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Yale Entrepreneurial Institute (YEI)Early Stage Capital

Yale

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Tech Boot Camp

Start Something

Venture Creation Program

Summer Fellowship Program (Accelerator)

YEI Innovation Fund

2

YEI is equipped to help students start scalable ventures by providing:

1. Funding2. Resources3. Mentors4. Space

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3

~$2K

Growing the Pool of Funds

~$15K ~$100K

Academic Year Fellowship

Promising start-ups have more opportunities to secure funding

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Sta

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Tim

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Student ventures are eligible for ~$120K in fundingStudent ventures are eligible for ~$120K in funding

YEI Innovation Fund

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YEI Funding Success

Started in 2007 More than 70 companies accelerated 3 companies acquired $70M raised in outside funding 305+ jobs created YEI grads have gone onto

MassChallenge, Ycombinator, TechStars, etc.

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Successful YEI Teams

Panorama Education

Aaron Feuer, Xan Tanner and David Carel

$4M Funding – Google Ventures, Zuckerburg, Yale

School systems engaged with students, parents and teachers participating in highly-focused, digital opinion surveys.

2012 YEI Summer Fellows

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Successful YEI Teams

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• Complex analytics for cloud computing• Founded in 2010 by Faculty Member and

SOMer• 35 Employees• Raised $17+ Million

Justin Borgman, SOM ’11, YEI ‘10Dr. Daniel Abadi, Computer Science

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NSF, NIHAcademic

Academia

Small Business

Investors

Industry

Valley of Death

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Discovery Development Commercialization

Level of Technology Maturity

FromAngus Kingon

Funding Technology Innovation

SBIR AngelVenture Capital

Senior Debt

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Venture Capital Threshold

Angel Capital ThresholdEconomicDevelopmentFunds Threshold

NSFSBIR/STTRThreshold

Technology Risk

Market Risk

People RiskFinance Risk

Friends,Family (and Fools)Threshold

What is your Enterprise Risk Profile?

Senior DebtThreshold

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Bootstrap Techniques

What you have in your pocket!Pros+ Protection of Entrepreneur’s Equity+ No Outside Oversight+ Low Cycle Time and Transaction Costs+ Certain Consulting Activities May Augment Technology

Development

Cons- Self-Funding Brings High Level of Personal Exposure- Consulting May Dilute Core Development Activities- Licensing May Erode Downstream Revenue Potential - Equity-for-Service Trades Dilute Entrepreneur Ownership

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Federal and State Funding

SBIR, STTR ($3B available annually) and other grants

Pros+ Non-Dilutive+ May Offer Federal Customer Entrée+ Potential Adjunct to Development Roadmap and Business Direction+ Clear Milestone Expectations+ Validating of Technology Direction

Cons- Government Funding Sources May Bring Less Business Expertise Than

Equity Investors - If Grants Define and Drive Development Roadmap and Business Direction,

Cancellation of Requirement Could Leave Business Without a Customer- Generally Insufficient to Bridge “Valley of Death”- May Not Be Anchored to End-User Requirements- Not All States Offer Incentives

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BioHaven Event (November)

Office Hours – – Dec. 4, 11 – Merrie London from CT Innovations

SBIR “How To” – February 11-12

*** Additional Resources Available

Yale Support for SBIR/STTR

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Angel Investment

>2M individuals w/ Net Worth > $1M “Qualified Investors”

May have investment motivations beyond Rate of Return (ROR)

Various structures – Angel funds, Individuals, Super Angels

Pros+ May be Active Advisors+ May Assist in Business-Building Activities + Less Structured Monitoring and Control than Venture Capital+ Shorter Due Diligence Cycle than Venture Capital+ Relatively Loose Terms and Conditions+ Option Pool Likely not Required+ May be Widely Accessible

Cons- May be Active Advisors- Valuation Sensitive- High Expected Rate of Return (ROR)- Limited Ability to Support Follow-On- Availability / Access Subject to Macroeconomic Climate

** TERMS VERY IMPORTANT TO POSITION COMPANY FOR DOWNSTREAM CAPITAL**

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Venture Capital

Private Equity Class Focused on Funding and Building Early Stage, High-Growth Enterprises

Pros+ Investment Validates Business Plan+ Adds Significant Value to Business+ Ability to Significantly Assist in Business-Building Activities+ Well-Structured Terms and Conditions Designed to Balance Management and Investor

Objectives+ Assistive in Finding Follow-On Financing

Cons- Extensive Due Diligence Cycle- Heavy Company Monitoring and Control- High ROR Expected- Moderately – Highly Dilutive- Expectation of Preferred Stock- Option Pool Required

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Strategic Partners

Any alliance between commercial entities that furthers business interests (Formal to informal)

– Financing– R&D– Marketing / Sales / Distribution

Pros

+ Able to Add Meaningful Business Value+ Able to Assist in Business Building Activities+ Source for Technology, Market, or Business Model Validation+ Numerous Industry contacts+ Investment from Partner May Be Relatively Valuation Insensitive+ Expect Lower ROI+ courtship by Prospective Acquirer

Cons- Restrictive Terms and Conditions- May Require Certain Preferences to the Business Partner- Can Sometimes Limit Attractiveness of Company for Future Investment

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Panelists “Advice for Accessing Early Capital”

Kyp Sirinakis – Managing Partner, Rock Spring Ventures

kyp@rockspringventures.com

Adrian Horotan – Principal, Elm Street Capital

adrian@elmvc.com

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Resources

National Venture Capital Association. Provides listings of venture capital firms and entrepreneur education. http://www.nvca.org.

Kauffman Foundation Entrepreneurship Resource Center. Education on the A to Zs of business, including venture capital. http://www.entrepreneurship.org.

National Associate of Seed and Venture Funds. Provides lists of state venture capital funds and other resources. http://www.nasvf.org.

Angel Capital Association. Provides lists of angel groups. http://www.angelcapitalassociation.org.

Small Business Administration (SBA). http://www.sba.gov

• Connecticut Innovations http://www.ctinnovations.com/

• CVG http://www.cvg.org/