Pre-Seed & Entrepreneurial Success Initiative

FY 2010 Bidders ConferenceDecember 4, 2009

Agenda

• Welcome and Introductions

• Ohio Third Frontier

• Commercialization Framework

• Pre-Seed & Entrepreneurial Success Initiative (OTFPSESI)

• Q & A

• Closing Remarks

Ohio Third Frontier

Background

• The Ohio Third Frontier was initiated in February 2002 and, with a commitment of $1.35 billion, is the state's largest-ever economic development initiative

• Ohio’s investment has leveraged $4.1 billion in additional investments from the private sector and federal government

• Program investments have helped to create 598 new companies, more than 8,500 new jobs, and more than 48,000 direct and indirect jobs

Ohio Third Frontier

Vision

To establish, in targeted areas of technology, regional and statewide clusters of excellence that sustain our global competitive advantage in company and product formation, job creation and economic growth.

Ohio Third Frontier

Objectives

Guided by a focus on Ohio research and industrial strengths:

• Increase the quantity of high quality research that has commercial relevance to Ohio companies;

• Expand access and availability of investment capital to create, grow and attract technology-based enterprises;

• Grow and nurture entrepreneurial management talent supported by organized systems of services and networking;

• Address the technical needs of existing companies pursuing new products and production processes;

• Contribute to the expansion of a technologically proficient workforce.

Focus Areas

Based on a 2002 study by Battelle and revised by the Ohio Third Frontier Commission in 2008, the Ohio Third Frontier embraces five technology focus areas:

BiomedicalAdvanced/Alternative Energy

Instruments, Controls, ElectronicsAdvanced Materials

Advanced Propulsion

Ohio Third Frontier

Ohio Third Frontier - Investment Highlights

• Statewide Entrepreneurial Signature Program (ESP) established and organized around 6 regional networks

• 46 pre-seed and seed funds capitalized

• 13 Wright Centers of Innovation (including one Mega-Center) established

• Endowments for 26 Ohio Research Scholars

• More than 80 advanced energy projects supporting the growth of the fuel cell and photovoltaic clusters

• 3,000 STEM interns placed in over 700 companies

Research Commercialization Programs- Wright Projects Program RFP open

- R & D Center Attraction (New) RFP open

Entrepreneurial Programs - Pre-Seed & Entrepreneurial Success Initiative RFP open

Cluster Development Programs- Advanced Materials Program (New) RFP closed- Sensors Program (New) RFP closed- Advanced Energy Program RFP closed- Fuel Cell Program RFP closed- Photovoltaic Program (New) RFP closed- Medical Imaging Program (New) RFP TBR- Biomedical Program (New) RFP TBR- Targeted Industry Attraction Grants

Human Capital Programs- Third Frontier Internship Program

TBR = To Be Released

Ohio Third Frontier FY2010 Programs

Mobilizing Resources

for Incubating

MARKET ENTRYto Prove

Commercial Viability

DEMONSTRATINGProducts & Processes

in Commercial Context

IMAGININGthe Commercial

Opportunity

INCUBATINGto Define

Commercial-izability

Mobilizing Resources for Demonstrating

Mobilizing Resources for Market Entry

Mobilizing Resources for

Growth & Sustainability

GROWTH & SUSTAINABILITY

to Generate Financial Returns

PHASES OF DEVELOPMENT TO CREATE PROOF

TRANSITIONS TO MOBILIZE RESOURCES

THE PROCESS OF TECHNOLOGY COMMERCIALIZATION

Adapted from Jolly, Vijay K., Commercializing New Technologies, Getting from Mind to Market, Harvard Business Press, 1997

OTFPSESI

Commercialization Framework

Ohio Third Frontier

Pre-Seed & Entrepreneurial Success Initiative

Fiscal Year 2010

Program Purpose• Provide continuing support to existing Ohio Third Frontier Pre-

Seed Funds and related entrepreneurial support programs that have demonstrated success in using previously awarded Grant Funds to created measurable economic benefit for the state through support of Ohio technology-based companies in the Imagining, Incubating, and Demonstrating phases of commercialization.

Program Goal and Objectives

• To provide capital to eligible Pre-Seed Funds to enable them to build on their proven successes in applying investment capital to companies in the Imagining, Incubating or Demonstrating phases of commercialization by catalyzing their ability to raise new private monies so that either additional investments can be made to existing portfolio companies to extend their “runway” or investments can be made in new companies to expand the investment portfolio; and

• To provide funding to eligible Entrepreneurial Signature Program Lead Applicants to build on proven success in delivering entrepreneurial assistance services to help companies in the Imagining, Incubating, or Demonstrating phases of commercialization.

Eligible PurposesThe OTF will fund grant applications that focus on:

• Investment and service opportunities that are focused on the following technology areas: Biomedical, Advanced/Alternative Energy, Instruments-Controls-Electronics, Advanced Materials, and Advanced Propulsion;

• Investment opportunities that are designed to provide follow-on funding to existing portfolio companies that need additional financing or provide investments for new opportunities; and

• Entrepreneurial services that have a proven record of success and that are discrete, value added activities that meet an identified unfulfilled need in the region.

Eligible Lead Applicants

• Eligible Lead Applicants are limited to Existing Pre-Seed Funds and management teams of Existing Pre-Seed Funds or existing Ohio Third Frontier Entrepreneurial Signature Programs.

• This RFP recognizes three types of Lead Applicant: – Pre-Seed Fund Lead Applicant– Entrepreneurial Success Fund Lead Applicant– Combined Purpose Lead Applicant

• Eligible Lead Applicant organizations are listed in section 2.3.2 of the RFP.

Funding

• Development anticipates awarding up to $11 million through the FY10 OTFPSESI to eligible Lead Applicants across the designated funding categories.

Funding

Pre-Seed Fund

• The Lead Applicant’s plan must be based on a grant in the range of $500,000 - $2 million;

• The Lead Applicant may use up to 10% of Grant Funds awarded for Due Diligence;

• The Lead Applicant may use up to 10% of Grant Funds awarded for Enhanced Management Services;

Funding

Entrepreneurial Success Fund

• The Lead Applicant’s plan must be based on a grant in the range of $500,000 - $2 million; and,

• The Lead Applicant may draw on the grant to reimburse itself or collaborators for budgeted expenses.

Funding

Combined Proposal

• The Lead Applicant’s plan must be based on a grant in the range of $1 million - $4 million;

• For the Pre-Seed portion of the Grant, the Lead Applicant may use up to 10% of Grant Funds awarded for Due Diligence; and

• For the Pre-Seed portion of the Grant, the Lead Applicant may use up to 10% of Grant Funds awarded for Enhanced Management Services.

• The Lead Applicant may draw on the Grant Funds to make investments in Ohio-based technology companies or to reimburse itself for approved Due Diligence or Enhanced Management Services expenses or entrepreneurial assistance services.

Cost SharePre-Seed Fund• The Lead Applicant must meet or exceed the Cost Share requirement of $1 of Cost

Share for $1 of Grant Funds.

Entrepreneurial Success Fund • The Lead Applicant must meet or exceed the Cost Share requirement of $1 of Cost

Share for $1 of Grant Funds.

Combined Fund Proposal• The Cost Share requirement applies to the total combined request and must meet or

exceed the Cost Share requirement of $1 of Cost Share for $1 of Grant Funds. In a combined proposal, Cost Share may be overmatched on the Fund(s) or entrepreneurial assistance and the excess cost share raised may be used to meet the Cost Share requirement for the other proposed activities.

Note: Cost share is not required from each and every collaborator on a proposal.

Escrow Agreement

• Within 90 days of the beginning of the Project Period, all Pre-Seed Fund Grantees must select an escrow agent who is a public depository; a list of the approved public depository banking institutions will be provided by Development.

• Grantees must sign an escrow agreement in a form provided by Development.

• Grantees may then receive an initial advance payment of up to 15% of the total grant award. Subsequent payments shall be made following the receipt of a written request and are subject to approval of performance reports.

Proposal Evaluation Criteria

The following criteria have been designated with the highest relevance to and weighting for the OTFPSESI:

- Alignment of the Proposal with the OTFPSESI purpose, goals, objectives, eligibility, funding, and Cost

Share requirements as described in Section 2 of the RFPs

- Quality of responses to the requirements of the RFPs as outlined in sections 3.3.6 through 3.3.12 of the RFPs

- Compliance with the RFPs’ administrative requirements

- Past Performance

Proposal Evaluation Criteria

- 3.3.6 The Opportunity

- 3.3.7 Operations

- 3.3.8 Success and Track Record

- 3.3.9 Projected Economic Impacts & Regional Priorities

- 3.3.10 Experience and Qualifications

- 3.3.11 Budget

- 3.3.12 Collaborator Information/Letters of Commitment

Review Process

Administrative Review

– Conducted by Development staff

– Receive and process proposals to screen Proposals for compliance with the objective content requirements defined in this RFP.

– Forward to external evaluators for technical review

Technical Review

– Conducted by external evaluators

– First-stage review to determine which proposals meet the charge of RFP.

– Passing proposals move to the second-stage review in which applicants address questions submitted to Development by the evaluator.

Timeline

November 17, 2009 RFP Released

December 16, 2009 LOIs due by 2:00 p.m.

January 29, 2010 Proposals due by 2:00 p.m.

February – March 2010 Review Process

Approximately March 2010 Award Announcements

Be sure to use the current version of the RFP and application / budget forms

RFP Modifications & Clarifications

• From time to time, it may be necessary to modify or clarify portions of the RFPs, as well as the forms. In that event, we will post a document titled “RFP Modifications and Clarifications” to the RFP page for the particular program on the Third Frontier website. The document will have an explanation of any changes.

• It is your responsibility to be aware of any RFP modifications and to ensure that your proposal conforms with any such modifications

Policy & Administrative Questions

• All questions must be submitted via e-mail

• E-mail: OTFPSESI2010@development.ohio.gov» with subject line “OTFPSESI Q&A”

* LOIs are to be submitted to the respective e-mail address, with

the subject line of “2010 OTFPSESI LOI”

• Frequently asked questions will be posted on the Third Frontier web site: www.thirdfrontier.com

Major Changes from FY09 RFP• No new Lead Applicants are eligible to apply for funding;

• Eligible Lead Applicants are limited to Existing Pre-Seed Funds and management teams of Existing Pre-Seed Funds or existing Ohio Third Frontier Entrepreneurial Signature Programs;

• Proposals must include at least one collaborator;

• Cost Share is 1:1 for all applicants and all activities; and,

• Proposals from an eligible Lead Applicant that combine the capitalization of a For-Profit and/or a Not-For-Profit Pre-Seed Fund with support for entrepreneurial assistance activities will be accepted. Cost Share requirement will apply to the total combined request and must meet or exceed a 1:1 ratio.

• Budget Forms have changed – only use the changed Forms!

Things to Avoid

Collaborations

• Failure to consider/involve OTF grantees when it makes sense

• Involving OTF grantees when it doesn’t add value

• Window dressing and a cast of thousands

• Hollow letters of support

Things to Avoid

Administrative Issues

• Failure to submit a Letter of Intent

• Late proposals – deadline is 2:00 p.m.

• Ignoring page limitations

• Appending material

Questions?