SC Launch Annual Report 2012

ANNUAL REPORT 2012

SCRA Technology Ventures’ SC Launch program is a leader in growing South Carolina’s Knowledge Economy.

helps grow knowledge-based businesses by assisting early-stage companies with technology development and commercialization, ultimately creating jobs.

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1) Integro Earth Fuels and other companies entering the SC Launch program are provided resources to further their technology. 2) SC Launch supports start-up companies, like 52apps, from South Carolina research universities. 3) SETi received Phase I SBIR matching from SC Launch to test their UVCLEAN® LED lamps. 4) CareCam Innovations received a second investment from SC Launch for their healthcare documentation technology. 5) SC Launch has helped 12 companies relocate to South Carolina, including Climax Global Energy. 6) CreatiVasc and other SC Launch companies have secured over $185 million in follow-on funding. 7) SC Launch helps innovative companies like ISI Technology commercialize technologies across a wide range of industries and disciplines. 8) Proterra received help from SC Launch to bridge the financing gap and attract large-scale, venture capital investment funding. 9) SC Launch provides companies with access to federal government and commercial markets: Zipit Wireless is partnering with Verizon Wireless to sell their Zipit® Enterprise Critical Messaging Solution™. 10) SC Launch companies receive priority access to SCRA Innovation Centers: Immunologix was purchased by bioscience industry leader Intrexon and expanded its operations at the SCRA MUSC Innovation Center in Charleston.

11) The SC Launch Resource Network is committed to helping companies succeed and mature.

INITIAL INVESTMENT In 2006, SCRA contributed $12 million of retained earnings to establish the SC Launch Program.

CONTINUING INVESTMENT

$17 million used to design and build three SCRA Innovation Centers $36 million in annual tax-incented private donations over 7 years

$65 million generated and directed to support the growth of technology companies.

CUMULATIVE OUTCOMES

185,000,000

Dollars in follow-on capital secured by SC Launch Portfolio Companies

64,000

Average salary (in dollars) of the jobs created

434

Contributors to the Industry Partnership Fund

279

Entities receiving funding

135

Companies currently receiving support services

54

Entities receiving portfolio investments

44

SBIR/STTR matching grants awarded

35

Demonstration projects funded and executed

12

Landing parties in South Carolina

5

National and international economic development awards

2

National American Business Awards 2012 Executive of the Year and 2011 Non-Profit of the Year

provides an ecosystem of support for companies through connections with business, academic and economic development sectors in South Carolina.

RidePost

a trusted community connecting travelers across the country RidePost is an online marketplace connecting drivers and passengers for safe and social travel. The service is hosted on a free and open platform that is designed to dramatically reduce the cost of travel, while increasing the ease of mobility. RidePost allows its members to harness the power of their existing online social networks to create their own travel experience. With its proactive security features, RidePost removes anonymity from the transaction - empowering its members to know who they are getting in the car with before the trip begins.

RidePost plans to go nationwide and is seeking funding and strategic relationships in transportation, public policy and technology sectors.

RidePost is a member of The Iron Yard’s Summer 2012 graduating class. The Iron Yard is a three month mentorship-driven accelerator program based in Greenville, South Carolina and sponsored by SCRA Technology Ventures.

Integro Earth Fuels

renewable fuels and energy systems Integro Earth Fuels developed a proprietary torrefaction process in which biomass is heated in the absence of oxygen to create a carbon-neutral direct or drop-in substitute for coal (known as NuCoalÂŽ). NuCoal enables utilities and industrial users of coal to meet clean energy standards at a cost lower than most competing renewable options.

Integro Earth Fuels has been approved for a demonstration grant through SC Launch. They have begun construction of a midscale manufacturing plant to produce renewable fuel at South Carolina Technology and Aviation Center in Greenville.

supports early stage start-ups from South Carolina research universities through University Start-Up Assistance.

Tiger Bioanalytics

rapid, accurate and inexpensive DNA sequencing Tiger Bioanalytics is a Clemson University start-up company dedicated to the development and commercialization of DNA sequencers and other related bioanalytic devices.

The company is developing cutting-edge technologies for advancing personalized medicine, cancer screening, disease diagnosis and drug development.

Although the gene sequencing industry is continues to grow and improve, high costs, long sequencing times and low accuracy harm the advancement of genomics as a productive clinical tool. Material costs of near $10,000 for one analysis, three to ten days to complete a genome review and around a 99 percent accuracy level leads to the possibility of 30 million erroneous reads. Tiger Bioanalytics’ DNA sequencing methodology aims to provide high accuracy, around 99.99999 percent, or less than 300 errors. SC Launch provided the company with University Start-Up Assistance to help with intellectual property development and other start-up costs.

52apps

mobile software startup 52apps is a Columbia-based company founded by students at the University of South Carolina. The software and computer programming company currently develops apps for the iPhone, iPad and Android device market. These apps are based on ideas submitted by the general public. The company shares royalties with the originator of the idea. The company’s apps have received over 500,000 downloads.

52apps received SC Launch assistance and is housed in the USC Columbia Technology Incubator. 52apps has hired six staff members with plans for additional employees as the company continues to develop a portfolio of innovative projects.

matches Phase I SBIR/STTR funding, multiplying the benefit to recipient companies and increasing the impact of federal funds.

Sensor Electronic Technology, Inc.

commercializing UV LEDs for disinfection applications Sensor Electronic Technology, Inc. (SETi) is the world’s leading supplier of germicidal ultraviolet light emitting diodes (UV LEDs). These LEDs, operating in the UV light spectrum are being integrated into healthy lifestyle consumer products for disinfection of water, surfaces and air. The SC Launch Phase I Matching Grant helped SETi demonstrate 99.99 percent disinfection of E-coli in a drinking water system using their UVCLEANŽ LED lamps.

The National Science Foundation subsequently awarded SETi with a Phase II grant to design, develop, fabricate and demonstrate water treatment units, using only UV LEDs, with reduced power consumption and extended reliability.

Continuing their work on water disinfection, SETi recently received $1.6 million from the Office of Naval Research to develop a self-contained, portable water purification system incorporating its UV LED technology for military and disaster relief markets. SETi production facilities are based in Columbia, South Carolina.

FirstString Research, Inc.

scar prevention, inflammation reduction and tissue regeneration FirstString Research, Inc. is a clinical stage biotechnology company, leading the translation of cell-to-cell communication and cell-to-cell contact and adhesion science for scar prevention, inflammation reduction, wound healing and complex tissue regeneration. The company is currently advancing GranexinTM Gel, the topical formulation of a lead peptide, through three Phase II human clinical trials.

FirstString Research has received several forms of support from SC Launch including a matching SBIR grant and an equity investment.

provides supplemental capital in the form of loans and investments to complement funding from individual investors, angel investment groups, lenders, private equity firms and other sources.

CareCam Innovations video healthcare record

CareCam Innovations is a Greenville-based company with a vision for their patented carecentric video system to become the standard of healthcare documentation. CareCam’s solutions create an accurate, comprehensive, instantly retrievable record while decreasing the documentation burden on the providers.

CareCam Innovations is leading a South Carolina statewide initiative focused on improving the health of diabetic patients. The collaboration includes SCRA, AT&T, Blue Cross Shield and Blue Choice of South Carolina, Palmetto Care Provider Group and Greenville Hospital System. This effort is the first to take place in the country and uses CareCam’s patented software technology and mobile smart phones provided to diabetic patients throughout South Carolina. Through this demonstration project CareCam is testing the compliance and adherence to clinician instructions, through use of video recall, to improve care for patients and reduce cost for payers and providers.

CareCam received their second SC Launch investment in May 2012 to expand product development and work on demonstration projects.

CharlestonPharma

innovative therapeutic antibodies for cancer patients CharlestonPharma is a cancer therapy company cofounded by a MUSC researcher and two veteran biotechnology executives. The company is working to develop safer, more effective cancer therapies. Their first-in-class, fully human antibodies target nucleolin, a receptor protein that can be found in a wide variety of cancers and leukemias, but not on normal cells in the body. CharlestonPharma believes their antibodies may provide selective, tumorspecific therapy to cancer patients.

CharlestonPharma received SC Launch investments in 2011 and 2012. The company is housed in the SCRA MUSC Innovation Center in Charleston. The Innovation Center’s readyto-use wet lab space and close proximity to MUSC have helped significantly accelerate CharlestonPharma’s product development.

helps companies relocate to South Carolina to take advantage of an environment supportive of business goals and revenue growth.

Climax Global Energy

renewable waste-to-fuel technology Climax Global Energy is a start-up company which has developed and is commercializing a new alternative energy technology that uses microwave energy to convert low value hydrocarbons, such as waste plastics and heavy oils, to high value synthetic oil products.

Climax Global uses an energy efficient technology called pyrolysis which uses ten to fifteen percent of the energy content of the waste to run the process. Furthermore, production of synthetic petroleum by Climax reduces the amount of oil that must be extracted by traditional drilling. The process can produce five barrels of oil from each ton of plastics.

In 2012, Climax Global Energy launched operations of a new plastics-to-oil recycling plant in Barnwell County expected to create twenty new jobs. The facility is designed to convert mixed waste plastics that usually are buried in landfills into high grade synthetic oil, which can be refined into diesel fuel, lubricants and commercial waxes. This environmentally beneficial process developed in South Carolina will be replicated across the US and internationally, creating a profitable solution for problematic waste streams, while creating hundreds of manufacturing jobs. Climax Global received an equity investment from SC Launch in 2008.

Pandoodle

customized media technology for advertising Pandoodle is a personalized, digital media technology company that relocated their offices from California to Columbia, South Carolina in 2011 with help from SC Launch. The company’s patented technologies and production systems provide turn-key setup and delivery of customized video. This can be used, for example, to dynamically insert targeted product placements directly into an online video once a user begins to watch it. A businessperson in Columbia streaming a TV show might see a poster in the background advertising a new exhibit at the Columbia Museum of Art. An artist in Greenville watching the same show would see the same poster advertising a new restaurant on Main Street. This has been compared to eBay and Google AdSense but for video brand placement.

SC Launch invested in Pandoodle in 2011, allowing them to move faster and enable further growth of the company.

companies have secured over $185 million in follow-on funding from private equity and venture capital sources.

CreatiVasc Medical

kidney dialysis connectivity CreatiVasc Medical developed an innovative, implantable valve system that assists with kidney dialysis patients. SC Launch support enabled accelerated product design, development and clinical testing. This set the stage for the company to raise nearly $3.5 million in private equity funding. The SC Launch Resource Partners program identified an in-state prototype developer and a manufacturer for a new component of the valve system and a new device the company is currently evaluating.

During 2012, CreatiVasc was chosen by FDA as one of three companies nationally to participate in the agency’s new Innovation Pathway program, which collaborates with innovators to speed important medical devices to market while safeguarding patient safety. The company has also received approval to expand its valve system’s clinical trial to Johns Hopkins.

KIYATEC, Inc.

cell culture goes 3D KIYATEC, Inc. advances pharmaceutical drug discovery through its 3D cell-based assay services and products. An early investment from SC Launch helped KIYATEC take technology developed at Clemson University to the commercial market.

Follow-on SC Launch funds assisted KIYATEC in relocating to new laboratory space at the Greenville Hospital System’s ITOR – Institute for Translational Oncology Research. ITOR allows doctors, researchers and businesses to pool their talents, which enables them to more efficiently perform cancer research and develop treatments. KIYATEC has secured Series A investment funding, furthering their research and commercialization capabilities and allowing them to more rapidly increase their market presence. Proceeds from the financing will be used to launch two 3D cell-based assays for more predictive evaluation of cancer treatment efficacy and certain kinds of liver toxicity.

helps innovative companies commercialize novel technologies across a wide range of industries including advanced materials, aerospace, alternative energy, automotive and bioscience.

ISI Technology

immediate, safe, infinite hot water ISI Technology has developed a breakthrough technology for electric liquid heaters that delivers best in class energy, water and space savings. The company’s unique technology and Heatworks™ line of residential tankless electric water heaters solves the quality and reliability shortcomings associated with existing products. It enhances the operational experience with highly accurate temperature control from low to high flow rates. The HeatWorks™ line of products are optimized for apartment, home and condominium applications. Electric savings range from eight percent to fifty percent and water savings can exceed ten percent.

ISI Technology received an SC Launch investment in 2012, enabling them to strengthen and grow in South Carolina. The ISI HeatWorks™ products will be commercially available in 2013.

SmartTruck

increasing fuel efficiency through aerodynamic upgrades SmartTruck, headquartered in Greenville, South Carolina, is bringing the next generation of aerodynamic products to the trucking industry. SmartTruck has announced over 20,000 units in actual deliveries and firm backlog. Their newest system is manufactured entirely in the USA and is made of 100 percent recycled material. SmartTruck products are available with new equipment or as a retrofit to existing equipment. Installation times for most fleets are under one hour.

SmartTruck has created several systems, all certified with the US EPA. Depending on which one is deployed on a trailer, fuel savings can range from 5.5 percent to more than 10 percent. SmartTruck systems have proven durable with less than one percent replacement rate.

investments help bridge the financing gap, enabling knowledge economy start-ups to germinate, grow and attract large-scale private investment funding.

Proterra, Inc.

electric bus manufacturer Proterra, Inc. has become a leading innovator of zero emission commercial vehicles. The company’s EcoRide BE35™ bus is made of lightweight composite materials and with state-of-the-art battery technology that allows for a full recharge in less than ten minutes.

The bus recently became the first full-size, heavy-duty, battery-electric transit bus to ever pass a stringent federal test that simulates 12 years of vehicle life. The extensive test, known as Altoona testing, evaluates the bus on structural integrity and durability, reliability, maintainability (ease of servicing and other maintenance), noise, fuel economy and emissions. The EcoRide BE35™ has the highest fuel economy and the lowest noise of any full-size passenger bus ever tested. The successful test results demonstrate the quality of the buses, but they also enable Proterra to sell them to transit agencies that can purchase them using federal transportation grants.

Proterra relocated to South Carolina with support from the SC Launch program. The company is headquartered in Greenville, South Carolina because of the close proximity to the Clemson University International Center for Automotive Research (CU-ICAR). The EcoRide™ is either already or will soon be in operation in Austin and San Antonio, Texas; Burbank, Pomona and Stockton, California; Fort Lewis, Washington; Tallahassee, Florida; Columbia and Seneca, South Carolina and Worcester, Massachusetts.

The company and its buses are garnering a lot of attention for innovations in clean energy, sustainability, quality and the promotion of public transportation. The company was recently honored as a White House Champion of Change in Transportation and was one of 18 international finalists for the Financial Times Citi Ingenuity Award.

helps companies gain access to federal government and national-level commercial markets.

Zipit Wireless

wireless devices for critical messaging Zipit Wireless develops wireless devices and infrastructure software. Zipit recently launched the Zipit® Enterprise Critical Messaging Solution™ product through an exclusive partnership with Verizon Wireless. This two-way paging system delivers a comprehensive solution addressing the needs of industries relying on critical communications. Verizon’s national sales force is helping take this new product to the commercial market.

Zipit Wireless has received investments and other support from the SC Launch program over several years.

MIT-RCF

reengineering carbon fiber, reclaiming the environment MIT-RCF developed a method of recycling and reusing carbon fiber to manufacture complex-shaped performance parts. Fibers are reclaimed from carbon-based components and materials and are used in the company’s 3-DEP™ process to mold preforms and or roll good materials that are then utilized to make parts. MIT-RCF’s reclamation technology solves a critical problem for industries that use carbon fiber products. It is detrimental to the environment if placed in landfills because it does not break down naturally. MIT-RCF plans to employ up to 120 people within the next five years at its 49,300 square foot facility in Lake City, South Carolina.

Pictured below is a process for making composites using recycled carbon fiber materials from MIT-RCF. The raw carbon fiber materials were derived from scrap parts, including aircraft processing scrap and components from Boeing. The 3-DEP preform shown here, a hatch door for a recreational boat, is placed into molds and infused with a resin. The inclusion of the carbon fiber gives the newly-formed parts much greater tensile strength than fiberglass that is typically used, as well as reduces the overall weight.

Rapid Application of New Technologies

Innovation Centers are critical infrastructure for the Knowledge Economy.

SC Launch-supported companies receive priority access to SCRA’s Innovation Centers.

SCRA Innovation Centers are a sustaining component of South Carolina’s Knowledge Economy. These Centers, which were built in close alignment with South Carolina’s research universities, represent stepping stones from basic research to market-ready technologies.

They are places where intellectual property can be developed into technologies and companies can grow and commercialize research discoveries.

The SCRA MUSC Innovation Center facility in Charleston, South Carolina features offices and labs fully equipped for biopharma, biomed and biotech research and commercialization.

Operations housed at the facility include a company that generates antibodies from human tissue and a pharmaceutical company that develops treatments for cancer and other diseases. The center earned an ‘Excellence in Construction’ award from the Associated Builders and Contractors of the Carolinas.

The SCRA USC Innovation Center in Columbia, South Carolina houses high-tech companies entering scale-up manufacturing stages. Tenants include one of the largest and fastest growing data storage and management companies in the state and the manufacturing operations of a company that builds light emitting diodes used as semiconductors.

Duke Energy Innovation Center in Anderson, South Carolina houses SCRA’s advanced materials applied research operations and secure rooms for sensitive work. Much of SCRA’s award-winning advanced materials for prosthetics project work is conducted at this facility.

The building earned LEED Certified Gold Rating from the US Green Building Council.

SCRA’s Innovation Centers were awarded the International Economic Development Council’s Gold Excellence in Economic Development Award. The honor recognized the role of the Centers in supporting SCRA’s commitment to creating start-up companies and high-paying jobs in South Carolina.

provides access to a Resource Network of experienced organizations to help companies succeed past early-stage growth.

SC Launch would like to thank our Resource Partners for their services.

SC Launch is able to provide all mandated services through the generous support and commitment of our Resource Partners.

Accounting n Bauknight Pietras & Stormer, P.A. n Elliott Davis Banking n BB&T n Square 1 Bank n Wells Fargo Bank, NA Business Services n Cedar Ventures, LLC n Ceterus Inc. n Knowledge Capital Group (KCG) n SC Financial Advisors n The Baciocco Group, Inc. (TBG) Engineering n Flextronics n UEC Electronics, LLC (UEC) n Vetronix Human Resources n Clarke & Company Benefits, LLC n Corporate Benefits, Inc. n KeenanSuggs n The Kidder Group n McPherson, Berry & Associates, Inc. n Smart Work | Network, Inc. Information Technology n Carolina Software As A Service (CSASS) n Cyberwoven n Immedion n ProActive Technology n Productivity Solutions Training (PST) n VC3 Insurance/Risk Management n Clarke & Company Benefits, LLC n Corporate Benefits, Inc. n KeenanSuggs n Neace Lukens

Legal n Dority & Manning n entrepreneurs law group n Haynsworth Sinkler Boyd, P.A. n McNair Law Firm n Michael D. Layman n Monahan & Moses, LLC n Nelson Mullins Riley & Scarborough n Ogletree Deakins n Stipkala, LLC n Willcox, Buyck & Williams, P.A. n Womble Carlyle Sandridge & Rice n Wyche Sales & Marketing n Byrum Innovation Group, Inc. (BIG) n CarterTodd & Associates n Chernoff Newman n Dynamic Exhibits n ECI n GrowthSpring Group n JC Rose & Associates n Post No Bills, Inc. n Smoak Public Relations n Strategic Marketing International (SMI) n Strategic Partner n Trevelino/Keller Communications n VantagePoint SBIR/STTR Assistance n Nimbus Technologies Other n SCBIO n South Carolina Chamber of Commerce n South Carolina Manufacturing Extension Partnership

program operations are lean and efficient, assuring the majority of funds are invested in entrepreneurial company growth to support the Knowledge Economy.

SC Launch makes judicious investments with funds and resources, generating strong returns and promoting job creation.

SC Launch funds are carefully invested to generate many favorable outcomes for client companies and the state of South Carolina. On a consistent basis, SC Launch program operations have been lean and efficient, assuring that most program funds directly support the growth of the Knowledge Economy.

SC Launch was started in 2006 using $12 million of SCRA’s retained earnings. The Industry Partnership Fund was created by the state legislature to sustain South Carolina’s Knowledge Economy development beyond SCRA’s initial investment. Annual funds of $6 million in tax-incented private donations support the commercialization of university research and general market intellectual property, finance start-up and spin-out companies plus provide incubation and business services.

Certain services are mandated by the state. They include: market research, intellectual property protection, finance, management and business practices, relevant science and technology, industry research partner recruitment and other support designed to advise and assist new company growth.

Uses of SC Launch Funds in Fiscal Year 2012

SC Launch targets investments for maximum benefit to South Carolina 6% 9%

8% 16%

13% 34%

4%

76%

11%

23% Program Operations Mandated Support Services Direct to Entrepreneurs

Advanced Materials Automotive/Transportation Chemical/Engineering Information Technology

Life Sciences Defense Energy

is a high-achieving program that continues to attain national and international recognition by experts in knowledge-based economic development.

SC Launch leads development of the Knowledge Economy in South Carolina by creating companies, jobs and technologies.

The SC Launch team executes all 34 line item mandates in the Innovation Centers Act of 2005 and the Industry Partnership Act of 2006 on behalf of the state of South Carolina. The SC Launch Board is an experienced commercialization forum that ensures SC Launch is supporting the companies that will have a lasting positive impact on South Carolina’s economic future.

SC Launch has been recognized by the Southern Growth Policies Board, Forbes and the International Economic Development Council. SCRA’s Bill Mahoney received the Gold Stevie from the American Business Awards as 2012 Non-Profit Executive of the Year. In 2011, based on a review of SC Launch, SCRA was named National Nonprofit Organization of the Year by the American Business Awards for leading entrepreneurial economic development.

The SC Launch program was recognized by Forbes as one of the top five economic development programs in the nation. Forbes stated that the program’s efforts attract angel and venture investment which serves to strengthen the area’s entrepreneurial ecosystem.

Accolades from SC Launch companies and partners.

“Having access to the Resource Network on a subsidized basis is fundamentally important to us as entrepreneurs as we’re trying to launch our companies.”

- Michael Bolick, President of Lab 21 “SC Launch played a crucial role in making Zipit happen. I have said this many times, without SC Launch, Zipit would not exist today.”

- Frank Greer, CEO of Zipit “Jobs are something people understand, and the thousands of jobs that SCRA supports in our state is significant...it’s not just the number of jobs, it’s the quality of jobs.”

- Dr. Doug Woodward, Director Division of Research, Moore School of Business at the University of SC

The SC Launch team pictured from left: Greg Clark, Derek Willis, Mark Housley, Greg Hillman, Ambrose Schwallie, Marty Ettlemyer and Lori Mack.

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