Guide to the Inventors’ Fund
Contents Introduction 1 About UniServices
2
Proof of concept and seed funds
5
University of Auckland Inventors’ Fund
6
Applying to UoAIF
8
A. First contact
8
B. Complete a project summary form
8
C. Investment types
8
D. Investment evaluation and decision
8
E. Investment criteria
9
F. Offer letter
9
G. Monitoring the investment
10
H. Investment returns
10
I. Timetable
10
10
J. Payment of funds
Fund application process flowchart
11
Investment Proposal Form example
13
Pro-form offer letter example
16
Introduction These guidelines introduce you to the University of Auckland Inventors’ Fund, powered by UniServices, and help you decide if you wish to apply for an investment. I would welcome any comments you have concerning the objective and operation of the fund. I would also welcome any comments you have on how these notes could be improved and made more helpful. This booklet is designed to go alongside the Guide for Researchers, also published by UniServices: http://tiny.cc/AULGuide UniServices is experienced in both the commercialisation of intellectual property (IP) and the establishment of spin-out companies based on University of Auckland research. The University of Auckland Inventors (UoAIF) aims to assist in the commercialisation of research. UniServices is responsible for identifying and evaluating potential fund investments. If you wish to discuss your research and the fund, please contact us. There is no substitute for talking to someone who has the relevant experience to provide you with specific advice relating to your circumstances. This may lead to an application for funding from the fund or assistance in accessing other sources of funding.
Will Charles General Manager, Technology Development Auckland UniServices Limited Level 10 70 Symonds Street 09 373 7522 w.charles@auckland.ac.nz www.uniservices.co.nz 1
Auckland UniServices Limited is the University of Auckland’s wholly owned technology transfer company. Established in 1987, we manage the University’s IP portfolio, working with University researchers on identifying, protecting, investing in and marketing technologies through licensing, spin-out company formation, consulting, contract research and material sales.
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We provide researchers with commercial advice, fund patent applications and legal costs, negotiate licence and spin-out company agreements, and identify and manage consultancy and contract research opportunities. We work on projects from all areas of the University’s research activities: medical and life sciences, physical sciences, social sciences and humanities. PATENTS AND LICENSING UniServices files, on average, one patent application each week and manages over 400 patent application families and 200 license agreements. We license technologies to companies that invest in developing and selling products in a timely and ethical manner. Licensees are sought from all technology and business sectors on an international basis. CREATING NEW COMPANIES We have assisted in the formation of many successful University spin-out companies, generating significant value in equity holdings for the University of Auckland and its inventors. We work with University researchers to develop new business opportunities, identifying and sourcing investment, management and professional services. 3
CONSULTING AND CONTRACT RESEARCH We provide a professional service dedicated to finding cost-effective solutions to consultancy and contract research needs of clients from the expert knowledge of University researchers and departmental services. Areas of expertise include problem solving, data analysis, and expert evaluation, due diligence, management, business development, R&D partnerships, company co‑location, services delivery contracts for education, social development and public health. MATERIAL SALES We manage the negotiation of sales agreements for biological and physical science materials developed within the University. UniServices has strong links with all the parts of the University involved in technology commercialisation and enterprise. These include the Research Office, the business school, the Centre for Entrepreneurship and Innovation and the VELOCITY Entrepreneurial Programme. Return On Science, a UniServices programme, offers consulting expertise and advice in technology transfer. It is based on our success as the University’s technology transfer company and its international investment committee advisory programme. Return On Science also helps other New Zealand universities and research organisations develop their technology transfer activities and projects.
4
Proof of concept and seed funds Auckland UniServices Limited brings to you the University of Auckland Inventors Fund (UoAIF), an “evergreen” open ended $10m investment fund accessible to University researchers and students for the development of technologies for commercialisation. For over 10 years UniServices has been providing early proof of concept and pre-seed investment to support the University’s research discoveries, ensuring that they reach a point where commercial usefulness can be demonstrated and the first steps are taken to ensure commercial viability. The availability of seed funds is critical to the commercialisation process in a number of ways – financing access to managerial skills; securing or enhancing intellectual property; supporting additional R&D; construction of prototype; preparation of business plan; covering legal costs; etc. In 2015, the University of Auckland made considerable funds available to expand UniServices investment activity. To further accelerate this growth UniServices is now making an additional $5m investment available to make the $10m University of Auckland Inventors Fund (UoAIF) a reality.
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University of Auckland Inventors’ Fund The overall objective of the Fund is to enable University researchers and students the successful transformation of good research into good businesses and exciting new products. This early investment is the riskiest stage of the venture process and typically no other sources of risk capital are available. Applications are managed by our commercialisation managers together with University researchers and presented to the relevant Return On Science investment committees (returnonscience.co.nz). The investment committees (which are owned in their entirety by UniServices) will recommend whether an application will be funded by the UoAIF. The UoAIF is an “evergreen” fund and will continue to make investments whenever possible. It also provides an opportunity for donors to support innovation and enterprise in Auckland, and to see a return to the University from successful new business ventures. The fund is an integral part of the University of Auckland’s new fundraising campaign. The following table provides an overview of the UoAIF. Further information can be obtained from UniServices. If you have a project that you believe may be suitable for the fund, please contact UniServices at UoAIF@auckland.ac.nz.
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Fund
University of Auckland Inventors Fund (UoAIF)
Status
Open
Size of the fund
$10m
Ownership of the fund
Auckland UniServices Limited
Management of fund
Auckland UniServices Limited
Investment policies
Designed to establish a sustainable fund
Level of funding
• No more than 20% of fund size on any one project • Up to $500k per application
Restriction on funding
• Not to replace or subsidise research grants
Can invest in existing companies
Yes
Investment criteria
• Innovation of science • IP • Key people • Commercial opportunity
Monitoring and reporting
Appropriate progress report schedules will be agreed between the researcher(s) and their UniServices commercialisation manager
Investment returns
UoAIF funding is expected to produce a return from equity
Investment decisions
Made by UniServices on the recommendation of the Return On Science investment committees
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Applying to UoAIF A. FIRST CONTACT A researcher and their students wishing to apply to the fund should contact a commercialisation or business manager at UniServices B. COMPLETE AN INVESTMENT PROPOSAL FORM After an initial meeting and assuming you wish to continue with your proposal, you must complete an Investment Proposal Form (see pages 13, 14 and 15). The form should be completed together with the UniServices commercialisation manager. This form will start the proposal evaluation procedure. A commercialisation manager will then take over the process and keep you informed of progress. C. INVESTMENT T YPES The fund may invest in different types of project activity, including: • proof of concept • pre-patent research • reduction to practice • commercial demonstration planning support
or
prototype
business
• spin-out company. The fund may make investments for external services (e.g. market research, business planning). D. INVESTMENT EVALUATION AND DECISION The Investment Proposal Form is circulated to members of the relevant Return On Science investment committees for their review, before presentation to UniServices. You may be 8
invited to present the proposal to the relevant investment committee for the domain of your project. The investment committees were appointed by UniServices to advise about all aspects of the fund. Current members can be found on the Return On Science website (www.returnonscience. co.nz). These committees meet monthly to review the fund’s position and discuss the investment proposals presented by UniServices. The committee reviews investments for UniServices to approve and may also make suggestions as to what might need to be changed for the proposal to be approved. Our aim is to ensure that decisions can be made quickly and with the minimum of additional paper work for researcher(s) and their department(s).
E. INVESTMENT CRITERIA The key criteria for evaluating projects include:
researcher(s). On receipt of the signed letter, we will release the funds to the appropriate destination.
• Innovation of the science
G. MONITORING THE INVESTMENT
• IP: What does the backdrop of prior art look like?
The commercialisation manager and researcher(s) will have identified and agreed a set of milestones which will form the basis of the monitoring process. The investment committee meets monthly and will expect progress reports on all investments.
• C ommercial opportunity: can the research be turned into a product or business? • Is there a market need or “pain point” that we can address? F. OFFER LET TER If the proposal is approved, we will prepare an offer letter on behalf of the fund detailing the amount to be invested and the terms. This offer letter will need to be signed by the
We recognise it may be difficult to identify clear end points in all cases, and alternative forms of progress reporting will need to be agreed.
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Applying to UoAIF H. INVESTMENT RETURNS Fund investments must offer the prospect of a financial return. Each award is made under the terms set out in the pro forma offer letter (see page 16). The normal University policies will apply when dealing with the commercialisation of intellectual property. In the case of spin-outs, the equity split is agreed between the UniServices and the researcher(s) on a case-by-case basis. I. TIMETABLE We expect to process investment proposals within four to eight weeks of receipt of the Investment Proposal Form, depending on the complexity of the proposal. J. PAYMENT OF FUNDS The approved proposals are sent to the UniServices Technology Development team for payment once the signed offer letters have been received. They will advise when the project has been activated on our system and provide a task number for funding requests and communication.
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Fund application process flowchart Investment application form UniServices commercialisation manager Researcher(s)
Return On Science Investment Committee
No
Yes
Offer letter
Project approval and code supplied
Reporting Commercialisation manager and Researcher(s)
11
Applying to UoAIF The following pages show examples of the: • Investment Proposal Form for the UoAIF • Pro-forma offer letter describing the terms under which funds from the UoAIF are made available.
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Investment Proposal Form (1) Project Title:
UniServices ref:
UniServices Commercialisation Manager:
UniServices project no:
Researcher name(s): Department(s): Project type:
Type 1: Initial proof of concept
$
(indicate the amount of funding requested per category)
Type 2: Pre-patent research
$
Type 3: Reduction to practice
$
Type 4: Commercial demonstration
$
Type 5: Start-up company
$
Brief description of technology/invention (2-3 lines):
Would you classify this technology/invention as: LIFE | PHYSICAL SCIENCE | ICT | AGTECH? (please delete as applicable) No patent applied for Status of patent application: (please delete as applicable)
Patent application
Date:
PCT application
Date:
National phase application
Date: 13
Investment Proposal Form (2) Brief description of commercial potential of project (consider the points below): • Innovation of the science: How novel is the approach compared with other research in the field? • IP: What does the backdrop of prior art look like? • Background of the key people: Who are the key researchers, etc? • Commercial opportunity: Can the research be turned into a product or business? • Is there a market need or “pain point” that the research can address?
Next step after funding (e.g. license technology, further research, form company):
Date of Investment Committee meeting at which approved:
Date:
Recommended to UniServices:
Date:
Approved for payment by:
Date:
Is this for equity in a new company? YES | NO (Please delete as applicable) If the funding is not for equity in a new company, please complete the following table: 14
Investment Proposal Form (3) ITEM
AMOUNT
Salaries (incl employer’s costs)
$
Consumables*
$
Equipment*
$
Computer hardware*
$
Computer software*
$
Bought-in services*
$
Other*
$
TOTAL
$
Funding start date:
Completion date: Date:
Instalment dates where applicable:
*PLEASE PROVIDE DETAILS
Amount: $ $ $
Has this funding been sought from other sources? YES | NO (Please delete as applicable) Other comments/issues:
Form completed by (researcher(s) to sign and date):
Date:
Form checked by: (Commercialisation Manager)
Date:
Submission agreed by: (General Manager)
Date:
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Pro-form offer letter Ref. xxxx xxx Date Dear ##, I am pleased to confirm that the Investment Committee of the University of Auckland Inventors’ Fund is prepared to recommend an investment of $[amount] on the following conditions. 1. The money will be used exclusively for the work described in your application and to achieve the milestones set out therein. 2. Any IP generated as a result of work financed by the fund will remain the property of the University of Auckland. 3. I f a new company results from work financed by the investment, the cash will be treated as equity investment and will be accorded equity in the name of UniServices on behalf of the University for the account of the fund, at the same price as the first round cash investors. In addition, at formation of the company, the fund has the opportunity to subscribe for further shares at the same price as, and on a basis no less favourable than, the first round cash investors. If the company is spun out without first round cash investors, the company will agree a side letter with the fund at the time of spinning out which sets out a mechanism under which shares will be issued to the University for the account of the fund if there is no cash investment within six months of spinning out. 4. If, rather than a new company, results from work financed by the fund generate licensing income, a portion of the net revenue will be allocated to the fund in accordance with the University’s normal revenue sharing practice that exists at the time. The researcher(s) share will not be affected. 5. UniServices requires regular progress reports on projects invested by the fund. These will be agreed jointly, based on the application and its approval. 6. This offer will remain open for four weeks from the above date. Yours sincerely, General Manager Technology Development To indicate your acceptance of these conditions, please sign and return this letter to: Auckland UniServices Ltd Level 10 70 Symonds Street Auckland Accepted Principal Investigator Date 16
Auckland UniServices Limited
Level 10, UniServices House 70 Symonds Street, Auckland Private Bag 92019 Auckland Mail Centre Auckland 1142 New Zealand +64 9 373 7522 www.uniservices.co.nz