i2E Annual Report 2014

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WHAT WE DO > Evaluate the market potential of new concepts > Assist with evaluation of business plans, marketing plans and assessing capital needs > Provide guidance in building a management team, choosing an optimal business structure and creating financial forecasting > Assist in obtaining funding through federal grant programs and/or private investment capital > Work with universities to encourage commercialization of university research

Over our 16-year history, i2E’s nationally recognized services

> Provide grant capital assistance

have provided business expertise and funding to more than 620

> Make equity investments to start new companies and grow existing companies

of Oklahoma’s emerging small businesses. With more than $48 million of investment capital under management,

NATIONAL RECOGNITION

MOVING FORWARD

OKLAHOMA INNOVATION

we are focused on serving companies in all phases of the business

Southern Growth Policies Board

life cycle, from startups looking for their first round of capital all the

2006 Innovation Award recognized for fresh approaches to solving problems and creating

way to established businesses seeking funding to expand their markets or

opportunity in the South’s rural regions

products.

Kauffman Foundation 2008 Entrepreneurship Summit recognized as a

We also are helping lead new business developments into the

principal source of high value-added human &

marketplace more efficiently and more quickly while providing

intellectual capital

guidance to bring more funding to Oklahoma’s researchers and

International Economic Development Council 2009 Best Practices Award for comprehensive

entrepreneurs.

commercialization services State Science & Technology Institute 2010 Excellence in Technology-based Economic Development for increasing Access to Capital

Through our proven business and venture development process, we turn innovations into successful enterprises ... i2E.

Standards for Excellence Institute 2010 Standards for Excellence only second Oklahoma non-profit organization certified Regional Innovation Acceleration Network 2011 Venture Development Market Leader recognized as a leader in this field

2014 i2E Annual Report

Scott Meacham President & CEO


E N T R E PR E N E U R I A L DE V E L OPM E N T

Our Mission

To Invest in Oklahoma Entrepreneurs and Build High Growth Companies.

Our Process

V E N T U R E A DV I S ORY S E RV IC E S

ACC E S S T O C A PI TA L


MEDIA & MARKETING 68 Weekly Columns Published

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54 Video Blogs

52 E-blasts

ENTREPRENEURIAL DEVELOPMENT

47 Client Articles 45 Networking Events

10 Electronic Newsletters

4 i&E Magazines

Our Entrepreneurial Development programs encourage entrepreneurship through a variety of events and activities including a statewide collegiate business plan competition and internship programs that expose students to early stage businesses with practical, hands-on application of what they are learning in the classroom.

THE FELLOWSHIPS The i2E Fellowship program draws enterprising students ready to put their skills to work in entrepreneurial settings at an Oklahoma startup or with i2E in Oklahoma City and Tulsa. Of the 18 students who applied for the 2014 Fellowship, five were selected. They each earned $6,000 for the 10-week Fellowship where they tackled real world projects designed for their individual skill sets. The real success of the program is illuminated by the offer for full-time positions by the companies to three of the five 2014 Fellows.

Over the six year history of the program, 41 students from campuses across Oklahoma

and beyond have received i2E Fellowship opportunities, earning $231,200 along the way.


2014 GOVERNOR’S CUP WINNERS

The Donald W. Reynolds Governor’s Cup statewide collegiate business plan competition began in 2005 and achieved a remarkable milestone in 2014, celebrating a 10-year legacy. The 2014 Governor’s Cup put an exclamation point on a decade of competition. Almost 40 teams and 135 students from 26 campuses across Oklahoma took the challenge for the 2014 competition. They competed for more than $150,000 in cash and scholarships and the opportunity to compete for an additional $118,000 at the Tri-State competition in Las Vegas.

> SMALL BUSINESS

AT&T IT/Communications Category: Driven Analytics, University of Oklahoma

Second place, $8,000: LockWall, East Central University

Greater OKC Chamber Healthcare Category: Get People Moving, University of Central Oklahoma

Third place, $4,000: NEO 2014, Northeastern Oklahoma A&M College > HIGH GROWTH GRADUATE First place, $20,000: AeroHead, University of Tulsa Second place, $10,000: Driven Analytics, University of Oklahoma

The Interview In the real world, ideas don't make it far without input from industry experts. Each High Growth Division team in the 2014 Governor's Cup sat down with an expert in their industry category in a one-on-one session that included no formal presentations, no handouts, no guests – just the students and the expert. The winning category teams were chosen based on knowledge of their business and competitive advantages, how well they articulated the business model, how well they explained how their proposed business makes money, and the competency across the team. The Scholarships The Oklahoma Business Roundtable awarded $5,000 Paulsen Award scholarships to three participants in the 2014 Governor's Cup competition. It was the seventh year that Business Roundtable has awarded the scholarships, named in honor of longtime OBR President Don Paulsen. The Paulsen Award is designed to encourage Oklahoma's future leaders to continue their education while at the same time contributing their viewpoints to the ongoing dialogue on key economic issues. The scholarships can be used to pay for tuition at any Oklahoma college or university.

> INTERVIEW WINNERS $1,000 each

First place, $10,000: X-Pert Shot, Oklahoma State University-OKC

Third place, $5,000: AeroFusion, Oklahoma State University

i2E Student Generated Category: AeroFusion, Oklahoma State University OG&E Positive Energy and Environmental Category: WellBot, Oklahoma City University Oklahoma Business Roundtable Manufacturing, Material Sciences and Transportation Category: AeroHead, University of Tulsa

> HIGH GROWTH UNDERGRADUATE First place, $20,000: Owlpal, University of Tulsa Second place, $10,000: Valoshade, University of Tulsa

TEN-YEAR IMPACT

Third place, $5,000: RoadWatch, University of Oklahoma

1350 College Students > PITCH WINNERS $1,000 each Small Business Division: Chase Sheffield, LockWall, East Central University

31 Campuses Statewide 450 Innovative Ideas

High Growth Graduate Division: Philip McCoy, AeroHead, University of Tulsa

$1.4m Cash Awarded

High Growth Undergraduate Division: Zach VanMeter, Inspire Ink, University of Oklahoma

$201,000 In Fellowships

> OKLAHOMA BUSINESS ROUNDTABLE PAULSEN AWARD SCHOLARSHIP WINNERS $5,000 each Samantha Slater, Rogers State University Mackenzie Ward, University of Tulsa Mitchell Walser, University of Oklahoma

$65,000 In Scholarships

2014 Governor’s Cup High Growth Graduate Division AeroHead, from the University of Tulsa, was top winner in the High Growth Graduate Division, writing a business plan around an innovative putter and bladed cartridge which is inserted into the head of the club to create overspin on a golfball for increased accuracy when putting.


S

ince each entrepreneur comes to i2E with different skills and experiences, our advisors provide a customized mix of coaching, technical services and access to capital. Proof Of Concept Center (POCC) is a convergence of resources from across the state created to educate research and tech- oriented entrepreneurs, build a supportive pipeline that takes high-growth technologies from the lab to the market, and promote statewide economic development. During the 10 week program participants in the POCC:

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VENTURE ADVISORY SERVICES Our Venture Advisors are experienced professionals who work closely with each client, coaching them from initial technology development to business planning and positioning for funding all the way to company launch and growth.

> Evaluate relevant markets and validate commercial opportunity through customer and business model development > Develop or refine prototypes utilizing industry and potential customer input > Work with advisors and industry mentors to create the foundation for viable startups as well as obtain funding

In FY2014

we provided advisory services to 103 entrepreneurial companies.We helped position 25 companies for funding with a total of 31 clients obtaining more than $31m in private equity capital.

Immersion Program An innovative program for early-stage technology based startups in Oklahoma City and Tulsa to work on determining product-market match and the optimal path forward to commercialization. The goal of the program is to position the early-stage startup to raise $250,000 to $500,000 in first-round capital at the end of the program.

Oklahoma SBIR Collaborative Resource (OSCR) Offers the resources and expertise to successfully compete for federal grant funding. i2E co-directs this program with the Oklahoma Center for the Advancement of Science and Technology. OSCR’s goal is to increase both the number of Oklahoma applicants for SBIR/STTR funding as well as the number of successful grant proposals from Oklahoma. CFO-In-Residence Oklahoma entrepreneurs gain valuable assistance on financial modeling and creating a proper financial structure from i2E’s Chief Financial Officer-in-Residence Program. The CFO-in-Residence helps entrepreneurs create realistic future financial projections and develop the financial structure to support growing operations. Sales Executive-In-Residence provides critical product validation, market development and sales support for Oklahoma startups that don’t yet have a sales or marketing staff. Entrepreneur-In-Residence brings in recognized national experts in areas of business, product and market development, sharing their knowledge with Oklahoma entrepreneurs in workshops held both in Oklahoma City and Tulsa throughout the year.

Aravind Seshadri, CEO and Pedro Velasco, COO In May of 2013, Roll to Roll technologies won second place in the Governor’s Cup business plan competition. In October, they completed the Proof of Concept Center program and in July of 2014 received $520,000 in funding.


68% Domestic 10% International 22% Oklahoma


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ACCESS TO CAPITAL i2E’s portfolio attracts investment to the region with more than $510 million in private investment from banks, venture capital, angels and strategic investors.

i2E offers capital spanning each stage of a company’s lifecycle. As manager of the Oklahoma Seed Capital Fund, the Accelerate Oklahoma Funds, and the Technology Business Finance Program (TBFP), i2E committed over $6.62 million in investment funding to 22 companies during FY2014. Additionally, i2E formed and manages the SeedStep Angels, a statewide group of 50 individual investors that during FY2014 invested over $2.89 million in 14 different companies.

TBFP Concept Fund This fund is designed to provide Oklahoma start-up companies with pre-seed, proofof-concept funding to develop a marketable concept or product. Oklahoma Seed Capital Fund This seed stage fund targets new companies and existing companies looking to move into a new product or market. This investment enables companies to build a business infrastructure around their concept or product. StartOK This fund invests in companies that are in the earliest stages or startup stage that have not yet generated any revenue or completed a market launch. This capital will enable them to take their concept or product prototype into beta test phase with potential customers or first sales. GrowOK This fund seeks established companies with existing products or services that are generating revenue in the market place. These funds will enable these companies to expand new products or services and allow growth in both revenue and employees. OK Angel Sidecar Fund This fund overlays all four of the i2E companion funds, providing leverage and capital to angel investment in Oklahoma companies at any stage of the continuum of business development. This fund essentially doubles the size and scope of angel investment in Oklahoma because it requires a one-to-one co-investment from angel investors and/ or angel groups. SeedStep Angels This is a network of successful Oklahomans who provide capital, strategic advice and mentoring to emerging growth companies to help them succeed. Typical investments range from $50,000-$500,000 with individual members making investment decisions.

SEED FUND IMPACT: 130 full time employees with an average annual wage of $94,428 Invested $10.13m in 22 companies with $29.96m in co-investment 8 patents filed, 3 issued $8.6m in revenue 55% job growth


CONCEPT FUND IMPACT

50%

122 Companies Funded

Entrepreneurs Funding Entrepreneurs

93%

of revenues from outside of Oklahoma

44% Job Growth

> BY INDUSTRY 26% Life Science 17% Telecom/Internet

184

10% Other

full time employees

32% Computer Software and Hardware

$12.9m annualized revenues

$13.4m annualized payroll

$87,190 equivalent average wage

15

Patents Filed

4

Patents Issued 7% Energy & Environment 6% Advanced Materials 2% Manufacturing Equipment

> AVERAGE ANNUAL WAGE COMPARISON > LEVERAGED PRIVATE INVESTMENT 1999-2014

All Concept Fund Companies $344,344,744 Concept Funding $11,140,477 $250m

Oklahoma $150m

$50m

1999

$74,935

i2E Portfolio

2014

$40,123 Craig Shimasaki, President and CEO Moleculera Labs Seed Fund II Recipient – $700,000.00 Developed a series of tests known as the Cunningham Panel, which predicts a patient’s likelihood having treatable neurologic conditions that may be associated with motor tics, obsessive compulsive disorders and often associated with Autism Spectrum Disorders..


FINANCIAL REPORTS 4D Sales Tulsa StartOK Fund $250,000 4DSales has created an innovative tablet app that helps sales professionals shorten the sales cycle. Codesy Bixby Concept Fund $38,000 Codesy enables enterprises of all sizes utilizing open source technologies to improve project efficiences through an open source market that matches coders to valuable software bugs in a pay-what-youwant system. Docvia Tulsa OKAngel Sidecar $350,000 Developed the ICEdot Crash Sensor, an emergency identification and notification service that works with smartphones to send text messages or emails alerting family or emergency responders if a cyclist or snow sports enthusiast has been incapacitated during a fall. Drik LLC Oklahoma City StartOK $250,000 Developing the state’s first toxicology testing laboratory specifically targeting life science companies developing new drugs and other organizations that have mandatory toxicology testing requirements. Expert TA Tulsa Seed Fund II $300,000 Has developed Web-based technology that provides human-like partial credit grading of complex math and engineering programs, allowing professors and teaching assistants to focus on educating students.

Great Plains Microbiology Oklahoma City OKAngel Sidecar $275,000 A Food Safety laboratory implementing new methodology that provides rapid, low cost, comprehensive contract testing services for meat processors, food wholesalers and organic food producers. Miira Edmond Concept Fund $28,000 Miira has developed two tools, the View Frame and iOS app, that are helping artists find linear perspective and measure proportion.

Moleculera Labs Oklahoma City Seed Fund II $700,000 Developed a series of tests known as the Cunningham Panel, which predicts a patient’s likelihood having treatable neurologic conditions that may be associated with motor tics, obsessive compulsive disorders and often associated with Autism Spectrum Disorders. Monscierge Oklahoma City GrowOK $1,000,000 Monscierge is a hospitality industry technology company that provides hotel guests with local recommendations and facilitates communication between the hotel and the guest. OfferBoxx Tulsa Concept Fund $38,000 OfferBoxx has developed a web and mobile app that allows businesses to build and deploy in-store/on-location promotions in exchange for customer information. Otologic Pharmaceutics Oklahoma City OKAngel Sidecar, Seed Fund II $1,200,000 Creating therapeutic solutions that both prevent and treat noise induced hearing loss such as that suffered by soldiers in combat situations. ReTenant Tulsa Seed Fund II $150,000 An innovative smartphone app designed to help apartment owners to keep tenants posted on local happenings, submit maintenance and security reports, send tenant-specific notifications and provide a tenant-to-tenant social network. Roll to Roll Technologies Stillwater Seed Fund II $200,000 Roll-2-Roll Technologies has developed intelligent guides that use a fiber optic sensor to reduce waste during the manufacturing of flexible materials by keeping material properly aligned throughout the process. SIVI Corporation Oklahoma City OKAngel Sidecar, StartOK $100,000 SIVI has created an online education product called LaunchLeader that combines activities, challenges and rewards to help aspiring entrepreneurs advance their concepts toward the marketplace.

Statement of Activities

FY2014

SmartPanel Oklahoma City Concept Fund $38,000 SmartPanel is a new home energy management product that facilitates automated electricity control and intelligence.

ASSETS

Spectrum FX Tulsa Concept Fund $50,000 A proprietary fire extinguishing agent called Firebane that is focused on the aviation market and targeted toward extinguishing Lithium Ion battery fires.

Investment in Oklahoma Seed Capital Fund

Tailwind Oklahoma City OKAngel Sidecar $500,000 Developed an innovative suite of Web-based software tools for brand marketers and ad agencies who seek in-depth information about Pinterest users and popular pins on the site. TemperedMind Stillwater Concept Fund $38,000 Tempered Mind produces mobile games combined with education modules that introduces new content, reinformce previously introduced material, and test comprehension and retention. WellChecked Systems Tulsa OKAngel Sidecar, Seed Fund II $600,000 Well Checked Systems specializes in remote oil and gas well site video monitoring, reporting, alerting and video data storage and retrieval. ZarthCode Broken Arrow Concept Fund $28,000 ZarthCode produces consumer virtual reality interfaces such as the MantisVR wireless virtual reality gloves.

FY2013

Statement of Activities

FY2014

FY2013

Revenues

Cash & Cash Equivalents Cash Restricted for Future Funds Investments Accounts Receivable Prepaid Expenses

829,385

660,314

2,069,645

1,321,178

409,520

2,156,379

2,292,401

OKC Technology Business Launch Initiative

367,510

388,627

368,357

Tulsa Business Development Initiative

199,151

Accelerate Oklahoma Admin Revenue

39,099

33,524

450,204

598,407

29,211

63,764

Accelerate Oklahoma Funds Investment

5,777,749

2,639,300

Furniture, Fixtures and Equipment, Net

102,669

108,000

Certificates of Deposit

Other Assets

9,290

9,290

Total Assets

9,716,772

5,802,134

Liabilities and Net Assets

OCAST Contracts

Accelerate Oklahoma Investment Funding Fund Management Fees Client Service Fees

69,596

TBFP Reinvestment Fund Payable

140,611

73,477 1,899,656

375,000

375,000

85,743

69,000

Event Sponsorships and Fees

474,637

526,250

Corporate Contributions

127,020

Contributions from OKBio Acquisition Other Income

Accounts Payable

151,860

74,018 3,097,795

Total Revenues

20,500

-

277,997

57,688

91,821

7,014,941

6,166,589

Expenses

130

130

2,056,645

1,300,000

OK Technology Commercilization Center

1,930,027

1,997,177

Deferred Revenue

115,036

150,021

Technology Business Financing Program

200,000

200,000

Accrued Liabilities

108,254

84,000

OK Seed Capital Fund

370,970

375,009

2,349,661

1,674,762

2,349,661

1,674,762

Accelerate Oklahoma Funding Payable

Total Current Liabilities Total Liabilities Net Assets Unrestricted Unrestricted -Investments Unrestricted - Board Designated

Accelerate Oklahoma Program

93,635

162,196

Donald W. Reynolds Governor’s Cup

322,680

386,213

OKC Technology Business Launch Initiative

408,344

431,808

1,547,151

1,403,130

Tulsa Business Development Initiative

199,151

151,860

5,806,960

2,703,064

OK Bioscience Institute

153,524

3,855

13,000

21,178

96,871

133,419 3,841,537

Non-Program

Total Unrestricted Net Assets

7,367,111

4,127,372

Total Expenses

3,775,202

Total Liabilities and Net Assets

9,716,772

5,802,134

Excess of Revenues Over Expenses

3,239,739

2,325,052

Net Assets at Beginning of Year

4,127,372

1,802,320

Net Assets at End of Year

7,367,111

4,127,372

FY2014 Revenues 44% Accelerate Oklahoma Investment funding 31% OCAST Contracts 7% Event Sponsorships and Fees 5% Fund Management Fees 5% OKC Technology Business Launch Initiative 3% Tulsa Business Development Initiative 2% Corporate Contributions 1% Client Service Fees 1% Accelerate Oklahoma Admin Revenue 1% Other Income

31%

44%

BOARD OF DIRECTORS

INSTITUTIONAL GOVERNANCE

Scott Meacham President & CEO

Howard G. Barnett, Jr., Chairman OSUTulsa, OSU-CHS

i2E strives to have the highest standards of corporate governance practice and ethical conduct by all board members

and staff. Consistent with those intentions, i2E has received the David Thomison Stephen Prescott, Vice Chair Standards for Excellence Certification. Senior Vice President, Client Services OMRF Group Board of Directors Charter of Governance: Sets and ensures Michael LaBrie, Secretary fidelity to i2E’s mission. Reviews and approves organizational Rex Smitherman McAfee & Taft strategy, goals, plans, and budgets. In addition the board is charged Senior Vice President, Operations Leslie Batchelor with establishing policies, approving major engagements in public Sarah Seagraves Center for Economic Development Law policy, and ensuring that management systems are in place for Senior Vice President, Marketing Robert Brearton compliance. Tom Francis American Fidelity Assurance Company Executive Committee Charter: The function of the Executive Director of Funds Administration Bill W. Burgess Committee is to exercise powers of the Board of Directors Josh O’Brien Vortex, Inc. on matters which arise between regularly scheduled Board Director of Entrepreneurial Development meetings or when it is not practical or feasible for the Board Michael Carolina Judy Beech OCAST to meet. This Committee also reviews and monitors all Director of Finance compensation, benefit and human resource policy matters, plus Rita Combs monitors and evaluates the performance of the corporation’s Kenneth Knoll REYAP Youth Programs CEO. Venture Advisor & Director, Advisory Steve Cropper Services Finance and Audit Committee Charter: The primary purpose Philip Eller of this Committee is to assist the Board of Directors in fulfilling Elaine Hamm Eller Detrich, P.C. its fiscal oversight responsibilities. It serves as an independent Venture Advisor & Director, Proof of Carl Edwards and objective party to monitor the integrity of the Corporation’s Concept Center Price Edwards Company, financial accounting and reporting processes and internal Mark Lauinger Oklahoma Business Roundtable, control system. Nominating and Governance Committee Venture Advisor & Director, Tulsa Presbyterian Health Foundation Charter: The Committee assists the Board in developing and Services overseeing the Corporation’s policies and procedures regarding Suzette Hatfield Richard Rainey Board composition and recommendations of candidates for Crawley Ventures Venture Advisor & Director, OSCR nomination to the Board. Brad Krieger Program Investment Committee Charters: The Board engages Arvest Bank Michael Kindrat-Pratt two Investment Committees, The Oklahoma Seed Capital Philip Kurtz Venture Advisor & Manager, SeedStep Fund Investment Committee and the Accelerate Oklahoma CareATC Angels Committee, to consider and approve applications for Hershel Lamirand III Darcy Wilborn investment within the requirements of the investment programs. Capital Development Strategies Client Engagement Director Code of Ethics and Conflict of Interest: The i2E Code of Ethics Merl Lindstrom Scott Thomas and Conflict of Interest Policy outlines principles and standards Phillips 66 IT Manager of honesty and ethical accountability by which all board Justin McLaughlin members and employees agree to adhere to with respect to the Cindy Williams Tulsa Regional Chamber Underwriting Coordinator & Investment company and its associates. Compliance Officer Fred Morgan Board Evaluation: The Board completes a board evaluation The State Chamber Katelynn Henderson survey biannually. The results of the evaluation are compiled and Events Specialist presented to the full Board for review and biannual discussion. David Myers Ponca City Development Authority Shaun Fair Underwriting Specialist David Pitts i2E is a 501(c)(3) private not-for-profit corporation focused on wealth creation by growing Bank SNB Jennifer Buettner the technology-based entrepreneurial economy in Oklahoma. We are able to accomplish Executive Assistant our mission through support from the Oklahoma Center for the Advancement of Science Mark Poole and Technology (OCAST). We would like to thank OCAST, the state of Oklahoma, and First National Bank of BA Kate Nelson all of our partners for their ongoing financial support. The success of i2E and our client Administrative Assistant Meg Salyer companies also relies on the contributions of many individuals and organizations Accel Financial Staffing who invest their time, expertise, and capital in Oklahoma’s start-up technology based Darryl Schmidt BancFirst

companies. The economic impact statistics used throughout this report are based on client company responses to i2E’s annual impact survey and i2E’s internal database.

Craig Shimasaki Moleculera Labs

FY2014 Expenses 51% OK Technology Commercilization Center 11% OKC Technology Business Launch Initiative 10% OK Seed Capital Fund 9% Donald W. Reynolds Governor’s Cup 5% OKC Technology Business Financing Program 5% Tulsa Business Development Initiative 4% OK Bioscience Institute 3% Non-Program 2% Accelerate Oklahoma Program

i2E TEAM

Wes Stucky Development Management, Inc. Roy Williams Greater Oklahoma City Chamber

51%

Richard Williamson T.D. Williamson Duane Wilson LDW Services, LLC

840 Research Parkway, Suite 250 OKC, OK 73104 618 E. Third, Suite 1 • Tulsa, OK 74120 800.337.6822 www.i2E.org facebook.com/OKGOVCUP • twitter.com/i2E_Inc