Review of best practices in University Proof of Concept (POC) Gap Funding Programs from the Mind the Gap Initiative and Report, a full program development guide for fund managers covering 82 translational research, proof of concept, and start-up gap funding programs

1. Accelerating Innovation:
Proof of Concept Gap Fund Program
Best Practices
www.gapfunding.org

2. Increase awareness of the
capital gap for early-stage,
university/lab technology and
advocate for solutions, including
gap funding
Expand knowledge and create
access to best-practices for
current/aspiring gap fund
managers and stakeholders
Connect university/lab proof of
concept technologies and start-
ups to sources of early-stage
capital (venture, angel,
crowdfunding), talent, and other
peer support
inform.
advocate.
connect.
Objectives
the resource for those
interested in
university-affiliated
translational research,
proof of concept,
and pre/seed
gap funds
Research Universities
Laboratories and Hospitals
Early-stage Investors
High-tech Companies
Government Agencies
www.gapfunding.org!
• Founded in 2005
• 82 Gap Funding
Programs from 51
Universities and
Affiliated Organizations
• Over $300M Funded in
over 2,000 Projects
and Start-ups
www.gapfunding.org

3. www.innovosource.com
The Innovation Capital Continuum

4. RESEARCH TECHNOLOGY START-UP
Translational
Research
Gap Funds
Proof of
Concept
Gap Funds
Start-up
Formation
Gap Funds
Start-up
Growth
Gap Funds
Start-up
License to Existing CompanyWaive or Further Develop
Defining Gap Funding Types
Defining “Proof of Concept”
Proof of Concept (POC) programs evaluate commercial
potential, demonstrate the potential value, and take steps to
de-risk the project (real or perceived) to attract commercial
partners or investors
Pre-commercialization • $50-60K/Project • Add value/De-risk
www.gapfunding.org

5. POC Source and Sustainability
Translational Research Proof of Concept Start-up Form
16%
36%
30%
15%
24%
23%33%
31%
14%
21%
Source
Licensing Royalties
Donation/Endowment (Alumni)
Donation/Endowment (Non-Alumni)
Equity Return
Federal Program
State/Region Program
Local Program
Venture Capital
Angel Capital
Corporate Support
Translational Research Proof of Concept Start-up Formation
15%
14%
16%
36%
30%
15%
24%
23%33%
31%
14%
21%
ni)
Type of Fund
Translational Research Proof of Concept Start-up Formati
0 2 4 6
Number of Funds
0 10 20
Number of Funds
0 5
Number of Fund
License Royalties/Equity Returns
Donations and Endowments (Alumni)
Donations and Endowments (Non-Alumni)
Federal Programs
State/Region Programs
Local Programs
Venture Capital
Angel Capital
Corporate Support
3
2
2
1
1
1
1
15
13
129
3
4
2
2
2
2
2
1
1
1
1
1
5
3
3
6
6
4 2
2
2
1
1
1
1
1
• 70¢ for every $1 comes from the sponsoring university
• Increasing trend in donations and public programs
• Strategy for source/sustainability should tie directly to
intended impact, expectations of fund
Source Sustainability
~$500K
www.gapfunding.org

6. POC Process and Best Practices
PROMOTION
INTAKE
EVALUATION
DECISION
OVERSIGHT
Promotion
• Open and Targeted Approach
• Transparent Communication of Process
• Established Internal/External
Communication Channels
• Showcase the Impact
www.gapfunding.org

7. POC Process and Best Practices
PROMOTION
INTAKE
EVALUATION
DECISION
OVERSIGHT
Intake
• Collect Adequate Applicant Information
• Provide Proposal Assistance
• Submission Management System
www.gapfunding.org

8. POC Process and Best Practices
PROMOTION
INTAKE
EVALUATION
DECISION
OVERSIGHT
Evaluation and Decision-Making
• Defined, Consistent Evaluation Criteria
• Use Review as a Teachable Moment
• Scorecard + External Advisory Board
• Purposeful Feedback
Advisory Board Breakout
PaidRFRFirst View
www.gapfunding.org

9. POC Process and Best Practices
PROMOTION
INTAKE
EVALUATION
DECISION
OVERSIGHT
Oversight
• Annual Impact, 3-yr Operational
Assessment/Benchmarking
• Tranche or Milestone Investment
• Evangelism and Program Feedback
www.gapfunding.org

10. POC Support Programs
www.gapfunding.org

11. POC Impact Horizons
Immediate Nearterm Midterm Longterm
Catalyzing the Commercialization Process
Growing a Community of Innovation
Building Businesses and Creating Jobs
Attracting Capital and Expertise
Returning Capital
1-3 Years 3-5 Years 5 +Years
Expected Time from Initial Investment
www.gapfunding.org

12. Some POC Impact…
• Catalyzing the Commercialization Process
ü 35% Yield Rate
ü 43 out of every 100 commercialized, 80% startups
• Growing a Community of Innovation
ü 4,000 Faculty, 11,000 External Stakeholders
• Building Businesses and Creating Jobs
ü 322 Start-up Companies, 6,300 Reported Jobs
ü 71% Five Year Survival Rate
• Attracting Capital and Expertise
ü $2.1B Leveraged on $90M in Funding
ü Up to $12 Government/Angel and $148 VC per $1
• Returning Capital
ü Jury Still Out! Future Reporting
www.gapfunding.org

13. A Shot at Forecasting POC…
1)In the next three years, we will see some major returns from POC
funded deals (that happened 5-10 years ago!)
2)US Government will follow emerging economies in aggressively funding
POC
3)Larger venture capital funds/large banks will spin out microfunds to
invest in Pre-seed/POC
4)Corporations will look at getting more involved in POC funds as
matching sponsors, advisors
5)Smart university POC managers will see their role as connector/process
innovators, not business developers/ entrepreneurs
www.gapfunding.org

14. Additional Resources can be found at:
www.gapfunding.org
www.innovosource.com
• The Mind the Gap Report: Detailed analysis of
82 university research, POC, and start-up gap
funding programs
• Over 4,000 stories showcasing funds and
activity
• 25 hours of archived and upcoming web-
workshops for gap fund program managers and
www.gapfunding.org
Including: