Meeting minutes 6 30 14 (3)

i-GATE NEST Board Meeting Meeting Minutes June 30, 2014

INTRODUCTIONS/ROLL CALL Present: Mayor John Marchand, Art Pontau, Rick Lazansky, Sblend Sblendorio, Dr. Marshall Kamena, Mayor Tim Sbranti (Time), Council Member Newell Arnerich, Mayor Jerry Thorne, Alex Greenwood, Marc Roberts, Nelson Fialho, Joe Calabrigo, Linda Smith Call In: Rameet Kohli, Bjornulf White, Dr. Woody Clark Excused absence: Chairman Shail Khiyara CITIZENS FORUM none ACCEPTANCE OF MINUTES Tabled until next meeting MATTERS FOR CONSIDERATION Downtown Facility Update Brandon Cardwell provided an update on the progress of the downtown facility renovation, stating that the facility is scheduled to open on 7/7. Brandon stated that last item to be completed is the IT networking infrastructure, which has been delayed due to a technical issue the ISP is working through. Brandon showed several photos of the renovated space, including flooring, paint, and furnishing upgrades.

Brandon provided an update on some of the prospective companies/entrepreneurs that are interested in joining the space; companies range from radiation nuclear detection to mobile app startups. Brandon noted that all of i-GATE’s current portfolio companies are exploring moving out of the Longard facility into their own space, though some may end up moving downtown.

CEO Search Update Mayor Marchand provided an update on the three candidates interviewed, stating that each had qualities that the committee liked, but that no one candidate possessed all the skills necessary to be successful.

Mayor Marchand stated that there had been discussion of appointing Mark Wilhelm as interim CEO in advance of this board meeting, and if he was not ultimately selected for the permanent role, Mark would return to his position as a Venture Advisor. It was then discovered that Mark was not a member of i-GATE’s Venture Advisory Board, and it seemed inappropriate for the search committee to try to appoint him to the Venture Advisors without the consent of the VAB. Mayor Marchand commented that it ultimately made sense to wait until this board meeting to

discuss the CEO search and hear more about potential partnership opportunities with Innovation Tri-Valley.

Council Member Arnerich asked if it made sense to put the CEO search on hold until we explore models of partnership with Innovation Tri-Valley that may result in i-GATE not needing a CEO. Council Member Arnerich noted that we will be out of our lease on Longard in September, and that and the CEO represent the two biggest costs to i-GATE. He stated that if i-GATE is going to stand alone, it definitely needs a CEO, but if it was to combine with another organization, it may not need to have one to be successful.

Mayor Marchand echoed that it is not necessary to hire a CEO at this point, and that we should wait until after the downtown facility is operational and figure out what that model is.

Board Member Kohli asked who would be responsible for day-to-day operations if we forgo bringing on a CEO. Council Member Arnerich stated that in the interim Brandon Cardwell would run the day-to-day, as he has for a long time. He stated the CEO position is responsible for carrying out vision recruiting. In looking at the partnership opportunity with Innovation Tri-Valley, we should evaluate the strengths of each organization. ITV is great at marketing, and i-GATE is not.

Council Member Arnerich commented that i-GATE has struggled in the past from trying to have a CEO do too many things. The question is whether a partnership opportunity with ITV allows iGATE to reach the GEs and other established companies, which is what the CEO would have been responsible for. And if the facility can start to pay for itself, then i-GATE can start to focus on other important things like attracting companies.

Vice Chairman White noted that he agrees that from a tactical perspective, i-GATE doesn’t need a CEO, but i-GATE does need some to serve as at least an interim chief executive or executive director.

Mayor Marchand commented that Brandon Cardwell has been performing that role, and he recommended installing Brandon as interim executive director.

Brandon Cardwell offered that he is willing to serve in that capacity, but asked if the appointment is necessary if the position may only be vacant for a few weeks depending on the outcome of the potential partnership with ITV. Vice Chairman White stated that there really needs to be someone in charge at all times, so appointing someone to that position is necessary.

Mayor Marchand moved to appoint Brandon Cardwell as interim executive director.

Council Member Arnerich seconded.

Board Member Kohli asked if there is a job description associated with the position that Brandon Cardwell would be assuming.

Council Member Arnerich suggested keeping it simple by making the interim position responsible for management of daily operations until such time that the board makes the decision to merge or not merge with Innovation Tri-Valley.

Mayor Sbranti agreed that in the near term, operations are the priority.

Vice Chairman White stated his belief that the bylaws identify the specific items that rise to the board level, and all other items by default become the responsibility of the executive director.

Board Member Kohli asked if we are then taking the current slate of CEO candidates off the table, and will the search committee then inform the candidates.

Council Member Arnerich suggested that the candidates be told that we are not sure at this point if the CEO position will be filled.

Board Member Kamena stated that he thinks this is good short term measure, but that we should remember that our previous CEO was unable to perform some of the tasks necessary to the job, including going after corporate funding. Board Member Kamena commented that saving money by not hiring a CEO may not be the best strategy if we are going to need someone in that position to raise money once we finalize our plan. Even if we have a partnership with ITV, we should not expect ITV to raise funds or conduct marketing for i-GATE. Council Member Arnerich concurred, and stated this is a near term solution.

Mayor Marchand noted that i-GATE has had four or five CEOs, and none of them have been able to raise corporate funds. He stated that each of the partner cities have stated their desire to stop funding i-GATE at some point. ITV is very good at raising corporate money.

Board Member Kamena commented that there is a difference between having a person who is good at raising corporate money and that person being willing to share it.

Mayor Marchand agreed.

Vice Chairman White recommended an agenda item for the next meeting be the description of the roles of the executive director and the board of directors, and that the outstanding motion be addressed now.

The motion to appoint Brandon Cardwell as interim executive director of NEST carried unanimously.

Partnership Opportunity with Innovation Tri-Valley Brandon Cardwell briefly went through the presentation provided in the meeting packet that describes the potential partnership. Brandon noted that the presentation is intended to identify the strategic advantages of partnership without being prescriptive about the mechanics of the partnership, which is a board level topic for discussion.

Brandon discussed the value of being able to connect i-GATE’s startup community with the established business community, providing the example of connecting TerrAvion with regional wineries during TerrAvion’s product development process, and the success that resulted.

Brandon stated that strong linkages to the established business community are essential, not just so that i-GATE can try to raise money, but so that i-GATE can demonstrate value to corporate partners, which is required to be able to raise funds. In order to demonstrate value, iGATE has to show the business community what it is doing. By introducing established

businesses to technologies and products they want to use, acquire, or collaborate with, we can replicate some of the other innovation centers, like PlugandPlay, are doing. We don’t have the ability to do that well right now.

The value that i-GATE brings to ITV is a demonstrable platform for accelerating innovation, which they do not currently have. i-GATE has successfully accelerated companies and has a physical environment that people can visit to see a tangible example of what is happening in the Tri-Valley.

Brandon Cardwell also mentioned that partnering would enable both organizations to focus resources on objectives of mutual interest. There will be some items that ITV is working on, like permit streamlining, that may not be as important to i-GATE, but areas like STEM education are critical to building a workforce that can support startups in the long term. And in areas like branding, marketing, and lab-related initiatives, i-GATE and ITV definitely have common objectives. In fact, the labs have asked us to work more closely together.

Brandon also discussed the need to ensure clear governance, accountability, reporting structures, and financial responsibility under any partnership structure.

In conclusion, Brandon Cardwell stated that the most successful innovation ecosystems around the country and the world are engaging the “full stack” of innovators, from the business leadership level early stage startup founders. He noted that the presentation is intentionally light on details, and a white paper is under development that provides a highly detailed suggested framework.

Board Member Kohli asked if this would be a no-cost relationship, and if this would result in collaborative opportunities to raise funds together.

Brandon stated that at this point there have been no discussions of funds changing hands between ITV and i-GATE, and that over the long term there may opportunities to jointly fund raise, but at this point the organizations are interested in feeling each other out more.

ITV has raised a substantial amount of private capital over the years, and they are understandably wary of sending that over to i-GATE. Brandon commented that i-GATE can reduce its operating cost substantially through a combination of this partnership model and shedding the Longard location. He noted that the downtown facility may be able to run cash-flow positive, and if i-GATE can cover its hard costs and some staffing through membership revenue, then that leaves a relatively small delta to cover through sponsorship.

Nelson Fialho asked how the incubator will be financed under the new model.

Brandon Cardwell stated that we should be able to cover all non-personnel hard costs through membership dues when operating at scale. It may even be possible to cover the costs of an administrative person if the facility is at max capacity.

Nelson asked where the current contributions from the city partners would go under the new model.

Brandon noted that the City of Livermore will continue to backstop the facility costs and Brandon Cardwell’s time, and through reducing the operating overhead by not hiring a CEO, the partner

cities could stop funding i-GATE without killing the organization. Or, the cities could reduce funding or fund specific events, programs, etc.

Mayor Arnerich commented that our story is better now, and the downtown is probably where we should have started. That environment is the right one for startups. i-GATE has achieved its mission of creating a vibrant network, and we’d like it to more vibrant. ITV’s mission is regional and focused building prosperity in the Tri-Valley. We still need to focus on how we get people into the downtown facility, keep it going, and monetize their success.

Mayor Arnerich also noted that he isn’t clear on the interface between i-GATE and ITV. Brandon Cardwell described one framework that leverages ITV’s working committee structure to create that interface. The i-GATE board would be limited to funding entities only, and members of the boards that would like to continue supporting i-GATE’s programmatic efforts, would look at the working committee as a vehicle for doing so. This structure compartmentalizes the responsibility for governance at the funding level, and allows all others play a supporting strategic input role without being entangled in the governance and fiduciary responsibility for the organization.

Brandon stated that under the framework that is being developed, the Development Corporation board would be the “surviving” entity, with the NEST board either being sold, dissolved, or some other alternative. NEST board members and Development Corporation members who are not funding entities would have the opportunity to participate through one of the other vehicles, e.g. the ITV working committee or the Venture Advisory Board.

Nelson Fialho asked to whom the framework would be presented for approval.

Brandon Cardwell stated that technically the NEST board does not have to vote to approve the framework, as the Development Corporation would be the entity entering into the partnership, but that it would be appropriate and preferable to have both entities endorse the framework before proceeding.

Brandon also commented that the plans and programs for i-GATE would be developed by the program director with input from the ITV CEO and the working committee, and presented to the Development Corporation board for approval.

Chairman Sblendorio added that the Development Corporation would be solely responsible for approving the budget.

Council Member Arnerich stated that the board would need to see a detailed budget, and Brandon Cardwell commented that a strong foundation for that budget has already been developed as a result of the business model forecasting done for the downtown location.

Nelson asked how soon that could be delivered, and Brandon commented that the Development Corporation had asked for a meeting to consider the item by mid-July, but that perhaps a joint meeting toward the end of July would be more efficient. The board concurred.

Council Member Arnerich asked if anyone is opposed to pursuing the ITV partnership. No opposition was voiced.

Brandon Cardwell stated that the framework document would be provided with plenty of time for the board members to review it.

Alex Greenwood stated that Brentwood doesn’t have a lot of experience with Innovation TriValley. Brentwood joined i-GATE because it is supportive of what i-GATE is trying to achieve, but also because it wanted to be part of an organization that will at some point bring business development to Brentwood, and Alex is not sure exactly how that would take place under the ITV partnership.

Brandon Cardwell commented that the ITV partnership is not a way to fund i-GATE in the near term, and it is also not going to fundamentally change what i-GATE is doing. During partnership discussions with ITV, it has been made clear that ITV does not intend to upend i-GATE’s activities, but rather to work together to create more success. The ITV partnership isn’t an attempt to fundamentally change i-GATE. It’s an attempt to make i-GATE more efficient and replicate at a regional scale the success that i-GATE has had at a smaller scale.

Nelson Fialho commented that the narrower focus that is implied in the ITV partnership idea is healthy, and that we should say that we may not cater to Davis or maintain partnership with the University of Oklahoma. We should say that we are focused on the Tri-Valley, and we should get more granular in that focus. Nelson stated that i-GATE has struggled when it has taken an approach to try to be everything to everyone. What worked was the incubation model that spun businesses out into Dublin and into Pleasanton.

Chairman Sblendorio said i-GATE’s success has come by capturing the entrepreneurship that was starting in the Tri-Valley and going elsewhere. They now have a place that will assist them.

Council Member Arnerich asked Chairman Sblendorio if from his perspective as a board member of ITV and i-GATE, is this partnership the right move at the right time?

Chairman Sblendorio responded that he believes it is. From the ITV standpoint, i-GATE provides a product that can be demonstrated visually. And for i-GATE, ITV provides connectivity to individuals and entities that we cannot currently access.

Mayor Sbranti added that he agrees with everything that’s been said, but he also wants to see iGATE continue to focus on nurturing the partnership with the labs.

Marc Roberts agreed, and added that at full scale, the labs will likely spin out only a handful of companies per year, which is not enough to build the organization around. However, we need to be able to serve those companies when they do come out.

Brandon Cardwell commented that the labs have tremendous long term potential, and that bringing companies out of the lab is more difficult than anyone predicted. We are seeing some signs of improvement like Life Science Angels leading the round for Sandstone Diagnostics. We need to continue to develop the ecosystem and add value added people to our network in support of lab commercialization, which is also aided by the ITV partnership.

Mayor Sbranti stated that the original idea was that brilliant people would have brilliant ideas, and we would connect them with the labs and magic would happen. We now know that’s not the case, and we may need to focus on teaching entrepreneurship to some of the researchers inside the lab through startup weekend events or others to help them discover that they have a business opportunity.

Brandon Cardwell commented that he and Rich Rankin from LLNL have been discussing a grant proposal to teach entrepreneurship to lab researchers the way the NSF iCorps program did at UCSF, Berkeley, and Stanford.

Brandon offered to put together a Doodle poll to identify a date for the joint board meeting at the end of July, and to distribute the minutes of the March 31 and current board meeting.

Vice Chairman White adjourned the meeting at 7:00pm.

MEETING ADJOURNED