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Pre-Seed Funding Vital to Business Start-Up
8/24/00-- If you are an inventor of a technology that is ready for commercialization, and you are looking for seed money to form a start-up company, Ann Arbor is a pretty good place to be. "We're lucky because the supply of seed funding and early business development resources is increasing," says Ken Nisbet, Director of New Business Development at UM's Office of Technology Transfer (OTT). "And there are firms outside of the area interested in investing in UM technologies." Venture capital firms, corporate partners, and incubators all provide seed money for start-up companies in this area.
Before a start-up is able to attract seed money, usually it must first achieve the more challenging task of securing pre-seed money. Pre-seed money is used to fund activities aimed at proving to investors that a new technology has a certain level of commercial and technical viability. These activities often include conducting a marketing assessment, developing a realistic business plan, and a creating a working prototype. Typically, technologies that have just emerged from the lab require at least $5,000-$20,000 in pre-seed funding. Says Nisbet, "Pre-seed money is vital, requires timely deployment and is in very short supply compared to seed funding."
Currently the main source of pre-seed funding for UM start-ups come from the university. The OVPR's Technology Transfer Fund provides a small grants of about $15,000 to develop prototypes, or fund other activities that will move an idea with strong technology transfer potential closer to successful transfer. The medical school has a similar fund called the Biomedical Technology Development Fund (BTDF), and the College of Engineering is establishing a pre-seed fund for engineering technologies.
In addition, the OTT has funds to protect through patents, copyrights and trademarks eligible technologies, which reduces risk to investors. OTT has also invested in regulatory approvals in certain cases where outside investment was limited and timely approval increased the likelihood of technology deployment.
Despite the current shortage of pre-seed funds in this area, inventors and investors can look forward to more of this "walk around money" walking around Michigan in the near future. Through the Emerging Technologies Fund, the Michigan Economic Development Corporation (MEDC) has committed $1 million annually in pre-seed activities such as prototyping, underwriting of consultants and initial human resource development costs, grant writing assistance and assistance seeking investors.
In addition, UM, Wayne State University and Michigan State University jointly submitted a proposal in June to MEDC's Life Sciences Corridor Fund. If funded, the joint MLSC proposal would establish a life sciences equivalent to the Emerging Technologies Fund, among other activities aimed at accelerating early technology deployment.
UM inventors interested in forming a start-up should contact Ken Nisbet at the Office of Technology Transfer (knisbet@umich.edu, 734-764-4290). Nisbet and his staff will assess the technology for commercial viability, assist with business development activities, and if the technology is eligible, they will work to secure pre-seed funding, and to attract investors.
Printed from: http://www.techtransfer.umich.edu/news_events/news/article_6.php