Tech Focus
Dr. Brian Herman, UTHSCSA
Dr. Brian Herman, Vice President of Research at the UT Health Science Center at San Antonio gives an inside look at hot new UTHSCSA discoveries and  shares his market-driven approach to driving education, research and the growth of a knowledge-based economy in San Antonio.
>> Read Article

From the Tech Startup Desk $32 Million More & Counting!
SATAI announces 2009 results that demonstrate achievement in the mission to Inspire, Create and Grow technology companies.  In 2009, 14 clients raised over $32 million in external financing, making the total raised since 2003 over $159 million.  "We are proud of our client accomplishments to jump start technology businesses in South Texas, said Jim Poage, President & CEO of SATAI.
>> Read Article

Tech Focus

By Analisa Nazareno 

The University of Texas Health Science Center has long been a dynamic force in the San Antonio economy, driving the city's $16 billion health and biotechnology sector. 

Within the past few years, a number of elements have come together for the university that could accelerate the growth of the city's health and biotechnology industry.  This could move cutting-edge medical research more quickly to the marketplace, where that new technology can more effectively help save lives.

"It's a very exciting time," said Dr. Brian Herman, vice president for research at the UTHSCSA.

Since 2000, research funding at the UTHSCSA has more than tripled from $84 million in sponsored research to $270 million in 2010.  Research innovations are the seeds from which biotechnology breakthrough companies are grown.

Next year, the UTHSCSA will open the South Texas Research Facility, a new $150 million research building that will house 40 research teams in 200,000 square feet of ultra-modern laboratory space.

This year, the UTHSCSA exceeded its $300 million fundraising goal and generated $340 million in donations that will be used for the construction of the new research facility, the recruitment of top-notch faculty, scholarships for students, and medical research.

Two years ago, the University of Texas formally opened the South Texas Technology Management (STTM) office, which now assists the UTHSCSA and the UT systems San Antonio, Brownsville and Pan Am campuses with patenting and licensing of intellectual property created through university research.

The office, Herman said, has taken a "market-driven" approach to evaluating intellectual property, and aggressively reached out to the business community to license patents and facilitate partnerships.

At the same time, the UTHSCSA modified its promotion and tenure standards so the university now considers technology transfer, or the commercialization of research – patenting, licensing, company formation, and revenue generation – as part of faculty performance review.

"We view commercialization here at the UT Health Science Center as an extremely important goal," Herman said. "The commercialization process actually allows us to distribute our new knowledge much more quickly than would happen if we just published it in scientific journals."

And, Herman added: "It's becoming more and more important to have a functional intellectual property office to attract some of the brightest talent in the country."

Under the new intellectual property guidelines, faculty members stand to earn 37.5 percent of the first $250,000 in net proceeds gained from commercial licensing of their discoveries, and 40 percent of net earnings beyond the first $250,000. 

"They can do quite well if they have a successful idea, invention, or reagent," Herman said. "That's a tremendous incentive for the faculty to be thinking about whether what they are doing has some value commercially." 

With greater incentives to move research to the marketplace and with a formal office in place to aggressively help researchers with commercialization, more UTHSCSA discoveries are coming closer to the marketplace and potentially saving lives.  Herman said the following is just a sampling: 

- Dr. Leonid Bunegin, an associate professor of anesthesiology, is working with two local entrepreneurs, who have licensed his patented device and approach to preserving organs for transplantation.  They are working to develop and market that device, which uses a technology called "fluidics" to continuously deliver oxygen and nutrients into the organ, keeping the organ alive for 24 hours and giving the organ a 95 percent chance of resuming normal function immediately after transplantation.

- Microbiology and immunology professors, Dr. Guangming Zhong of UTHSCSA and Dr. Bernard Arulanandam of UTSA, are working together to develop a vaccine for Chlamydia, targeting the common sexually transmitted bacterium Chlamydia trachomatis, as part of an exclusive license and sponsored research agreement with Merck & Co., Inc

-Dr. Daniel DeArmond, assistant professor in the UTHSCSA is developing a device to detect gastrointestinal leakage after GI surgery.  DeArmond applied for and was awarded a $15,000 Morrison Trust grant to continue work on the device.  Herman said STTM and the UTHSCSA are in the early stages of marketing and developing this discovery for commercialization.

"These are just a few examples.  There are other things that are going on as well," Herman said. "There have been other companies that have been started by our faculty.  We've had about 15 companies that have spun out of the university from faculty inventions.  Vidacare is one of those."

Vidacare – which was a SATAI client company, founded in 2001 – has had recent success in marketing and distributing the EZ-IO, a device that penetrates into the bone marrow to more quickly and effectively deliver drugs and intravenous fluids to patients in emergency care.  Dr. Larry Miller, an emergency medical doctor, developed the EZ-IO in partnership with researchers at the UTHSCSA. 

"I think that everybody does win from commercialization," Herman said. "The faculty benefit from their own hard work, the institution benefits, society benefits, and the economy may benefit.  So there are a lot of returns that are multiplied across the spectrum by having the faculty being able to do this."

Herman said with the various new pieces in place at the UTHSCSA, the community's greater understanding of the importance of education and research, and greater incentives for researchers to bring their research to the market, he sees the San Antonio bio-health economy growing and the city moving toward a knowledge-based economy.

"The health care-bioscience industry is now the largest economic engine in San Antonio," Herman said.

With the ongoing work of city-wide partners, such as SATAI, BioMed SA, investors, and community leaders, the UTHSCSA will help lead the city in creating many of those knowledge-based jobs through the commercialization of research.

"I think that creating the ability of San Antonio to create new knowledge, with the growth of UTSA toward being a Tier 1 institution, the partnerships the Health Science Center is entering with other educational institutions in the community, all this is going to be increasing and it's going to leverage and yield a stronger base in which we'll be able to attract more industry to San Antonio," Herman said.

Back to Top

From the Tech Startup Desk
$32 Million More & Counting!

By Jim Poage, President & CEO, SATAI & STRCIC 

In case you didn't see the headlines a couple weeks ago – anyone that is not involved in this entrepreneur network every day may not see or recognize how effective it is, but it is alive, well and keeps improving – the results speak for themselves.  We had 5 more clients raise money in 2009 than in 2008, and the $32 million raised is more than triple the investments our clients secured in 2008 –  making the total raised from 2003 to 2009 $159 million. The investment sources in 2009 were roughly 1/3 from early stage angel investors, 1/3 from state institutional funds, and 1/3 from traditional Venture Capital firms.  Collaboration between organizations in the region is key to the success of the technology sector, and we look forward to driving efforts to Inspire, Create, and Grow technology companies.

SATAI – Measures of South Texas Technology Sector Success

Inspire

• SATAI served 962 clients since 2003 (213 in 2009)
• SATAI hosted the STARs Technology Innovation Conference in 2009 with 300+ attendees
• SATAI hosted or participated in 48 entrepreneur-focused events in 2009

Create

• 31 of the 215 SATAI clients achieved portfolio status in 2009. Those 31 portfolio clients reported:
• 465 investor pitches were delivered
• 14 companies received 27 rounds of investment
• 20 companies hired 56 new employees
• 31 companies had 423 employees
• 79 SATAI clients received investment since 2003   

Grow

• SATAI clients received $159 million in investment since 2003 ($32 million of which came in 2009)
• Based on an Economic Impact Study performed by the Center for Community and Business Research by the Institute for Economic Development at The University of Texas at San Antonio, the 2009 economic impact of the 31 companies is as follows
• 423 jobs supported 556 additional jobs (261 indirectly supported, and 295 induced)
• Average pay for the 423 employees is $64,219¹
• Total economic impact of $209 million Total tax revenue is $4.7 million

"Collaboration between organizations in the region is key to the success of the technology sector and these outstanding results speak for themselves," added Poage.

SATAI continues to grow the sources of funding available to innovators and new ventures in South Texas.  "Most entrepreneurs come to us looking for funding for their venture," said David Clark, Director of Investment Services of SATAI.  "We advise our clients of the many sources of capital available for startup companies. We have a platform of more than 20 diverse funding sources so clients can pursue multiple options.  We are eager to talk to public and private organizations that are interested in funding innovation and startup technology companies."

¹Compared to estimated median household income of $42,261 (http://www.city-data.com/city/San-Antonio-Texas.html Retrieved 2010-03-15.)

Back to Top

Entrepreneur's Corner
20+ Sources of Funding

By Bruce Hughes, Project Manager, SATAI & STRCIC 

On March 3, as part of the InnoTech event, I participated on a panel at the Emerging Medical Technology Symposium entitled:  "BUSINESS:  General Business Practices."  The focus of my presentation was the federal government's SBIR/STTR programs, which can be a significant source of non-dilutive capital.  If you have a significant breakthrough technology, and it is something that one of the eleven federal agencies need, you can get the development of the technology paid for and still keep your intellectual property rights.  While that source of funding was relevant for a number of those in the audience, I also directed them to a number of other sources of equity, grant, and loan funding such as the ETF, CPRIT, the McDermott Fund, etc.  At SATAI we help our clients figure out which sources of funding are available to them and help them get a step-wise plan in place to prepare for and apply to all sources of funding that are relevant to the growth and development of their business.  Some of the resources on which we can draw are listed below.

• Accion Texas
• www.acciontexas.org
• Angel Investors
• http://www.satai.us/investment/investment_stan.html
• http://www.angelcapitalassociation.org
• Banks – traditional lenders & SBA loan Guarantees
• http://www.sba.gov/
• Certified Development Companies
• http://www.nadco.org/i4a/pages/index.cfm?pageid=1
• CPRIT
• http://www.cprit.state.tx.us/
• EDCO Ventures
• http://edcoonline.org/
• Incubators (Non Profit)
• Roadrunner Incubator  http://business.utsa.edu/cite/cite_rrincubator.aspx
• UTSA Institute for Cyber Security (ICS) Incubator  http://www.ics.utsa.edu/
• T3DC –  http://www.t3dc.org
• Incubators (For Profit)
• Idea Finishing School  http://www.ideafinishingschool.com/
• Microsoft BizSpark
• Inquire with SATAI,  a Network Partner, at marketing@satai.us
• http://www.microsoft.com/BizSpark/
• National Instruments Green Engineering Grant
• http://zone.ni.com/devzone/cda/tut/p/id/10346
• Contact SATAI about obtaining a sponsor
• POCsparc
• http://www.utsystem.edu/sttm/sparc.shtml
• Private Foundations
• http://foundationcenter.org/
• SBIR / STTR
• http://www.zyn.com/sbir/
• Texas Emerging Technology Fund
• http://strcic.com/
• http://www.emergingtechfund.com
• Texas Enterprise Fund
• http://governor.state.tx.us/ecodev/financial_resources/texas_enterprise_fund/
• Texas Small Business Loan Fund
• http://www.raconline.org/funding/funding_details.php?funding_id=1388
• UT Ignition Fund
• http://www.utsystem.edu/sttm/tif.shtml
• Venture Capital
• http://www.nvca.org/index.php?option=com_mtree&Itemid=173

To learn more call SATAI.  To assist you in preparing to get funded, we recommend you attend the SATAI New Venture Forum which is a series of three-hour sessions. To learn more click here.

Back to Top

Investor's Beat
Current News and National Perspectives

By Jim Poage, President & CEO, SATAI & STRCIC 

SATAI has been a member of the National Association of Seed and Venture Funds for several years.  They provide a great resource to us on a number of fronts, one of those being the periodic NetNews newsletter. You will find a regular link to it on the homepage of our website www.satai.us.

Below are links to articles of interest to investors from a wide variety of news sources around the US picked from current and immediately past issues of NetNews.  We believe that they are germane and hope you find them as valuable as we do.

• Senator Dodd's Bill Gets Even Worse! (click here to link to draft bill)
• Family and Friends More Important than Angel's Help
• Have Start-Up, Will Travel: 'Start-Up Bus' Yields Winners at SXSW
• Ohio 2010 Venture Capital Outlook: Public-Private Strategy Is Key to Success
• Private-Equity, Venture-Capital Funds Escape Regulatory Net
• Survey Finds VCs Bullish on Clean Tech Energy Storage
• Student Clean Energy Plans Win Cash and Acclaim
• SRI Funds Significantly Outperformed Benchmarks in 2009
• Local Group Re-mobilizes to Attract Angel Investment in MI Tech Companies
• Venture Capital Shifts to Energy Efficiency Investments
• VCs Preferred Life Sciences in 2009
• Three Ps Increase Chances of Raising Capital

Back to Top

Sales Tips
Do You Need to Farm, or Do You Need to Hunt?

By David Clark, Director of Investment Services, SATAI & STRCIC

As you start the process of hiring a salesperson for your organization first you must determine your sales objectives and strategies for that person.  These are not tactics nor are they marketing strategies.  A primary consideration should be whether you want this person to secure new customers or to derive additional revenues from your existing customer base.  Obviously the answer always is 'Both'!!

Unfortunately those that can do both well are very hard to find.  Secondly, if you find such a salesperson, they can (and probably should) be quite expensive.

Compensation plans will drive the sales person to do what you wish.  Highly incentivized sales plan tied directly to sales and or revenue production tend to appeal to Hunters more than Farmers.  Plans which reward customer development, use MBO's, and incent strategic customer planning tend to appeal to Farmers.  So, when you go to hire a sales person make sure your sales compensation plan will attract the type of sales person you are seeking.

Each business, from time to time should re-examine and re-align its sales and marketing strategy.  Many time companies fail to consider the sales compensation plan as part of this re-alignment.  Don't make the mistake of modifying sales objectives without modifying the incentives.  For example, in a period of economic downturn you may decide the current sales strategy should be changed to focus on retaining existing customers rather than getting new ones.  If your compensation plan fails to align with this new strategic plan you could be in trouble.  Likewise, if you decide to 'farm' the customer base and your sales force is comprised of all Hunters you could be in trouble also.

Here are some attributes of each:

Hiring a farmer for a hunter objective and hiring a hunter for a farmer objective will only insure that everyone is unhappy.

Back to Top

No Kidding?
Top 10.5 Lies Investor Don't Want to Hear

By Jim Poage¹, President & CEO, SATAI & STRCIC

Rarely a day goes by that I don't hear at least one of these "turn offs."  My experience has shown that when one of these sneak into the presentation, credibility takes a hit.  If you are making an investor pitch, see if you can take all of these out.

¹Derived from Guy Kawasaki's ongoing iterations and personal experience.

Back to Top