Request for Information (RFI) - SUNY RF

Research Foundation for State University of New York Venture Capital Fund Development Request for Information 20150526

Request for Information (RFI) The Research Foundation for State University of New York Release Date: October 20, 2015

Responses Due: November 20, 2015 by 5:00 PM Eastern Time


Audience: The audience for this RFI includes:          

Seed stage investors, Public-private investors, Entrepreneurs, Innovators with demonstrated success of commercializing technology out of a university, University connected incubators, High technology corporate venture principals in fields such as Biotech & Life Sciences, Cleantech & Renewable Energy, Advanced Materials & Manufacturing, Digital Learning, or other areas, Startup accelerator leaders, Angel investors and organizers, Venture capital leaders and experts, Other individuals with experience in high technology startup development

Specific Purpose: The specific purpose of this RFI is to seek feedback regarding translation of SUNY research and innovation to startup formation, acceleration, growth and development across New York State through a public-private SUNY venture fund. We seek feedback as to how to best leverage the “Power of SUNY”, the combined research, innovation and applied learning strengths of SUNY’s campuses, including its seven university centers, as well as comprehensive and technical institutions. The SUNY research enterprise is $1.0 billion with 2,622 principal investigators. SUNY campuses employ 34,024 expert faculty, and SUNY has a total student enrollment of 459,550. By these measures, SUNY is the largest university system in the world. Specific feedback may include public-private seed stage activities focused on translating innovation while also providing a return on investment. Startup companies may emerge from SUNY intellectual property, out of one of SUNY’s 18 incubator sites, or a SUNY supported STARTUP-NY1 zone. Feedback may include ideas on how SUNY could build upon emerging industry sector strengths. Startup companies may leverage the SUNY’s Networks of Excellence2 (NoE), technology concepts developed out of the SUNY Technology Accelerator Fund3 (TAF), SUNY research areas matching opportunities with

SUNY Tax-free Areas to Revitalize and Transform UPState New York, www.startup.ny.gov https://www.suny.edu/impact/research/networks-of-excellence/ 3 http://www.rfsuny.org/Our-Work/Innovation-and-Partnerships/Programs/Technology-Accelerator-Fund/ 1 2


SBIR/STTR4 funding, or other related areas. Feedback may include how to connect research experts to entrepreneurial leaders, advisors or mentors. We seek to open a dialogue to better understand the breadth of strategies that can be designed and implemented. Once completed, this RFI may lead to further partnership discussions including but not limited to the development of a venture fund committed to developing SUNY technology for both strategic impact and financial return objectives.

Background – Impact of SUNY: SUNY is the largest university system in the world. The SUNY research enterprise is $1.0 billion with 2,622 principal investigators. SUNY campuses employ 34,024 expert faculty, and SUNY has a total student enrollment of 459,550. The RF was founded in 1951 to support SUNY’s research enterprise and to capitalize on the scale and diversity of the SUNY system as an engine of New York State’s innovation economy. Key industry sectors include Biotech & Life Sciences, Cleantech & Renewable Energy, Advanced Materials & Manufacturing, Digital Learning, among other areas. RF works with leaders at SUNY campuses to support research and discovery administration of sponsored projects, technology transfer and intellectual property development and incubator services. Across the SUNY enterprise there are over 70 companies that have licensed technology from SUNY, 99 approved businesses in a SUNY sponsored STARTUP-NY zone and over 400 tenants and graduates of one of SUNY’s 17 business incubator programs. There is an opportunity to leverage the scale, breadth and depth of these programs to source deals for venture funding. Opportunity: Leverage SUNY’s Leading Position with STARTUP-NY. As a system, SUNY is a critical player in Governor Cuomo’s STARTUP-NY program. Through STARTUP-NY, businesses which locate in a tax-free area may be able to operate 100% tax-free for ten years. Benefits to businesses include no income tax for eligible employees (with caps after certain income levels after five years), no business or corporate state taxes (with certain limitations), no sales tax, no property tax and no franchise fees. While pre-revenue startups may not yet see the benefit of business related taxes, there are clear benefits to earlystage startup companies regarding attracting and retaining talent with respect to no personal income taxes. Benefits to both the startup and the university including developing deeper relationships with industry supply chain, including small and large businesses. The majority of STARTUP-NY activities to date are associated with SUNY. Key performance metrics include: 

50 of 72 STARTUP-NY university campuses are SUNY locations;

4

https://www.sbir.gov/about/about-sttr


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335 of 411 New York’s designated STARTUP-NY zones, comprising more than 4.0 million of the 4.6 million square feet of STARTUP-NY space, are located on SUNY campuses;

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SUNY has nearly 2,000 acres of land for STARTUP-NY development, representing 99% of the program total.

Opportunity: Leverage SUNY’s Leading Positions in Innovation. As a system, SUNY is in strong position to make an impact. As a system, the State University of New York, through the Research Foundation for SUNY, is ranked5: 

#1 in the state of New York in terms of total research expenditures ($1,003M) during the year,

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#1 in the state in terms of university-connected industry research ($175M) during the year,

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#1 in the state in terms of cumulative operating startups (73),

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#1 in the state in terms of startups having a home base of business in New York (10),

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#2 in the state in terms of new startups initiated during the year (12).

Opportunity: Leverage SUNY Campuses’ World-Leading Research Initiatives. SUNY campuses continue to lead major research initiatives for the United States, contributing to high technology economy of New York. Recent examples include: 

In July 2015, Governor Cuomo and Vice President Joseph Biden announced a total investment of over $600 million, including more than $250 million by New York State, to support a $110 million award by the Department of Defense, a multi-state “Integrated Photonics Institute for Manufacturing Innovation”;

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In September 2015, Binghamton University received a new $75 million federal initiative to advance flexible hybrid electronics manufacturing, the first of its kind in the United States. Potential applications and startup fields include health monitoring patches, medical devices, sensors, imaging systems, prosthetic devices, energy storage and energy harvesting devices;

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In August 2015, SUNY Buffalo received a $16.0 million Clinical and Translational Science Award (CTSA). The grant establishes the Buffalo Translational Consortium in partnership with the Roswell Park Cancer Institute, the Great Lakes Health System, UBMD and other community health organizations.

Opportunity: Leverage SUNY’s Demonstrated Success in Developing Startup Companies. Over the period from 2005 to 2014, there were 509 startup companies having some affiliation with SUNY, characterized as having received a license agreement from SUNY, operated in one of 18 SUNY incubators, 5

Rankings determined from data organized by the Association of University Technology Managers, Statistical Access for Technology Transfer database accessed 9/30/15


or participated in a SUNY managed STARTUP-NY area. 71 of these companies received investment from an investor. Three notable examples of a SUNY startup include: 

Peptidream, founded in 2006, now with headquarters in Tokyo Japan, with a previous relationship with University of Buffalo, is a biopharmaceutical company focused on developing novel peptides. In 2013, Peptidream had an IPO value of over $2 billion.

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Map Pharmaceuticals, founded in 2003, with previous relationship with Stony Brook University and the Long Island High Technology Incubator, was invested by Perseus-Soros, Pequot Ventures, Bay City Capital, Skyline Ventures, among others. In 2013, Map Pharmaceuticals was acquired by Allergan for over $950 million.

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Liaizon, founded in 2007, is a STARTUP-NY company located in a University of Buffalo STARTUP zone, with research and academic relationships with the University of Buffalo, invested by Rand Capital, Ingleside Investors, Bain Capital Ventures, Fidelity Biosciences, Bessemer Venture Partners, among others.

Objective: The immediate objective is to solicit information and feedback regarding potential approaches for a venture fund with a focus on high technology, university related startups. The RF may, at its sole discretion, select certain respondents to follow up on key issues, strategies or opportunities. A long-term objective is the development of sufficient early-stage private capital investments, and/or coinvestments, into SUNY-related startups. The goal is to increase the quality and frequency of venture capital investors and co-investors. Another goal is to enhance activity and engagement with seed stage investors, public-private investors, entrepreneurs, innovators, high technology corporate venture principals, startup accelerator leaders, angel investors and organizers, venture capital leaders and other individuals with experience in high technology startup development.

Information Requested: The RF seeks to explore options for the development of a public/private early stage investment fund in such a way that maximizes utilization of existing infrastructure and programs, and mirrors current and accepted practices. Feedback may include, but not limited to:  Impact both innovation and economic development strategic goals, and a return on investment financial goals (“double-bottom line impact”),  Operational models to enhance deal flow out of the research and student enterprise,  Methods of decision making and selection based on quality,  Engaging with entrepreneurial talent including leadership, advisory and mentorship,  How to define and measure success,  Stage and industry sector dependencies,  Other key factors


Please frame responses to this RFI using the following questions and topics and provide information under each section as necessary or appropriate to your knowledge and experience: Organizational Background and Experience 1. Background: Provide general background information about your organization including location, industry sector focus, investment stage focus, geography investment focus (if applicable), history and management 2. Experience: Provide details regarding your experience in high technology venture capital development and deployment including number of funds raised to date, current assets under management and number of companies in your portfolio, or other experience related to high technology ventures 3. Other Venture Partners: Please discuss other venture partnerships you have engaged in, the partnerships you have been able to develop and effective strategies and approaches to these partnerships. Also provide insights in terms of the risks of such partnerships and potential mitigation strategies. 4. Co-Investments. Describe how you have been able to drive co-investments to financings of specific high technology startups, driving both deal sourcing and selection. If available, please provide metrics for leverage ratios of direct to co-investor. 5. University Partnerships: Discuss any experience you have working directly with a university, either public or private, and whether formally or informally. Provide your general impressions regarding this experience including challenges, risks, opportunities and areas in which you feel universities could improve the degree to which they are leveraging their resources to attract investment capital. 6. Impact to the University Culture. Please provide information regarding how efforts with high technology venture capital led to a positive impact to the university. For example, you may describe how efforts with venture capital led to commercialization of university technology; applied learning experiences for science, technology, business or other students; creating an ecosystem of innovation and entrepreneurship at the university; and overall contributing to a culture of innovation. 7. Engaging with Entrepreneurs: Describe your experience attracting and building relationships with experienced entrepreneurs as leaders, advisors and mentors. 8. SBIR/STTR and related funding. Describe your experience utilizing federal SBIR/STTR and related funding. 9. Industry/Corporate Experience: Describe your experience in engaging industry directly whether in identifying potential acquisition targets for VC exit or through the development of corporate venture interest in portfolio companies for potential syndication.


Proposed RF-SUNY Venture Fund Structure 1. Focus: Provide your thoughts or details regarding your experience in focused investments based on criteria such as geography, stage or industry sector. 2. Organization: Provide your thoughts on organizational structure including financial considerations, management fees and interest and compensation. 3. Origination: Provide your thoughts on origination of deals related to technologies and startups out of the university. 4. Due Diligence and Selection: Provide your thoughts on selection criteria such as due diligence, participation, follow-on investments, exclusion criteria, and other factors. 5. Portfolio Management: Provide your thoughts on managing the portfolio of investments post transaction. Include best practices, activities, risks and contingencies. Discuss how to best track performance of investments, and approaches to address under-performing investments. 6. Transaction costs: Please discuss transactional costs associated with venture investing and strategies to mitigate or limit costs. 7. Challenges: Discuss any potential limitations and/or challenges that you would anticipate given the objectives of the program and any strategies you might suggest for addressing these challenges. 8. Performance Metrics and Key Performance Indicators (KPI’s): How would you measure success for the proposed fund and over what time frame would you expect to be able to determine whether the program has been successful? 9. Other: Please provide any additional information you feel would be helpful in framing this program as well as other suggestions we may consider as we begin discussions with potential partners. Other: This RFI will be used for information only and does not represent any obligation on the part of the RF. Any responses will not be taken as an obligation or representation of desired partnership. The RF reserves the exclusive right to proceed to partner with one or more respondents as a result of this RFI and may in its sole discretion determine to issue further solicitation or targeted inquiry as needed for clarification. There should be no assumption of confidentiality on the part of the respondents; as such, respondents should not include any proprietary information in their responses. Response Submission: Responses should an Adobe print document file (PDF) be by email. A paper copy may also be sent in but the preferred format is PDF by email. Electronic responses should be addressed to: [email protected]


Paper submissions should be sent to: The Research Foundation for SUNY, Division of the Vice President for Innovation and Partnerships, 35 State Street, Albany NY 12077 If you have technical questions concerning this RFI, contact Mr. Gregory O’Connor, Director of New Ventures, at 212-364-5788 or [email protected]