Creating Successful Spin-outs

09:00 - 09:15    Course introduction

In this opening session the Course Directors, Anja Zimmermann and Jeff Skinner, shall outline what to expect from the days ahead and answer any queries you may have before starting out on three days of intense learning.

09:15 - 10:00    When and why to spin-out

There are basically two ways of commercialising a new technology as a result of academic research: licensing as is and adding value in a spin-out. How do you decide whether to form a spin-out: what are the criteria and when is the decision made? Here we explore the decision-making process and some bad reasons for spinning out.

10:00 - 10:30    Break and networking

10:30 - 11:45    Agile approach to creating a new venture

In the bad old days, we needed a business plan to be taken seriously internally or by investors. Such plans looked lovely but were often works of fiction. Then came a new, and to most of us, a refreshing methodology called ‘lean’. This prioritised purposeful experimentation and ‘customer discovery’ over planning. In this session, explore what ‘lean’ means for us and how it shapes our role

11:15 - 11:30    Break

11:45 - 12:30    Bootstrap business models

We explore when it is better not to raise finance for a business. Is it better to run the venture, initially, as a service-based consultancy that reinvests profits and grows organically?  There are significant upsides to this model, especially when you are unclear about the ‘killer application’ and when you think you have time before competitors will emerge.

12:30 - 13:30    Lunch

13:30 - 14:45    Acting like an entrepreneur

What does it mean to be a Commercial Manager of a tech-based entrepreneurial venture? We need to know the answer for two reasons: in the beginning we are often thrust into this role and because most ventures need to recruit such a person.

We need to know what this role requires: what are right skills and attitudes and what might go wrong if there is not a good peer-to-peer, relationship with the academic leads.

In this session, we study the tactics of a one such person,  to learn the what, how and why what they prioritise to add value to a new venture.

14:45 - 15:15    Break

15:15 - 16:15    Distributing equity

Most ventures develop for a year or so before raising any money. However, a lot of people can be involved and somehow their input has to be paid for, or at least recognised. The only currency a spin-out has is equity and it is tempting to start giving shares to contributors. This can be a good thing but it is often not (or is premature) especially when percentages are offered.

Here we look at one case where equity is being carved up and ask who should get what and whether there are alternatives form of compensation.

16:15 - 17:15    Academic conflict of interest

In this session, we spend a few minutes to raise awareness of the various conflicts of interest that can occur when an academic starts their own venture without leaving their university duties behind. The purpose is more to help recognise red flags than offer solutions.

19:00 - 22:00    Networking dinner

Join  the participants of all the courses, the speakers and the ASTP staff team for a meal together in a local restaurant. 

08:45 - 10:15    Valuation methods

How do you determine the value of an early-stage venture? There are a number of different methods. Some are theoretical to the point of useless, some are vague but defensible while others are without any basis whatsoever but are still in use. The truth is that each method has merits and are best used in combination, but how?

In this session we study the different methods of early-stage valuation. In order to give you a better understanding, we will attempt to weave them together using a simulation.

10:15 - 10:45    Break

10:45 - 11:45    Creating and analysing a Term Sheet

The Term Sheet is a key document that summarises the major, potentially divisive, elements of the agreement between the various parties before moving to the full ‘legals’. This is true of all deals but particularly important with spin-outs because the number of variables and parties is so much greater.

In this session you will learn the key elements, the do’s and don’ts and learn how to analyse and interpret Term Sheets.

11:45 - 12:45    The legal process: due diligence, negotiations, agreements

The legal process for forming a spin-out is far more complex than any research and development or license agreement. There can be many separate agreements covering different aspects of the investment, the company, and the relationship with the university.

The structure of these documents can set the agenda for the negotiations, and it is vital that the KTO has a clear understanding of what and who (potentially, up to four sets of lawyers) is involved.

12:45 - 13:30    Lunch and Networking

13:30 - 14:30    Licensing IP to your spin-off

Alongside an entrepreneurial team, Intellectual Property is one of the core assets in any new venture. It serves as a deterrence to imitators, should the venture become successful, and gives investors assurance that they will have a monopoly position and a healthy return on their investment. It also acts as a non-compete clause from the academic founders themselves.

However, spin-outs are fragile, so we need to take great care when licensing to a new venture in case it fails. In this session we examine the terms under which IP should be licensed to a spin-out.

14:30 - 15:30    How to use Proof-of-Concept (PoC) funds

Many KTOs have access to early-stage financing (PoC-type) funds and this will be the first independent source of dedicated finance. The tragedy is that this funding is very often wasted, spent either on the wrong things or the right things but in the wrong order. The key is prioritisation.

In this session we explore spending early-stage financing to greatest effect , and demonstrate show how such thinking links to investment strategy.

15:30 - 16:30    Break

16:00 - 17:00    The instruments investors use to balance risk and reward

There are three basic instruments that investors/ universities use to be rewarded for their money/IP. These are equity, debt and royalty. However, these are often used in strange combinations and dressed up in investors speak.

In this session we outline these instruments, talk about their purpose and the impact they have (usually shifting power and returns in favour of the investors to investors) over multiple rounds of funding.

08:30 - 09:45    Get me the money!

What are the sources of spin-out funding and how do get it? The journey starts with internal and ‘soft’ PoC funds and possible ‘bootstrapping’. Most ventures will quickly need more, and we must tap into external sources: Angel, Seed, Series A, Corporate.

What is the KTO’s role in locating, warming up and negotiating with external funders? How do you know who to accept investment from ‘venture-investor fit’? How and when do you approach investors and to what extent are KTOs, investors and founders on the same ‘side’ of the table.

09:45 - 10:00    Break

10:00 - 11:15    Joint ventures

So far, we have focused on spin-outs financed through bootstrapping (eat what you kill) or from independent venture capital.

In this session, we briefly consider joint ventureswhere the investment comes from an existing company but, unlike pure license deals, the university receives shares in the new venture. This is a more complex situation since a ‘strategic investor’ has mixed motives which may conflict with those of the university.

We study a real joint venture set up in the midst of Covid-19.

11:15 - 11:30    Break

11:30 - 12:45    Preparing for exit

If all goes well and following funding rounds, the venture and everyone in it, can hope to exit and release sizeable amount of cash.

There are a two main exit routes: a trade sale and a float. Contrary to popular belief, you do not know which it will be, though the former is more likely. Here we explore the reasons why.   

• Do we have any influence over the exit? Even if not, how can we ensure that the university receives a fair share of the proceeds? 
• How do we prevent massive dilution in a ‘pay to play’ world? 
• How effective are ‘anti-dilution clauses and ‘golden shares and royalties?

13:00 - 14:00    Lunch