fees.

Equity returns are re-invested into the program, providing additional resources to South Carolina’s high-tech companies.

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Grants

Mentoring

Business Services

Loans

Facilities

Investments

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SC Launch provides a comprehensive suite of resources to support entrepreneurs.

Companies who are admitted into the SC Launch program are commonly called “client companies.” These companies receive mentoring, support services, access to our “Resource Partner Network” and may be eligible for federal Phase I SBIR/STTR grant matching or University Start-up Assistance Program grants. They may also be eligible for SC Launch equity investments or loans.

To be considered for an investment, client companies go through an extensive due diligence process and must appear before the SC Launch Board of Directors for approval. Companies receiving an SC Launch investment become “Portfolio Companies” and often receive additional capital from private venture groups.

SC Launch companies must reside in South Carolina, and the program may assist more established technology companies in their relocation to the state.

Some SC Launch companies take advantage of SCRA-operated Innovation Centers throughout the state that offer state-of-the-art lab space and areas for collaborative research.

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In 2006, SCRA invested $12 million of its retained earnings to form SC Launch and the Innovation Centers.

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Sources and Uses of Funds 8M

7M

9%

7%

3%

6M

10%

5%

7%

10%

7% 14%

11%

8%

18% 20%

5M

16%

4M

3M 91%

79%

100%

76%

97%

73%

90%

77%

82%

90%

2M

1M

0 FY 11

FY 12

FY 13

FY 14

FY 15

Sources of Funds Program Returns and Reserve Industry Partners Contributions Uses of Funds Program Operations Mandated Services Direct to Entrepreneurs 9%

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11% 82

Direct to Entrepreneurs

%

Mandated Services

7%

Program Operations

Judicious Investments Program operations are efficient and lean so that the majority of the Industry Partnership Fund is invested in support of entrepreneurial companies.

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Transportation

Information Technology

Advanced Materials

Chemical & Engineering Defense Life Sciences Energy

Focused Investments Investments are aligned with the focus areas in South Carolina’s universities, industry and emerging technology clusters.

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313 companies funded through SC Launch since 2006

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Client Companies Once accepted into the SC Launch Program, a company becomes a Client Company and has full access to program benefits. These include: our Resource Partner Network of business service experts, company mentoring, networking opportunities and possible funding for qualified companies.

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Region: Coastal Industry: Information Technology SC Launch company since: 2014

It all started as an idea. Vickie Waller, Founder and CEO of the company, said, “I’m married to a boat captain, and I could see how difficult it was to manage everything.” Vickie knew she had an opportunity. She formed EZ Waves and began to build the company.

EZ Waves is a software as a service company that provides a comprehensive, online booking and reservation system for boat charters and excursions.

Consumers can book boating trips in real-time, similar to booking an airline ticket online, using the company’s proprietary, interactive scheduling software.

The software provides captains the ability to manage their businesses with customized web sites, real-time schedulers, financial reporting tools, credit card processing abilities and full mobile capabilities.

What began as an idea was built with persistence. The company now has 12 employees and is looking at new market opportunities.

“It’s been quite a ride,” said Waller. “We’re thrilled to be a part of the “We’re offering something unique. With SC Launch program and to do business in South Carolina. I’m looking the strong tourism market and business forward to the next chapter.” community here, we can’t imagine anywhere better than Charleston, South Carolina to call our home.”

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57 SBIR/STTR matching grant awards since 2006

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Grant Matches The SC Launch Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) Phase I Matching Grant Program is designed to award matching funds to for-profit, South Carolinabased companies in the SC Launch program. We are one of only a handful of states that offer such a program to promising start-up companies.

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Region: Upstate Industry: Life Sciences SC Launch Company since: 2012 Founded in 2009, NUBAD is a drug discovery company devoted to identifying therapeutic agents that target nucleic acids. The company’s technologies and probes assist discovery of DNA and RNA-targeted drugs. Their technology assays could significantly lower the time for performing initial screening of compoundshelping doctors and researchers to find better therapeutics faster.

Originally founded on Clemson University developed technology, NUBAD opened a lab at the Greenville Hospital System’s Institute for Translational Oncology Research (ITOR) facility in 2011. The company was accepted to the SC Launch program “Having the support of SC Launch and other important resources in 2012 and has received Small Business in South Carolina, like Clemson University and ITOR, has helped us Technology Transfer matching funds from the SC to move NUBAD forward,” said company Founder Dev Arya. “We are working to prevent disease, advance medicine and improve Launch program. people’s lives. We’re glad to do that here in South Carolina.”

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Region: Coastal Industry: Life Sciences SC Launch Company since: 2014 Incorporated in 2012 in Pennsylvania, Leukogene Therapeutics Inc. is an oncology drug discovery and development company whose mission is to develop the next generation of treatments for patients with incurable blood cancers like multiple myeloma. The company relocated to Charleston, South Carolina in 2014, where scientific Founder Nathan Dolloff is on staff at the Medical University of South Carolina.

Leukogene joined the SC Launch program in September 2014 and has received Small Business Innovation Research matching funds and mentoring from the program.

“South Carolina offers many opportunities to companies looking to conduct world-class cancer research and innovation. We were drawn to the state for this reason and the wonderful quality of life offered in the Charleston area” said Leukogene Therapeutics Founder Nathan Dolloff. “Multiple myeloma remains a significant health burden, particularly in the state of South Carolina, and the goal of Leukogene is “At Leukogene, we’re developing the next generation of to provide new and better treatment options for therapeutics for blood cancers. When looking to move from Pennsylvania to South Carolina, the support and these patients toward the ultimate goal of curing available resources for the company were part this disease.” of those considerations. We’re delighted to be a part of the SC Launch program and to have their support.”

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portfolio companies since 2006

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Portfolio Companies Portfolio Companies are Client Companies that have received an equity investment from SC Launch. Companies must pass a rigorous qualification process and board approval to receive SC Launch funding.

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Region: Upstate Industry: Information Technology SC Launch company since: 2014

“The most overlooked learning style of kids is the kinesthetic learner- those that want to move as they learn,” said ActivEd Founder and CEO Julian Reed. “I was one of those kids. I learned through engaging my content.”

Founded by Furman University professor of health sciences Julian Reed, ActivEd is an educational software company aimed at giving teachers interactive lessons that incorporate movement into learning for pre-K through second grade students. ActivEd cites 15 years of research examining the connection between movement and academic achievement, cognitive ability and health.

The company joined the SC Launch program in 2014 and received mentoring and support services as a client company. In October of 2014, the company received a “big check” investment.

“At ActivEd, we believe learning is physical and research is clear. Kids who move more, perform better academically,” said Reed. “Having the support of SC Launch to move ActivEd forward is helping us to expand our software and reach for South Carolinians and “This is more than just a business opportunity to me,” children everywhere.” said Furman University Professor and ActivEd Founder Julian Reed. “I was one of those kids that learned through movement and engaging with content. We appreciate the support of SC Launch as we bring ActivEd to classrooms and help children to learn in a fun, healthy way.”

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Region: Coastal Industry: Life Sciences SC Launch company since: 2010

CharlestonPharma is developing innovative therapeutic antibodies to a target found only on cancer cells and working on a related diagnostic test for cancer patients and healthcare providers. Based on technology from the Medical University of South Carolina (MUSC), the company’s research is done in its laboratories located at the SCRA MUSC Innovation Center in Charleston, and is designed to establish preclinical efficacy and preliminary safety of these antibodies.

Part of the SC Launch program since October 2010, CharlestonPharma has received a grant and three rounds of investment from the program. The most recent round of investment is to expand recombinant production efforts, explore antibody-drug conjugates and perform additional animal efficacy studies.

“We have dedicated ourselves to finding better therapeutic and diagnostic options for cancer patients and healthcare providers,” said CEO Brad Goodwin. “SC Launch “We’re delighted to have resources such as the Innovation Center and the SC Launch program here. We are committed to this has been an instrumental part of our success as we community. So much so that we put Charleston in the company move these innovations in oncology forward.” name. We’re glad to be a part of South Carolina’s technologybased economy.”

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Region: Upstate Industry: Life Sciences SC Launch company since: 2007 It all began as a Clemson University biomedical engineering program thesis.

Could cells be grown in a standardized method to recreate human tissue and its behavior? Then, as the idea matured, a second question - could those cells predict a patient-specific response to cancer treatments? Realizing that ideas in this space had potential in the commercial marketplace, two entrepreneurial graduate students took this research, which eventually became a Clemson-patented technology, licensed it and created upstate company KIYATEC, Inc. in 2005. Accepted as one of the first companies into the SC Launch program in 2007, KIYATEC received non return-based funding in March of 2007 and two rounds of SC Launch investment funding in 2008 and 2009.

Today, KIYATEC’s business model is to accurately predict patients’ responses to drug treatment without ever exposing actual patients to drugs. The company recreates tumor tissues - using the patient’s own living cells - and uses them to test different combinations of cancer-treating drugs to see which has the best response.

This can better assist oncologists and ultimately provide better patient outcomes.

In 2011, KIYATEC moved to a lab inside

Greenville Health System’s Institute for Translational Oncology Research, enabling them to more easily test and develop their products. SC Launch continued to support the company, providing two additional rounds of follow-on investment funding.

In 2014 company received a $1.975 million National Cancer Institute contract to expand their 3D breast cancer model to address cancer’s interaction with the patient’s immune system and blood supply. And in 2015, KIYATEC received a second $1.725M contract, also from the National Cancer Institute, to tackle lung cancer by using “cancer stem cells.” These awards “KIYATEC is making a difference in the way we will enable the company treat cancer. We are grateful to broaden its technology to have had continual support from platform beyond its original SC Launch that enables us further our use in primary ovarian research and commercialization.” cancer into breast cancer, glioblastoma multiforme (a type of brain cancer with a 5 year survival rate that is less than 10 percent) and lung cancer, also one of the deadliest cancer diagnoses. The funded contracts have the potential to radically change the future of cancer patient care. KIYATEC currently has 11 full -time employees and hopes to add 7 more in the upcoming year.

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Region: Coastal Industry: Information Technology SC Launch company since: 2014

Good Done Great began around a kitchen table in 2008 as a small company with the idea of changing giving to make the good that companies do great. The company uses a cloud-based software to aid corporations and individuals with their charitable giving. The technology gives companies tools to connect and process donations more quickly and efficiently. Good Done Great became an SC Launch company this year and received an investment in June, which was used to expand operations.

Good Done Great has experienced a period of accelerated growth and now works with some of the biggest, most well-known brands both in the United States and internationally, whose 2.5 million employees give to over 60,000 nonprofits throughout the world. Employees can give to any charity in any country in any currency, which creates an “ecosystem of giving.” The company currently has 64 full time employees and plans to hire around 50 more in the upcoming year.

“The SC Launch program has helped us to grow at a rapid pace, expanding our operations in South Carolina. The work we are doing is truly making a difference, and SC Launch has helped make that possible.”

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Region: Upstate Industry: Information Technology SC Launch company since: 2014

Servosity CEO and Founder, Damien Stevens, knew there was a real need to protect IT data through recovery - making disaster recovery systems easy to use. He was right - what was once a side project became a company in 2005. Servosity delivers mission-critical disaster recovery as a service to managed service providers and IT resellers. During a disaster recovery situation, the technology allows for streaming of operating systems, so information is immediately received with very little wait time for downloads.

As the company grew, they moved to the NEXT Innovation Center, a Greenville Chamber program that supports knowledge-based businesses in the Upstate, in 2009 and soon expanded into a larger space to accommodate their growth this year.

Servosity became an SC Launch company in 2014 and received an investment in June of the following year. They have also received support from Michelin and the South Carolina Department of Commerce. SC Launch funds were used to expand operations and add jobs – Servosity’s average earnings are $80,000 and some positions are significantly higher; more than double the average prevailing wage in South Carolina. High-tech jobs “We are thrilled to be part of the SC Launch include: software developers, system administrators, support program - not only are we creating jobs in the engineers and sales. high-tech economy, we are creating meaningful, high paying positions with nearly unlimited growth potential for employees.”

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companies entered South Carolina through SC Launch since 2006

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Landing Parties Landing Parties are companies that relocate and establish operations within South Carolina.

These companies join the SC Launch program as a Client Company and are eligible for all program benefits and resources.

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Region: Midlands Industry: Information Technology SC Launch company since: 2011

To some, it seemed like Pandoodle’s CEO and founder, Dirk Brown, took a big risk when he moved his company from Silicon Valley to Columbia in 2011. To him, it was the right move for the company. Looking for financial resources and infrastructure-support resources, he thought South Carolina would be a good fit, and he was right.

Pandoodle is a computer vision, machine learning and big data company that specializes in monetizing images and video. They have created a SaaS platform for publishers that automates the analysis and dynamic insertion of branded content, providing advertisers and publishers with seamless, personalized branding, in real-time, in any video or photo. The company’s patented technologies and production systems provide turn-key setup and delivery of animation-based products that allow users to include their own personal information, such as an avatar, into a client’s custom online and mobile platforms.

“Pandoodle is excited to continue our growth in South Carolina.

SC Launch made an initial investment in 2011, Our unique software has the potential to revolutionize brand shortly after the company was accepted into strategy through advertising. We are grateful for SC Launch’s support and the access to capital they the program. Additional investments followed have provided throughout the years.” in 2012 and in March of 2015. When it comes to entrepreneurship, Brown knows what he’s doing: he is a professor at the University of South Carolina and serves as Director of the Faber Entrepreneurial Center at the university’s Darla Moore School of Business.

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22% internal rate of return from 12 exit events from 2006-2015

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Positive Exits SC Launch’s mission is to serve technology-based start-ups, fostering their growth as they reach new benchmarks. Eventually, companies reach the next stages of growth in a company’s life cycle. We celebrate these achievements and enjoy seeing our SC Launch companies meet new milestones.

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Region: Upstate Industry: Life Sciences SC Launch company since: 2007 Vascular surgeon Dr. David Cull believed there was a major opportunity to address the vascular access complications of End Stage Renal Disease patients. He invented a device that could offer significant relief to dialysis patients, and with the help of CEO Steve Johnson, CreatiVasc was created to commercialize this new technology.

The device, called the Hemoaccess Valve System®, allows blood flow to a dialysis graft to be selectively turned on for dialysis, then turned off afterward, restoring normal circulation between dialysis treatments. Currently, patients with dialysis grafts universally suffer a high rate of complications that frequently require surgical intervention.

SC Launch accepted the company into the program in 2007 and made an investment later that year. CreatiVasc received an additional round of SC Launch investment in 2010. Not long after, the Food and Drug Administration selected the company as one of three in the U.S. to be included in its Innovation Pathway program, designed to accelerate important breakthrough technologies through the regulatory approval process without compromising patient safety.

Clinical trials at Johns Hopkins Medicine resulted, taking the device to the next level.

In 2013, SC Launch made another investment into the company, and Brookhaven Medical followed suit, but with a larger, $5 million 40

investment. With those infusions, CreatiVasc is now completing development of the next generation Hemoaccess Valve System® which replaces needle activation of the system with a no-needle magnetic activation which could be a platform technology for a variety of clinical applications. This technology, along with others that CreatiVasc and Brookhaven are looking to license, focuses on maturing additional devices that reduce or alleviate problems that increase medical costs and mortality rates for dialysis patients.

Earlier this year, Brookhaven Medical acquired CreatiVasc, and as a result, the company became a graduate of the SC Launch program, repaying their loans in exchange for equity. Today, CreatiVasc remains in Greenville, with Steve Johnson at the helm as CreatiVasc CEO and President/COO of Brookhaven Medical. They are now working with FDA on expanded human clinical trials for the Hemoaccess Valve System®, which is expected to enter the market early in 2017.

As CreatiVasc CEO Steve Johnson said, “SCRA and SC Launch recognize that capital is the fuel that drives our economic engine. Without this program, many companies, including CreatiVasc, wouldn’t exist. Our company is changing the lives of End Stage Renal Disease patients, bringing technology to a field that has seen little innovation in over 30 years, and we are grateful that the support of SC Launch is helping change the world around us.”

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$12 million retained earnings invested to form SC Launch and the Innovation Centers

313 158 technology-based companies in South Carolina have been funded since SC Launch started in 2006

companies currently receiving support services

$362,700,000 In follow-on capital secured by SC Launch portfolio companies

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$69,000

is the average salary of the jobs created

2015

$21 57 MILLION directly invested into the top start-ups in the state

SBIR/STTR matching grants awarded

$6,000,000 12

22%

exit events from 2006-2015 with internal rate of return. Each and every dollar generated by exit events is reinvested in tech-based startups.

dollars in annual, tax-creditable private contributions to the Industry Partnership Fund fuels SC Launch

9 national and international economic development awards 43

SC Launch Board

Larry Blackwell

Ernie Csiszar

Andrea Marshall

Judith Davis

John Warner

Peter Dunphy

Joe Wischerath

SC Launch Leadership

From Left: Julia Linton, Derek Willis, Marty Ettlemyer, Ambrose Schwallie, Greg Hillman, Greg Clark, Angela Long and Tiffany DuPree.

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Resource Partners Accounting

Bauknight Pietras & Stormer, P.A. Elliott Davis

Banking

BB&T Square Wells Fargo Bank, NA

Business Services

Cedar Ventures Ceterus Inc. HS Diversified Solutions, LLC, Integrity Professionals, LLC Knowledge Capital Group Newport Board Group Supporting Strategies

Engineering

Flextronics UEC Electronics, LLC Vetronix

Human Resources

Clarke & Company Benefits, LLC Green Door Corporate Benefits, Inc. KeenanSuggs The Kidder Group, Inc. McPherson, Berry & Associates, Inc. Smart Work | Network, Inc. Snelling

Information Technology CSASS Cyberwoven HillSouth Immedion ProActive Technology PST VC3

Insurance/Risk Management Clarke & Company Benefits, LLC Corporate Benefits, Inc. KeenanSuggs Neace Lukens

Legal

Counts & Huger Dority & Manning entrepreneurs law group Haynsworth Sinkler Boyd, P.A. McNair Law Firm Attorney Michael D. Layman Monahan & Moses, LLC Nelson Mullins Riley & Scarborough Nexsen Pruet Ogletree Deakins Rogers Townsend & Thomas, PC ThriveIP Willcox, Buyck & Williams, P.A Womble Carlyle Sandridge & Rice Wyche Burgess Freeman & Parham, P.A.

Sales and Marketing

Byrum Innovation Group CarterTodd & Associates Chernoff Newman Dynamic Exhibits ECI Gil Shuler Graphic Design, Inc. GrowthSpring Group JC Rose & Associates Mad Monkey, Inc. Patrick Marketing & Communications, Inc. Post No Bills, Inc. Silicon Harbor Communications Smoak Public Relations Strategic Marketing International StrategicPartner Trevelino/Keller Communications VantagePoint

SBIR/STTR Assistance Nimbus Technologies

Other

Delegge Medical Dilks-Simone Enterprises, Inc. SCBIO South Carolina Chamber of Commerce South Carolina Manufacturing Extension Partnership

scra.org