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Annual Report • Provided advisory services to 111 Oklahoma high-growth start-up companies. • Assisted 27 companies in raising $35M in private capital. • Awarded Concept funding to 4 companies through the OCAST Technology Business Finance Program. • Established a Tulsa SeedStep Angels chapter. • Partnered with the Greater OKC Chamber to develop the Office of Entrepreneurial Development. • Reached a milestone through our entrepreneurial development initiatives in providing $1 million in scholarships, fellowships and cash awards to college students. • Named winner of the Excellence in Technology Based Economic Development award by the State Science and Technology Institute. OUR MISSION FY2011 Our mission is nurturing entrepreneurs and building high-growth companies in Oklahoma. We achieve our mission by working directly with entrepreneurs, researchers and compa-nies to help them develop their technologies, launch and grow new businesses and access needed capital. Busy entrepreneurs tell us that our model works for them because we not only provide high quality venture advice, capital and entrepreneurial development, we act as a portal to other private and public resources — making it easier to access the right in-formation, expertise and investment at the right time. i2E’s commitment to transparency in our operations, along with demonstrated evidence of strong corporate governance and management were recognized in October 2010 when we received the Certifi cate of Excellence by the national Standards for Excellence Institute. The certifi cation refl ects fundamental values of honesty, integrity, fairness, respect, trust, responsibility and accountability that we show in our everyday operations. i2E’s programs and services, management, fundraising and fi nancial practices were examined in-depth be-fore the certifi cation was awarded. i2E was one of the fi rst organizations to be certifi ed un-der the national Standards accreditation program that began in 2006 and only the second non-profi t in Oklahoma to achieve the certifi cation. In July 2010, the U.S. Department of Commerce’s Economic Development Administration (EDA) partnered with i2E to provide a new initiative to expand growth services to area entrepreneur. The EDA provided a $1 million grant to create the Oklahoma City Technology business Launch Initiative, which was matched by $1 million from fi ve local partners: the Greater Oklahoma City Chamber, the City of Oklahoma City, the Oklahoma Medical Re-search Foundation, the Oklahoma Business Roundtable and the Presbyterian Health Foun-dation. The $2 million project already has made an impact on area entrepreneurs, with 30 companies receiving venture advisory services through the new initiative. HIGHLIGHTS 2 1 It’s hard to believe that another year has passed. These have been tough times in our country. Our state has enjoyed better economic conditions than most, but we’re all certainly in a different era. At i2E we’ve taken the market conditions seriously and have added resources for area entrepreneurs to start and grow companies in our state. The capital markets have been unpredictable for the past decade which appears to be more the norm as opposed to an anomaly. Yet, in Oklahoma we have responded by continuing to create initiatives that provide access to concept, seed stage and startup capital. As you browse this Annual Report, consider that i2E had only a dozen years of history behind it during fi scal 2011. Yet our impact on Oklahoma’s community of entrepreneurs and the state’s economy hardly refl ects a com-pany that had been operating for little more than a year when the new millennium began. We’ve supplied venture advisory services to more than 1,100 Oklahoma entrepreneurs over the past dozen years. We provided critical capital to more than 200 companies. We provided training for 900 student entrepreneurs through the Donald W. Reynolds Governor’s Cup. We added to that legacy with new programs, services, people, national recognition, and the physical space in which to carry it all out. Let me describe just a few highlights from last year of those highlights for you: We launched a program that brought in nationally recognized entrepreneurs and investors to provide insight on business development issues to Oklahoma entrepreneurs. Our fi rst Entrepreneur-in-Residence workshop, “Trends in Raising Capital,” was led by our lead Entrepreneur-in-Residence Bill Payne followed by “Building a High Performance Team.” Entrepreneurs enthusiastically tell us they are fi nding value in the workshops as the series continues in the new fi scal year. In a new joint venture with the Greater Oklahoma City Chamber of Commerce, we created the Offi ce of Entre-preneurial Development. The Offi ce is lead by Josh O’Brien, Director, with the mission to grow resources and programs for Oklahoma Entrepreneurs. We added talent and depth to our team in fi scal 2011, beginning with Vice President of Entrepreneur Services Wayne Embree, who brings years of experience as an investor and fund manager. Kenneth Knoll joined us as Concept Investments Manager. Michael Kindrat-Pratt, Coordinator of the SeedStep Angels Network, signifi es the fi rst time Oklahoma has a dedicated individual focused on growing organized angel activity in our State. Round-ing out our team are Mark Lauinger, Venture Advisor, and Jay Sheldon, eMedia Specialist. The Venture Advisory Services we provide Oklahoma Entrepreneurs gained new structure during the year, de-signed to more quickly move emerging entrepreneurs from the pre-startup stage to being positioned for fund-ing and through to the launch of a product. We also established a Tulsa chapter of the rapidly growing SeedStep Angels in January. By the end of June, the group already had screened twelve investment opportunities, seen six presentations, and made its fi rst invest-ment of $200,000. The Oklahoma City SeedStep Angels continued to build momentum, investing in portfolio companies during the year, as well. i2E was named winner of the Excellence in Technology Based Economic Development award by the State Science and Technology Institute. The award recognized our organization for managing the Technology Business Finance Program that has provided concept funding to more than 100 startups over the past dozen years. Perhaps no achievement was more noteworthy in 2011 than news that i2E had been awarded the Seal of Excel-lence by the national Standards of Excellence Institute. The Seal of Excellence represents i2E’s efforts to ensure operational transparency along with evidence of strong corporate governance and management. These are but a few of the highlights from an incredibly productive year. We look forward to continuing to serve Oklahoma and our state’s entrepreneurs as i2E enters our teenage years and our programs continue to grow. 2 3 i2E takes a team approach in providing advisory services to Oklahoma entrepre-neurs, bringing the deep business experi-ence of our Business Analyst, Venture Ad-visors, Investment Team and Executives in Residence to help them focus on the steps needed for the new business to fl ourish. In the past year, we launched a novel Entre-preneur- in-Residence program in which na-tionally recognized business development and investment experts deliver meaningful information to Oklahoma entrepreneurs through a series of workshops and one-on-one mentoring. We also added a Sales Executive-in-Res-idence, which provides expertise and as-sistance in developing a sales channel for entrepreneurs. We have worked with 500 new high-growth ventures across Oklaho-ma over the 13-year history of our company. FY2011 Reported Economic Impact • $89M in annualized revenues • 79% of revenues obtained outside the state • $49M in annualized payroll • 681 current full time equivalent employees • Average wage of $65,203 • 65 patents fi led and 15 issued Venture Advisory Energy & Environmental Advanced Materials Other Life Sciences IT/Software 23% 11% 43% 6% 17% OKC MSA 239 157 104 Tulsa MSA Balance of State They are true small businesses, with 78% employing 10 people or less and averaging $65,203 in annual wages, paying 75% higher than the state average of $37,274 Portfolio Companies by Industry Portfolio Companies by Geography i2E’s team of venture advisors and investment professionals mentored 111 Oklahoma startup companies over the past year that are working to provide high-paying jobs, bring new revenue to the state and create wealth as they build an innovation-based economy. $37,274 $65,203 Oklahoma average i2E portfolio 4 5 Concept Profi t Seed Start-up Early Break Even 2011 Reported Sales Distribution International Oklahoma 21% 9% 70% Domestic Our funding resources, concept, seed and angel, are targeted to help companies move from one development stage to the next. From concept through growth, our team of investment professionals position Oklahoma companies for funding to match the appropri-ate capital source for their development stage. In FY2011, we helped position 36 entrepreneurial companies for funding with 27 of those, across all fi ve stages of development, obtain $35.1 million in private equity. Portfolio Companies Positioned for Funding by Development Stage Concept 8 Seed 9 Start-up 9 Early 6 Growth 4 Maturity i2E’s portfolio of high-growth companies is producing technology-related products or services targeted at large domestic and international markets. Our client companies continue to report that almost 80% of their revenue is generated from sales outside Oklahoma. That brings revenue into the state and creates jobs and wealth for Oklahomans. 2011 Reported Job Growth 2008 2009 2010 2011 State Average 1.4% -1.9% -0.1% 1.2% i2E Portfolio Companies 26% 36% 20% 22% 6 7 Growth Promising new technologies were spotlighted and thousands of dollars in prize money were awarded in the 2011 Donald W. Reynolds Governor’s Cup collegiate business plan competition, but the most important accomplishment from the competition was its impact on Oklahoma’s future entrepreneurs. More than 150 college students from college campuses across the state took their fi rst steps down the entrepreneur’s pathway in the 2011 competition. They formed teams, researched the market, wrote a business plan and then pitched it before a panel of investors and Oklahoma business leaders. For some, prize money in excess of $100,000 was reward enough for the challenges of the competition. For others, the awards dinner represented a momentary celebration as they prepare to begin a life of building high growth startup businesses. Entrepreneurial Development First place teams in both divisions of the Oklahoma competition won $20,000 each, while second place earned $10,000 each and third place $5,000 each. They described new medical technologies to treat and monitor epilepsy and heart disease, as well as diagnose infl uenza, recover oil and gas more effi ciently and manage complicated land leasing issues. The Governor’s Cup is underwritten by the Donald W. Reynolds Foundation and local sponsors. It is managed by i2E. 8 9 First Place: $20,000 First Place Tri-State: $25,000 CerebroGen Pharmaceuticals University of Oklahoma CerebroGen is developing an antibody-based drug therapy to treat epilepsy. Building on more than a decade of research, the company’s drug removes a recently discovered cause of epilepsy unaddressed by existing treatments With a regulatory approval strategy focused on reaching the market quickly through orphan status, CerebroGen is committed to bringing a much-needed therapeutic to Juvenile Epileptics, followed by a product indicated for the broader market. Faculty Advisor: Elaine Hamm Team Leader: Benjamin West Team Members: Chase Roberts, Tobi Olusola, Majed Gharfeh 2011 GOVERNOR’S CUP WINNERS GRADUATE DIVISION GRADUATE DIVISION Second Place: $10,000 IASO University of Tulsa Faculty Advisor: Michelle Witt Team Leader: Stephen Fain Team Members: Ryan Eslicker, Nathan Garrett IASO has developed “SPI Gel,” an environmentally friendly, silica-based enhanced oil recovery system that seals off inefficient reservoir zones, allowing more trapped oil to be recovered. Well operators that use SPI Gel can expect up to a 50 percent increase in daily oil recovery and decreased expenses. IASO’s mission is to provide oil recovery systems that allow operators to conveniently “get more oil” while being safe for personnel and the environment. Third Place: $5,000 TerraCoda Software Oklahoma City University Faculty Advisor: Kewei Sha Team Leader: Adele Rehm Team Members: Alexis Caron, Bridget Poputa-Clean TerraCoda provides real time enterprise land management, geo-spatial analysis tools, and report generation and mapping solutions for the land, energy, realty, right-of-way procurement, and municipal markets. TerraCoda’s Landman 360 software will provide full end-to-end visibility into the leasing process by providing effective tools that manage the leasing lifecycle. User-friendly technology combines communication, reporting, and cost management tools within TerraCoda’s Software-as-a-Service (SaaS) solution, which will reduce errors and increase efficiency through real time reporting and management tools that allow users to deliver a project on time and on budget. Entrepreneurial Development UNDERGRADUATE DIVISION First Place: $20,000 LumiDX University of Oklahoma Faculty Advisor: Jim Wheeler Team Leader: Amy Henderson Team Members: Ashley Zumwalt, Mimi Nguyen, Kaelyn Lu LumiDX is an infl uenza diagnostics company that offers ChemLight, a fast, highly accurate tool that harnesses chemiluminescent technology to offer a cutting edge innovation in the point-of-care diagnostic market. Lu-miDX aims to be fi rst to market with diagnostic tests that are simple, accurate and fast enough to provide results at the point-of-care. Second Place: $10,000 Vita Rhythm University of Oklahoma Faculty Advisor: Blake Gudgel Team Leader: Jessica Wills Team Members: Brett Gudgel, Brittany Myers, Erikka Roberts Vita-Rhythm has developed a medical device to treat heart failure. The AdvaHeart is a left ventricular assist device that helps eject blood from the left ventricle of a weakened heart. It is smaller and more easily and safely implanted in patients. Third Place: $5,000 Dreamcatcher Services, LLC Oklahoma City University Faculty Advisor: Robert Greve Team Leader: Michael Roselle Team Members: Feng Dong, David Scott, Patrick Kennedye Dreamcatcher Services, LLC has created technology to apply video-EEG monitoring capabilities to the medical diagnostic area of epilepsy. The company has at its disposal a critical mass of talent and indi-viduals necessary for the effi cient, speedy and prof-itable application of video-EEG technologies in the target market. 10 11 OG&E Positive Energy Award went to Brandon Mikael and Matthew Huber from the Univer-sity of Oklahoma, with the assis-tance of faculty advisor Lowell Busenitz, based on their work writing a plan around a tension and gauge device that saves time and money for utility com-panies. The OG&E Positive En-ergy Award supports Oklahoma college students in developing a business plan based on a tech-nology product in the area of al-ternative energy, energy storage, unique energy generation, en-ergy conservation technologies, new delivery methodologies, en-hanced energy controls, and en-ergy infrastructure optimization techniques. Al Tuttle Business Incubation Award winner TerraCoda Soft-ware from Oklahoma City Uni-versity. The award brings a year of offi ce space and business ser-vices in one of four participating Oklahoma business incubators for the graduate division team in which at least one of the stu-dents plans to go forward with the business. Oklahoma Business Roundta-ble Paulsen Scholarships were awarded to Ashley Zumwalt from the University of Oklahoma and Faith Garlington from Oklahoma State University. The Paulsen Award, which provides a $5,000 scholarship that can be used to pay tuition at any Oklahoma col-lege or university, was named in honor of Don Paulsen, long-time President of the Oklahoma Busi-ness Roundtable. Seven-year impact: • 26 campuses from across the state • 950 college students • 290 innovative ideas • $1 million-plus in cash awarded • $40,000 in scholarships • $85,240 in fellowships Other 2011 Governor’s Cup Opportunities In fi scal 2011, Governor’s Cup participants Entrepreneurial Development competed for nearly $200,000 in cash, $10,000 in scholarships and over $40,000 in fellowships and other opportunities. 12 13 Laura Medcalf, senior Computer Science major at East Central University Company: Mintiva Project: Laura managed Mintiva’s social media market-ing campaigns and provided return-on-investment analysis on those efforts. Audrey Metzier, MBA Candidate at Oklahoma City University Company: Otologic Pharmaceutics Project: Audrey performed capital development for Otologic along with project management on competitive analysis and creation of compelling business presentations. Anthony Moorehead, MBA candidate at Oklahoma City University Company: i2E, Inc. Project: As a Spring 2011 Business Fellow for i2E, Anthony worked with i2E’s business advisory and operations teams on business plan review and consulting and new i2E initiative projects. Lucas Rice, junior Industrial Engineering major at the University of Oklahoma Company: i2E, Inc. Governor’s Cup team: UniPHI, 2010 Project: An Investment Fellow for i2E, Lucas worked with the investment team on fi nancial modeling, market and competitive analysis and business plan revisions. Orgil Batsaikhan, MBA and Master of Finance candidate at the University of Tulsa. Company: Consolidated Networks Corp. Project: Orgil developed statistical models to optimize Consolidated Networks’ technical support services to school districts and government agencies across the United States. Alexis Caron, MBA graduate at Oklahoma City University Company: Consolidated Networks Corp. Governor’s Cup teams: Lenio Medical, 2010; TerraCoda Software, 2011 Project: Alexis develops Consolidated Networks’ partner relationship program, recruiting software and content pro-viders for the company’s engineered network solutions. Arun Kumar Devarakonda, MBA graduate at Oklahoma City University Company: WeGoLook.com Governor’s Cup team: CrowdLure, 2011 Project: Arun assisted WeGoLook.com on launching, tracking and evaluating multiple new social media marketing initiatives. Howard Haines, Ph.D. candidate in Entrepreneurship at the University of Oklahoma Company: i2E, Inc. Project: Howard assisted i2E staff with reporting, pro-cess design and providing venture advisory services to its clients. The i2E Fellows Program was redesigned and expanded as part of the OKC Technology Busi-ness Launch Initiative funded by the federal Economic Development Administration, the Greater Oklahoma City Chamber, the Oklahoma Business Roundtable, the Oklahoma Medical Research Foundation, the Presbyterian Health Foundation and the City of Oklahoma City. The program provided nine paid Fellowships to eight students, two Spring Fellowships and seven Summer Fellowships, during 2011. The two Spring i2E Fellows included one MBA stu-dent from Oklahoma City University and one undergraduate student from the University of Oklahoma. The seven Summer i2E Fellows were comprised of fi ve client-hosted Fellows and two i2E-hosted Fellows representing four Oklahoma universities. The Summer i2E Fellows included two undergraduate students, four MBA students and one PhD candidate including international students from France, Mongolia and India. 14 15 i2E put on a new online face in fi scal 2011 when it launched a completely redesigned website that invited users in with bright graphics, new features and easy navigation. The site at www.i2E.org added expanded information about i2E’s many services provided to entrepreneurs, video inter-views and a new blog to i2E’s presence on the Web. The new website provides visitors with plenty of reasons to linger, with in-depth sections on our venture advisory ser-vices, access to capital and entrepreneurial development. Users can even read every page of i&E magazine, both cur-rent edition and back issues, as well as annual reports and The Entrepreneur’s Path: A handbook for high-growth companies, which was written and published by i2E during the past year. The new i2E blogging presence also invites users to return frequently to the site. The i2E blog offers insight into pro-grams, clients and the current state of entrepreneurship, among other topics that were featured during the year. Bloggers included i2E team members, i2E Fellows and En-trepreneurs in Residence, who produced 81 posts in little more than six months after it was launched in December. The i2E blog pushed us deeper into the use of social me-dia during the fi scal year, complementing our active Twit-ter and Facebook pages. The Twitter feed was often used to link users back to blogs or news articles posted on the i2E website. By the end of the fi scal year, the number of people following i2E on Twitter approached 300. Over on the Donald W. Reynolds Governor’s Cup page on Face-book, the number of users who “liked” the page grew rapidly, with more than 450 followers by the end of fi scal 2011. i2E’s media activity was not limited to an online presence, however. We wrote or pitched client stories to media that resulted in 58 articles published on 23 separate clients in Oklahoma newspapers during the year. An i2E client also was highlighted in a USA Today story that profi led people who left California to do business in Oklahoma. In addition, another 62 articles were published with news about i2E initiatives, the Governor’s Cup, i2E Fellows pro-gram and other related activities. There is a bottom line to all the various routes that i2E has taken to establish a presence in both traditional and social media: We are telling the stories of our clients and of i2E as we work tirelessly to fulfi ll our mission to nurture home grown economic development and build wealth in Oklahoma. Media and Marketing 16 17 Five of the six Oklahoma tech companies that received venture capital investment during FY 2011 were i2E Clients, receiving 90% of the total amount raised. Angel Venture Capital Strategic Partners Percent Source of Funding % of 12 mo. capital raised 69% 19% 13% 28% 53% 22% 2011 data showed a signifi cant shift in sources of capital from 2010. Capital raised from angel investors more than doubled to 53% while capital raised from VC investors fell from 65% to 19%. i2E has been a primary source of concept, seed stage and start-up capital for Oklahoma’s high-growth companies for more than a decade. Through the state-funded Concept Fund and the Oklahoma Seed Capital Fund, i2E has provided critical capital to more than 111 early stage ventures since 1998, ensuring that fi nancing was in place to help them weather the pre-revenue funding gap. i2E also manages the SeedStep Angels, a network composed of successful Oklahomans who seek the opportunity to contribute to the success of new entrepreneurs while receiving a high rate of return on their investment. Access to Capital i2E’s portfolio attracts investment to the re-gion with more than $650 million in funding. Approximately $580 million of this has been in private investment from venture capital, angels and strategic investors participating in more than 345 fi nancing rounds. 18 19 Since 1999, a total of 107 Oklahoma companies have received over $10 million in critical concept funding through the OCAST Technology Business Finance Program. The fund has also proven to be a success in collecting and reinvesting repayments. Nearly $4 million, or 37%, of capital available for new investments has been provided by repayments from past recipients. 37% Over its history, Concept funding has helped companies subsequently raise $253 million in private capital, creating a leverage ratio of 29:1 for the state’s investment Concept Funding In Business All Concept Fund Companies Concept Funding $10,194,877 In Business $142,377,710 All Concept Companies $253,218,948 Concept Fund Energy & Environmental Advanced Materials Other Life Sciences IT/Software 7% 7% 10% 25% 51% 107 Companies Funded Private Equity Investment 1999-2011 Portfolio Companies by Industry 1999-2011 Entrepreneurs Funding Entrepreneurs $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 Access to Capital 20 21 Concept Fund 2011 Reported Economic Impact • $33M in annualized revenues • 86% of revenues outside state • $24M in annualized payroll • 324 full time employees equivalent • Average wage of $68,910 • 34 patents fi led, 11 issued We added to the long history of providing critical capital to Oklahoma’s early stage ventures last year by fi nancing four companies. The funding brings the total number of companies receiving funds to 105 since the state-appropriated fund began operating in 1998. Concept funded companies are creating new intellectual property, with 163 patents issued and 71 new products developed. 2011 CONCEPT INVESTMENTS Hassco is an Oklahoma City-based Medical-Device startup develop-ing new medical devices for lapa-roscopic procedures. The company currently holds a provisional util-ity patent on its fl agship device, the Robotic Articulating Laparoscopic System (RAL SYSTEM) which will allow for improved range of motion and faster, more effective surgeries. In the US alone, there are approxi-mately 9,500,000 procedures per-formed annually via Minimally Inva-sive Surgeries (MIS) while the global MIS device and instrument market is estimated at $18.5 billion annually. Failsafe Hazmat is a Tulsa-based startup company developing soft-ware to assist and support companies that ship hazardous products and materials. Among a daily 800,000 hazmat shipments, approximately 300,000 are classifi ed as posing ex-treme risk. In a single year, there were 19,277 US hazmat incidents resulting in $72,600,000 in property damage, not including the related litigation costs. The Failsafe Hazmat software is designed to keep companies com-pliant with all domestic and interna-tional shipping regulations and to help avoid costly accidents. Capacity Sports is a Tulsa-based startup developing mobile concus-sion management software, begin-ning with the iOS (iPhone) platform, to evaluate concussion symptoms in athletes and reduce the risk of per-manent brain injury in sports. Driven by heightened concussion aware-ness, the Capacity Sports application will evaluate balance, motor function, reaction time and memory to better manage athlete screening and pro-vide improved information for safe return to play decisions. $37,274 $68,910 Oklahoma average i2E portfolio TokenEX is a Tulsa-based Enterprise Data Security company that helps merchants reduce their risk and the cost of Payment Card Industry (PCI) compliance, thereby enabling them to focus on their core retail compe-tency, not Information Technology. Tokenization is a relatively new con-cept where a “token” is a surrogate value that replaces the payment card number, but unlike encryption, the token cannot be used to decipher the real card number. While TokenEx is not the only provider of tokeniza-tion, the company has a proprietary process that provides tokens at the front-end of the merchant’s opera-tion, thereby removing a greater por-tion of the merchant’s systems from PCI compliance requirements. Access to Capital 22 23 The Seed Capital Fund provides Oklahoma entre-preneurs with the capital and support needed to move a technology from concept to product launch. The Fund has invested almost $4.4 million in nine companies. These companies attracted more than $25 million of co-investment. Seed Capital Fund 2011 Reported Economic Impact • 50 full time employees • 35% job growth rate • Average Annual wage of $93,466 • 10 patents fi led, 4 issued • $3M in revenue • Nearly $7M in federal grants 2011 SEED FUND INVESTMENTS Expert TA is a Tulsa-based educational software company that has developed a powerful partial credit grading sys-tem for engineering and science based collegiate course work. The company provides a web-based homework as-sessment application to engineering, physics, and math departments. Real Time Rehab, LLC is a Tulsa-based company servicing clinicians, physical therapists, chiropractors, sports reha-bilitation and occupational specialists, by increasing their ability to improve a patient’s recovery from injury or illness. RTR has created the industry’s fi rst proprietary Software as a Service that provides the clinician with both high qual-ity video and printed materials that instruct a patient on how to perform exercises at home. 2011 FOLLOW-ON INVESTMENTS 2011 FOLLOW-ON INVESTMENTS Altheus Therapeutics, Inc. is located in Oklahoma City and is working to develop therapies to treat the two most common forms of infl ammatory bowel disease that affl icts about 1.2 million Americans. Ulcerative colitis and Crohn’s Disease, are chronic lifelong conditions which signifi cantly impact the quality of life. The Altheus therapy combines two FDA approved drugs in a novel way and has been shown to be highly effective in animal models. Emotion Media, LLC (EMM), is based in Tulsa and provides media services to the $7 billion dollar professional pho-tography market. EMM has developed a proprietary DVD technology that gives photographers a higher quality, less expensive way to present and sell their photos. DVDs are created in a fraction of the time (minutes vs. hours) using technology automation and include a professional, pro-duction quality media presentation with music, motion, and special effects. Exerbotics, LLC, is located in Tulsa and manufactures ad-vanced technology equipment and devices for commercial fi tness applications such as: Collegiate/Professional Ath-letics, Physical Medicine Rehabilitation and Occupational/ Industrial Medicine. This technology has been engineered, manufactured and tested in Oklahoma. Exerbotics’ patent pending technologies are the only real advancement in re-sistance strength training equipment – ever. Access to Capital 24 25 SeedStep Angels, founded in 2009 as a source of risk capital for start-up Oklahoma companies, moved forward in 2011 with growth, best practice, and investment initiatives. January 2011 marked the kickoff event for the Tulsa chapter of the SeedStep Angels. Marianne Hudson, the Executive Director of the Angel Capital Association, traveled to Tulsa to give a keynote speech to a dozen interested Angel investors regarding the state of the Angel investing industry. The group formally met for the fi rst time in February. It has screened 12 companies, seen six companies present, and has made an investment of $200K in DermaMedics. In Oklahoma City, the focus shifted to integrating national Angel best practices within the group. The group had the opportunity to attend private events with out-of-state experts – Bill Botts, Bill Payne and Tom Churchwell – all of whom are successful entrepreneurs or venture capitalists. The SeedStep Angels group also focused on building relationships with regional Angel groups surrounding Oklahoma. These relationships will be used to syndicate Oklahoma deals to outside investor networks to properly aggregate capital in investment rounds for Oklahoma companies. Good relationships with other Angel groups are also key to sharing best practices and to avoiding the mistakes other groups have made in the past. Initially, SeedStep Angels has been in contact with the Midwest Venture Alliance out of Wichita, Kansas. In 2011, the Angels screened 23 companies, saw 10 companies present, and made three investments. In 2012, the group looks forward to continuing to work with the Angel Capital Association and pursuing best practices by instituting a formal group due diligence process, creating a membership committee, and growing through recruitment of Angels in rural areas of Oklahoma. SeedStep Angels FY2011 INVESTMENTS DermaMedics has developed and markets topical anti-inflammatory products to prevent burns in cancer patients and patients undergoing cos-metic procedures, as well as products to treat a variety of common skin dis-eases such as psoriasis, acne, eczema and rosacea, and skin aging. Expert TA has created Web-based home-work assessment software that is capable of human-like grading of complex ques-tions like those found in engineering, physics and mathematics courses. Search and Clear had developed a Web-based collaborative software platform for any type of business that depends upon collaboration and communica-tion, such as the entertainment industry, health care, attorneys, information tech-nology, fi nancial institutions and gov-ernment contractors. Access to Capital Investment 1 Investments 3 26 27 Institutional Governance 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 adopted the following charters for its Board of Directors and Board Committees: Board of Directors Charter of Governance: Sets and ensures fi delity to i2E’s mission. Reviews and approves organizational strategy, goals, plans, and budgets. In addition the board is charged with establishing policies, approving major engagements in public policy, and ensuring that management systems are in place for compliance. Executive Committee Charter: The function of the Executive Committee is to exercise powers of the Board of Directors on matters which arise between regularly scheduled Board meetings or when it is not practical or feasible for the Board to meet. This Committee also reviews and monitors all compensation, benefi t and human resource policy matters, plus monitors and evaluates the performance of the corporation’s CEO. Finance and Audit Committee Charter: The primary purpose of this Committee is to assist the Board of Directors in fulfi lling its fi scal oversight responsibilities. It serves as an independent and objective party to monitor the integrity ofthe Corporation’s fi nancial accounting and reporting processes and internal control system. Nominating and Governance Committee Charter: The Committee assists the Board in developing and overseeing the Corporation’s policies and procedures regarding Board composition and recommendations of candidates for nomination to the Board. Investment Committee Charters: The Board engages two Investment Committees, the Technology Business Finance Program Committee and The Oklahoma Seed Capital Fund Investment Committee to consider and approve applications for investment within the requirements of the investment programs. Code of Ethics and Confl ict of Interest The i2E Code of Ethics and Confl ict of Interest Policy outlines principles and standards of honesty and ethical accountability by which all board members and employees agree to adhere to with respect to the company and its associates. Board Evaluation The Board completes a board evaluation survey annually. The results of the evaluation are compiled and presented to the full Board for review and discussion. BOARD OF DIRECTORS Roy Williams, Chairman, Greater Oklahoma City Chamber Michael LaBrie, Secretary, McAfee & Taft Jonathan Adamson, Argonaut Private Equity Howard Barnett, Jr., OSU - Tulsa and OSU-CHS Leslie Batchelor, The Center for Economic Development Law James Bode, Bank of Oklahoma, N.A. Michael Carolina, OCAST Bob Craine, TSF Capital, LLC Steve Cropper Phil Eller, Eller Detrich, P.C. Suzette Hatfi eld, Crawley Ventures David Hogan, HoganTaylor, LLP Phil Kurtz, Benefi t Informatics Hershel Lamirand, III, Oklahoma Health Center Foundation Merl Lindstrom, ConocoPhillips, Inc. Dan Luton, OCAST Scott Meacham, Crowe & Dunlevy Fred Morgan, The State Chamber Mike Neal, Tulsa Metro Chamber David Pitts, Stillwater National Bank Mark Poole, Summit Bank Stephen Prescott, OMRF Darryl Schmidt, BancFirst Sheri Stickley, OKBio Wes Stucky, Ardmore Industrial Development Authority Dick Williamson, TD Williamson, Inc. Duane Wilson, LDW Services, LLC Don Wood, Norman Economic Development Coalition i2E TEAM Tom Walker, President and CEO David Thomison, VP of Investments Rex Smitherman, VP of Operations Sarah Seagraves, VP of Marketing Wayne Embree, VP of Entrepreneur Services Tom Francis, Director of Investment Funds Josh O’Brien, Director of Entrepreneurial Development David Daviee, Director of Finance Richard Rainey, Venture Advisor Mark Lauinger, Venture Advisor Sonja Wilson, CFO-in-Residence Scott Thomas, IT Manager Grady Epperly, Marketing Manager Kenneth Knoll, Concept Investments Manager Michael Kindrat-Pratt, SeedStep Angels Coordinator Casey Harness, Business Analyst Jim Stafford, Communications Specialist Jay Sheldon, eMedia Specialist Katelynn Henderson, Event Specialist Cindy Williams, Investment Assistant Jennifer Buettner, Executive Assistant 28 13% 14% 12% 3% 58% FY2011 Revenues Other Revenues OKC Technology Business Launch Initiative OCAST Funding Governor's Cup Sponsorships & Grants Fund Management Fees FY2011 Expenses 12% 12% 67% i2E Seed Capital, LLC Other Expenses Commercialization Services Donald W. Reynolds Governor’s Cup Concept Financing Program 6% 3% Sources of State Funding: OCAST provides funding for i2E Commercialization Services, the TBFP Concept Fund and is the primary investor in the Oklahoma Seed Capital Fund. Statement of Financial Position FY2011 FY2010 Assets Current Assets Cash & Cash Equivalents 219,589 295,646 Accounts Receivable 191,895 271,695 Certifi cates of Deposit 697,001 474,674 Total Current Assets 1,108,485 1,042,015 Furniture, Fixtures and Equipment, Net 43,580 50,557 Investment in Oklahoma Seed Capital Fund 78,822 78,822 Other Assets 4,551 4,551 Total Assets 1,235,438 1,175,945 Liabilities and Net Assets Current Liabilities Accounts Payable 8,474 30,994 TBFP Reinvestment Fund Payable 120 106 Accrued Liabilities 51,462 42,172 Deferred Revenue 63,570 – Total Current Liabilities 123,626 73,272 Accrued Liabilities, Noncurrent 4,551 4,551 Total Liabilities 128,177 77,823 Net Assets Unrestricted 312,369 283,418 Unrestricted - Board Designated 794,892 814,704 Total Unrestricted Net Assets 1,107,261 1,098,122 Total Liabilities and Net Assets 1,235,438 1,175,945 i2E FY2011 FINANCIAL REPORTS Statement of Activities FY2011 FY2010 Revenues OCAST Funding 1,812,821 2,074,782 Governor's Cup Sponsorships & Grants 402.299 438,625 Fund Management Fees 375,000 220,093 Grants – 46,864 OKC Technology Business Launch Initiative 423,968 – Other Revenues 101,866 120,784 Total Revenues 3,115,974 2,901,148 Expenses Commercialization Services 2,081,411 1,852,680 Concept Financing Program 194,487 203,987 i2E Seed Capital, LLC 375,061 220,024 i2E Management Company, LLC 310 28,673 Donald W. Reynolds Governor's Cup 374,917 379,933 Other Expenses 80,649 137,514 Total Expenses 3,106,835 2,822,811 Excess of Revenues Over Expenses 9,139 78,337 Net Assets at Beginning of Year 1,098,122 1,019,785 Net Assets at End of Year 1,107,261 1,098,122 i2E is a 501(c)(3) private not-for-profi t corporation focused on wealth creation by growing the technology-based entrepreneurial economy in Oklahoma. We are able to accomplish our mission through support from the Oklahoma Center for the Advancement of Science and Technology (OCAST). We would like to thank OCAST, the state of Oklahoma, and all of our partners for their ongoing fi nancial support. The success of i2E and our client companies also relies on the contributions of many individuals and organizations who invest their time, expertise, and capital in Oklahoma’s start-up technology companies. The economic impact statistics used throughout this report are based on client company responses to i2E’s annual impact survey and internal database. 840 Research Parkway • Suite 250 • OKC, OK 73104 2 West Second Street • Suite 210 • Tulsa, OK 74103 800.337.6822 • www.i2E.org facebook.com/OKGOVCUP twitter.com/i2E_Inc
Object Description
Description
Title | 2011 i2e ar |
OkDocs Class# | S925.3 I91 2010/11 |
Digital Format | PDF, Adobe Reader required |
ODL electronic copy | Received from agency via e-mail |
Rights and Permissions | This Oklahoma state government publication is provided for educational purposes under U.S. copyright law. Other usage requires permission of copyright holders. |
Language | English |
Full text | Annual Report • Provided advisory services to 111 Oklahoma high-growth start-up companies. • Assisted 27 companies in raising $35M in private capital. • Awarded Concept funding to 4 companies through the OCAST Technology Business Finance Program. • Established a Tulsa SeedStep Angels chapter. • Partnered with the Greater OKC Chamber to develop the Office of Entrepreneurial Development. • Reached a milestone through our entrepreneurial development initiatives in providing $1 million in scholarships, fellowships and cash awards to college students. • Named winner of the Excellence in Technology Based Economic Development award by the State Science and Technology Institute. OUR MISSION FY2011 Our mission is nurturing entrepreneurs and building high-growth companies in Oklahoma. We achieve our mission by working directly with entrepreneurs, researchers and compa-nies to help them develop their technologies, launch and grow new businesses and access needed capital. Busy entrepreneurs tell us that our model works for them because we not only provide high quality venture advice, capital and entrepreneurial development, we act as a portal to other private and public resources — making it easier to access the right in-formation, expertise and investment at the right time. i2E’s commitment to transparency in our operations, along with demonstrated evidence of strong corporate governance and management were recognized in October 2010 when we received the Certifi cate of Excellence by the national Standards for Excellence Institute. The certifi cation refl ects fundamental values of honesty, integrity, fairness, respect, trust, responsibility and accountability that we show in our everyday operations. i2E’s programs and services, management, fundraising and fi nancial practices were examined in-depth be-fore the certifi cation was awarded. i2E was one of the fi rst organizations to be certifi ed un-der the national Standards accreditation program that began in 2006 and only the second non-profi t in Oklahoma to achieve the certifi cation. In July 2010, the U.S. Department of Commerce’s Economic Development Administration (EDA) partnered with i2E to provide a new initiative to expand growth services to area entrepreneur. The EDA provided a $1 million grant to create the Oklahoma City Technology business Launch Initiative, which was matched by $1 million from fi ve local partners: the Greater Oklahoma City Chamber, the City of Oklahoma City, the Oklahoma Medical Re-search Foundation, the Oklahoma Business Roundtable and the Presbyterian Health Foun-dation. The $2 million project already has made an impact on area entrepreneurs, with 30 companies receiving venture advisory services through the new initiative. HIGHLIGHTS 2 1 It’s hard to believe that another year has passed. These have been tough times in our country. Our state has enjoyed better economic conditions than most, but we’re all certainly in a different era. At i2E we’ve taken the market conditions seriously and have added resources for area entrepreneurs to start and grow companies in our state. The capital markets have been unpredictable for the past decade which appears to be more the norm as opposed to an anomaly. Yet, in Oklahoma we have responded by continuing to create initiatives that provide access to concept, seed stage and startup capital. As you browse this Annual Report, consider that i2E had only a dozen years of history behind it during fi scal 2011. Yet our impact on Oklahoma’s community of entrepreneurs and the state’s economy hardly refl ects a com-pany that had been operating for little more than a year when the new millennium began. We’ve supplied venture advisory services to more than 1,100 Oklahoma entrepreneurs over the past dozen years. We provided critical capital to more than 200 companies. We provided training for 900 student entrepreneurs through the Donald W. Reynolds Governor’s Cup. We added to that legacy with new programs, services, people, national recognition, and the physical space in which to carry it all out. Let me describe just a few highlights from last year of those highlights for you: We launched a program that brought in nationally recognized entrepreneurs and investors to provide insight on business development issues to Oklahoma entrepreneurs. Our fi rst Entrepreneur-in-Residence workshop, “Trends in Raising Capital,” was led by our lead Entrepreneur-in-Residence Bill Payne followed by “Building a High Performance Team.” Entrepreneurs enthusiastically tell us they are fi nding value in the workshops as the series continues in the new fi scal year. In a new joint venture with the Greater Oklahoma City Chamber of Commerce, we created the Offi ce of Entre-preneurial Development. The Offi ce is lead by Josh O’Brien, Director, with the mission to grow resources and programs for Oklahoma Entrepreneurs. We added talent and depth to our team in fi scal 2011, beginning with Vice President of Entrepreneur Services Wayne Embree, who brings years of experience as an investor and fund manager. Kenneth Knoll joined us as Concept Investments Manager. Michael Kindrat-Pratt, Coordinator of the SeedStep Angels Network, signifi es the fi rst time Oklahoma has a dedicated individual focused on growing organized angel activity in our State. Round-ing out our team are Mark Lauinger, Venture Advisor, and Jay Sheldon, eMedia Specialist. The Venture Advisory Services we provide Oklahoma Entrepreneurs gained new structure during the year, de-signed to more quickly move emerging entrepreneurs from the pre-startup stage to being positioned for fund-ing and through to the launch of a product. We also established a Tulsa chapter of the rapidly growing SeedStep Angels in January. By the end of June, the group already had screened twelve investment opportunities, seen six presentations, and made its fi rst invest-ment of $200,000. The Oklahoma City SeedStep Angels continued to build momentum, investing in portfolio companies during the year, as well. i2E was named winner of the Excellence in Technology Based Economic Development award by the State Science and Technology Institute. The award recognized our organization for managing the Technology Business Finance Program that has provided concept funding to more than 100 startups over the past dozen years. Perhaps no achievement was more noteworthy in 2011 than news that i2E had been awarded the Seal of Excel-lence by the national Standards of Excellence Institute. The Seal of Excellence represents i2E’s efforts to ensure operational transparency along with evidence of strong corporate governance and management. These are but a few of the highlights from an incredibly productive year. We look forward to continuing to serve Oklahoma and our state’s entrepreneurs as i2E enters our teenage years and our programs continue to grow. 2 3 i2E takes a team approach in providing advisory services to Oklahoma entrepre-neurs, bringing the deep business experi-ence of our Business Analyst, Venture Ad-visors, Investment Team and Executives in Residence to help them focus on the steps needed for the new business to fl ourish. In the past year, we launched a novel Entre-preneur- in-Residence program in which na-tionally recognized business development and investment experts deliver meaningful information to Oklahoma entrepreneurs through a series of workshops and one-on-one mentoring. We also added a Sales Executive-in-Res-idence, which provides expertise and as-sistance in developing a sales channel for entrepreneurs. We have worked with 500 new high-growth ventures across Oklaho-ma over the 13-year history of our company. FY2011 Reported Economic Impact • $89M in annualized revenues • 79% of revenues obtained outside the state • $49M in annualized payroll • 681 current full time equivalent employees • Average wage of $65,203 • 65 patents fi led and 15 issued Venture Advisory Energy & Environmental Advanced Materials Other Life Sciences IT/Software 23% 11% 43% 6% 17% OKC MSA 239 157 104 Tulsa MSA Balance of State They are true small businesses, with 78% employing 10 people or less and averaging $65,203 in annual wages, paying 75% higher than the state average of $37,274 Portfolio Companies by Industry Portfolio Companies by Geography i2E’s team of venture advisors and investment professionals mentored 111 Oklahoma startup companies over the past year that are working to provide high-paying jobs, bring new revenue to the state and create wealth as they build an innovation-based economy. $37,274 $65,203 Oklahoma average i2E portfolio 4 5 Concept Profi t Seed Start-up Early Break Even 2011 Reported Sales Distribution International Oklahoma 21% 9% 70% Domestic Our funding resources, concept, seed and angel, are targeted to help companies move from one development stage to the next. From concept through growth, our team of investment professionals position Oklahoma companies for funding to match the appropri-ate capital source for their development stage. In FY2011, we helped position 36 entrepreneurial companies for funding with 27 of those, across all fi ve stages of development, obtain $35.1 million in private equity. Portfolio Companies Positioned for Funding by Development Stage Concept 8 Seed 9 Start-up 9 Early 6 Growth 4 Maturity i2E’s portfolio of high-growth companies is producing technology-related products or services targeted at large domestic and international markets. Our client companies continue to report that almost 80% of their revenue is generated from sales outside Oklahoma. That brings revenue into the state and creates jobs and wealth for Oklahomans. 2011 Reported Job Growth 2008 2009 2010 2011 State Average 1.4% -1.9% -0.1% 1.2% i2E Portfolio Companies 26% 36% 20% 22% 6 7 Growth Promising new technologies were spotlighted and thousands of dollars in prize money were awarded in the 2011 Donald W. Reynolds Governor’s Cup collegiate business plan competition, but the most important accomplishment from the competition was its impact on Oklahoma’s future entrepreneurs. More than 150 college students from college campuses across the state took their fi rst steps down the entrepreneur’s pathway in the 2011 competition. They formed teams, researched the market, wrote a business plan and then pitched it before a panel of investors and Oklahoma business leaders. For some, prize money in excess of $100,000 was reward enough for the challenges of the competition. For others, the awards dinner represented a momentary celebration as they prepare to begin a life of building high growth startup businesses. Entrepreneurial Development First place teams in both divisions of the Oklahoma competition won $20,000 each, while second place earned $10,000 each and third place $5,000 each. They described new medical technologies to treat and monitor epilepsy and heart disease, as well as diagnose infl uenza, recover oil and gas more effi ciently and manage complicated land leasing issues. The Governor’s Cup is underwritten by the Donald W. Reynolds Foundation and local sponsors. It is managed by i2E. 8 9 First Place: $20,000 First Place Tri-State: $25,000 CerebroGen Pharmaceuticals University of Oklahoma CerebroGen is developing an antibody-based drug therapy to treat epilepsy. Building on more than a decade of research, the company’s drug removes a recently discovered cause of epilepsy unaddressed by existing treatments With a regulatory approval strategy focused on reaching the market quickly through orphan status, CerebroGen is committed to bringing a much-needed therapeutic to Juvenile Epileptics, followed by a product indicated for the broader market. Faculty Advisor: Elaine Hamm Team Leader: Benjamin West Team Members: Chase Roberts, Tobi Olusola, Majed Gharfeh 2011 GOVERNOR’S CUP WINNERS GRADUATE DIVISION GRADUATE DIVISION Second Place: $10,000 IASO University of Tulsa Faculty Advisor: Michelle Witt Team Leader: Stephen Fain Team Members: Ryan Eslicker, Nathan Garrett IASO has developed “SPI Gel,” an environmentally friendly, silica-based enhanced oil recovery system that seals off inefficient reservoir zones, allowing more trapped oil to be recovered. Well operators that use SPI Gel can expect up to a 50 percent increase in daily oil recovery and decreased expenses. IASO’s mission is to provide oil recovery systems that allow operators to conveniently “get more oil” while being safe for personnel and the environment. Third Place: $5,000 TerraCoda Software Oklahoma City University Faculty Advisor: Kewei Sha Team Leader: Adele Rehm Team Members: Alexis Caron, Bridget Poputa-Clean TerraCoda provides real time enterprise land management, geo-spatial analysis tools, and report generation and mapping solutions for the land, energy, realty, right-of-way procurement, and municipal markets. TerraCoda’s Landman 360 software will provide full end-to-end visibility into the leasing process by providing effective tools that manage the leasing lifecycle. User-friendly technology combines communication, reporting, and cost management tools within TerraCoda’s Software-as-a-Service (SaaS) solution, which will reduce errors and increase efficiency through real time reporting and management tools that allow users to deliver a project on time and on budget. Entrepreneurial Development UNDERGRADUATE DIVISION First Place: $20,000 LumiDX University of Oklahoma Faculty Advisor: Jim Wheeler Team Leader: Amy Henderson Team Members: Ashley Zumwalt, Mimi Nguyen, Kaelyn Lu LumiDX is an infl uenza diagnostics company that offers ChemLight, a fast, highly accurate tool that harnesses chemiluminescent technology to offer a cutting edge innovation in the point-of-care diagnostic market. Lu-miDX aims to be fi rst to market with diagnostic tests that are simple, accurate and fast enough to provide results at the point-of-care. Second Place: $10,000 Vita Rhythm University of Oklahoma Faculty Advisor: Blake Gudgel Team Leader: Jessica Wills Team Members: Brett Gudgel, Brittany Myers, Erikka Roberts Vita-Rhythm has developed a medical device to treat heart failure. The AdvaHeart is a left ventricular assist device that helps eject blood from the left ventricle of a weakened heart. It is smaller and more easily and safely implanted in patients. Third Place: $5,000 Dreamcatcher Services, LLC Oklahoma City University Faculty Advisor: Robert Greve Team Leader: Michael Roselle Team Members: Feng Dong, David Scott, Patrick Kennedye Dreamcatcher Services, LLC has created technology to apply video-EEG monitoring capabilities to the medical diagnostic area of epilepsy. The company has at its disposal a critical mass of talent and indi-viduals necessary for the effi cient, speedy and prof-itable application of video-EEG technologies in the target market. 10 11 OG&E Positive Energy Award went to Brandon Mikael and Matthew Huber from the Univer-sity of Oklahoma, with the assis-tance of faculty advisor Lowell Busenitz, based on their work writing a plan around a tension and gauge device that saves time and money for utility com-panies. The OG&E Positive En-ergy Award supports Oklahoma college students in developing a business plan based on a tech-nology product in the area of al-ternative energy, energy storage, unique energy generation, en-ergy conservation technologies, new delivery methodologies, en-hanced energy controls, and en-ergy infrastructure optimization techniques. Al Tuttle Business Incubation Award winner TerraCoda Soft-ware from Oklahoma City Uni-versity. The award brings a year of offi ce space and business ser-vices in one of four participating Oklahoma business incubators for the graduate division team in which at least one of the stu-dents plans to go forward with the business. Oklahoma Business Roundta-ble Paulsen Scholarships were awarded to Ashley Zumwalt from the University of Oklahoma and Faith Garlington from Oklahoma State University. The Paulsen Award, which provides a $5,000 scholarship that can be used to pay tuition at any Oklahoma col-lege or university, was named in honor of Don Paulsen, long-time President of the Oklahoma Busi-ness Roundtable. Seven-year impact: • 26 campuses from across the state • 950 college students • 290 innovative ideas • $1 million-plus in cash awarded • $40,000 in scholarships • $85,240 in fellowships Other 2011 Governor’s Cup Opportunities In fi scal 2011, Governor’s Cup participants Entrepreneurial Development competed for nearly $200,000 in cash, $10,000 in scholarships and over $40,000 in fellowships and other opportunities. 12 13 Laura Medcalf, senior Computer Science major at East Central University Company: Mintiva Project: Laura managed Mintiva’s social media market-ing campaigns and provided return-on-investment analysis on those efforts. Audrey Metzier, MBA Candidate at Oklahoma City University Company: Otologic Pharmaceutics Project: Audrey performed capital development for Otologic along with project management on competitive analysis and creation of compelling business presentations. Anthony Moorehead, MBA candidate at Oklahoma City University Company: i2E, Inc. Project: As a Spring 2011 Business Fellow for i2E, Anthony worked with i2E’s business advisory and operations teams on business plan review and consulting and new i2E initiative projects. Lucas Rice, junior Industrial Engineering major at the University of Oklahoma Company: i2E, Inc. Governor’s Cup team: UniPHI, 2010 Project: An Investment Fellow for i2E, Lucas worked with the investment team on fi nancial modeling, market and competitive analysis and business plan revisions. Orgil Batsaikhan, MBA and Master of Finance candidate at the University of Tulsa. Company: Consolidated Networks Corp. Project: Orgil developed statistical models to optimize Consolidated Networks’ technical support services to school districts and government agencies across the United States. Alexis Caron, MBA graduate at Oklahoma City University Company: Consolidated Networks Corp. Governor’s Cup teams: Lenio Medical, 2010; TerraCoda Software, 2011 Project: Alexis develops Consolidated Networks’ partner relationship program, recruiting software and content pro-viders for the company’s engineered network solutions. Arun Kumar Devarakonda, MBA graduate at Oklahoma City University Company: WeGoLook.com Governor’s Cup team: CrowdLure, 2011 Project: Arun assisted WeGoLook.com on launching, tracking and evaluating multiple new social media marketing initiatives. Howard Haines, Ph.D. candidate in Entrepreneurship at the University of Oklahoma Company: i2E, Inc. Project: Howard assisted i2E staff with reporting, pro-cess design and providing venture advisory services to its clients. The i2E Fellows Program was redesigned and expanded as part of the OKC Technology Busi-ness Launch Initiative funded by the federal Economic Development Administration, the Greater Oklahoma City Chamber, the Oklahoma Business Roundtable, the Oklahoma Medical Research Foundation, the Presbyterian Health Foundation and the City of Oklahoma City. The program provided nine paid Fellowships to eight students, two Spring Fellowships and seven Summer Fellowships, during 2011. The two Spring i2E Fellows included one MBA stu-dent from Oklahoma City University and one undergraduate student from the University of Oklahoma. The seven Summer i2E Fellows were comprised of fi ve client-hosted Fellows and two i2E-hosted Fellows representing four Oklahoma universities. The Summer i2E Fellows included two undergraduate students, four MBA students and one PhD candidate including international students from France, Mongolia and India. 14 15 i2E put on a new online face in fi scal 2011 when it launched a completely redesigned website that invited users in with bright graphics, new features and easy navigation. The site at www.i2E.org added expanded information about i2E’s many services provided to entrepreneurs, video inter-views and a new blog to i2E’s presence on the Web. The new website provides visitors with plenty of reasons to linger, with in-depth sections on our venture advisory ser-vices, access to capital and entrepreneurial development. Users can even read every page of i&E magazine, both cur-rent edition and back issues, as well as annual reports and The Entrepreneur’s Path: A handbook for high-growth companies, which was written and published by i2E during the past year. The new i2E blogging presence also invites users to return frequently to the site. The i2E blog offers insight into pro-grams, clients and the current state of entrepreneurship, among other topics that were featured during the year. Bloggers included i2E team members, i2E Fellows and En-trepreneurs in Residence, who produced 81 posts in little more than six months after it was launched in December. The i2E blog pushed us deeper into the use of social me-dia during the fi scal year, complementing our active Twit-ter and Facebook pages. The Twitter feed was often used to link users back to blogs or news articles posted on the i2E website. By the end of the fi scal year, the number of people following i2E on Twitter approached 300. Over on the Donald W. Reynolds Governor’s Cup page on Face-book, the number of users who “liked” the page grew rapidly, with more than 450 followers by the end of fi scal 2011. i2E’s media activity was not limited to an online presence, however. We wrote or pitched client stories to media that resulted in 58 articles published on 23 separate clients in Oklahoma newspapers during the year. An i2E client also was highlighted in a USA Today story that profi led people who left California to do business in Oklahoma. In addition, another 62 articles were published with news about i2E initiatives, the Governor’s Cup, i2E Fellows pro-gram and other related activities. There is a bottom line to all the various routes that i2E has taken to establish a presence in both traditional and social media: We are telling the stories of our clients and of i2E as we work tirelessly to fulfi ll our mission to nurture home grown economic development and build wealth in Oklahoma. Media and Marketing 16 17 Five of the six Oklahoma tech companies that received venture capital investment during FY 2011 were i2E Clients, receiving 90% of the total amount raised. Angel Venture Capital Strategic Partners Percent Source of Funding % of 12 mo. capital raised 69% 19% 13% 28% 53% 22% 2011 data showed a signifi cant shift in sources of capital from 2010. Capital raised from angel investors more than doubled to 53% while capital raised from VC investors fell from 65% to 19%. i2E has been a primary source of concept, seed stage and start-up capital for Oklahoma’s high-growth companies for more than a decade. Through the state-funded Concept Fund and the Oklahoma Seed Capital Fund, i2E has provided critical capital to more than 111 early stage ventures since 1998, ensuring that fi nancing was in place to help them weather the pre-revenue funding gap. i2E also manages the SeedStep Angels, a network composed of successful Oklahomans who seek the opportunity to contribute to the success of new entrepreneurs while receiving a high rate of return on their investment. Access to Capital i2E’s portfolio attracts investment to the re-gion with more than $650 million in funding. Approximately $580 million of this has been in private investment from venture capital, angels and strategic investors participating in more than 345 fi nancing rounds. 18 19 Since 1999, a total of 107 Oklahoma companies have received over $10 million in critical concept funding through the OCAST Technology Business Finance Program. The fund has also proven to be a success in collecting and reinvesting repayments. Nearly $4 million, or 37%, of capital available for new investments has been provided by repayments from past recipients. 37% Over its history, Concept funding has helped companies subsequently raise $253 million in private capital, creating a leverage ratio of 29:1 for the state’s investment Concept Funding In Business All Concept Fund Companies Concept Funding $10,194,877 In Business $142,377,710 All Concept Companies $253,218,948 Concept Fund Energy & Environmental Advanced Materials Other Life Sciences IT/Software 7% 7% 10% 25% 51% 107 Companies Funded Private Equity Investment 1999-2011 Portfolio Companies by Industry 1999-2011 Entrepreneurs Funding Entrepreneurs $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 Access to Capital 20 21 Concept Fund 2011 Reported Economic Impact • $33M in annualized revenues • 86% of revenues outside state • $24M in annualized payroll • 324 full time employees equivalent • Average wage of $68,910 • 34 patents fi led, 11 issued We added to the long history of providing critical capital to Oklahoma’s early stage ventures last year by fi nancing four companies. The funding brings the total number of companies receiving funds to 105 since the state-appropriated fund began operating in 1998. Concept funded companies are creating new intellectual property, with 163 patents issued and 71 new products developed. 2011 CONCEPT INVESTMENTS Hassco is an Oklahoma City-based Medical-Device startup develop-ing new medical devices for lapa-roscopic procedures. The company currently holds a provisional util-ity patent on its fl agship device, the Robotic Articulating Laparoscopic System (RAL SYSTEM) which will allow for improved range of motion and faster, more effective surgeries. In the US alone, there are approxi-mately 9,500,000 procedures per-formed annually via Minimally Inva-sive Surgeries (MIS) while the global MIS device and instrument market is estimated at $18.5 billion annually. Failsafe Hazmat is a Tulsa-based startup company developing soft-ware to assist and support companies that ship hazardous products and materials. Among a daily 800,000 hazmat shipments, approximately 300,000 are classifi ed as posing ex-treme risk. In a single year, there were 19,277 US hazmat incidents resulting in $72,600,000 in property damage, not including the related litigation costs. The Failsafe Hazmat software is designed to keep companies com-pliant with all domestic and interna-tional shipping regulations and to help avoid costly accidents. Capacity Sports is a Tulsa-based startup developing mobile concus-sion management software, begin-ning with the iOS (iPhone) platform, to evaluate concussion symptoms in athletes and reduce the risk of per-manent brain injury in sports. Driven by heightened concussion aware-ness, the Capacity Sports application will evaluate balance, motor function, reaction time and memory to better manage athlete screening and pro-vide improved information for safe return to play decisions. $37,274 $68,910 Oklahoma average i2E portfolio TokenEX is a Tulsa-based Enterprise Data Security company that helps merchants reduce their risk and the cost of Payment Card Industry (PCI) compliance, thereby enabling them to focus on their core retail compe-tency, not Information Technology. Tokenization is a relatively new con-cept where a “token” is a surrogate value that replaces the payment card number, but unlike encryption, the token cannot be used to decipher the real card number. While TokenEx is not the only provider of tokeniza-tion, the company has a proprietary process that provides tokens at the front-end of the merchant’s opera-tion, thereby removing a greater por-tion of the merchant’s systems from PCI compliance requirements. Access to Capital 22 23 The Seed Capital Fund provides Oklahoma entre-preneurs with the capital and support needed to move a technology from concept to product launch. The Fund has invested almost $4.4 million in nine companies. These companies attracted more than $25 million of co-investment. Seed Capital Fund 2011 Reported Economic Impact • 50 full time employees • 35% job growth rate • Average Annual wage of $93,466 • 10 patents fi led, 4 issued • $3M in revenue • Nearly $7M in federal grants 2011 SEED FUND INVESTMENTS Expert TA is a Tulsa-based educational software company that has developed a powerful partial credit grading sys-tem for engineering and science based collegiate course work. The company provides a web-based homework as-sessment application to engineering, physics, and math departments. Real Time Rehab, LLC is a Tulsa-based company servicing clinicians, physical therapists, chiropractors, sports reha-bilitation and occupational specialists, by increasing their ability to improve a patient’s recovery from injury or illness. RTR has created the industry’s fi rst proprietary Software as a Service that provides the clinician with both high qual-ity video and printed materials that instruct a patient on how to perform exercises at home. 2011 FOLLOW-ON INVESTMENTS 2011 FOLLOW-ON INVESTMENTS Altheus Therapeutics, Inc. is located in Oklahoma City and is working to develop therapies to treat the two most common forms of infl ammatory bowel disease that affl icts about 1.2 million Americans. Ulcerative colitis and Crohn’s Disease, are chronic lifelong conditions which signifi cantly impact the quality of life. The Altheus therapy combines two FDA approved drugs in a novel way and has been shown to be highly effective in animal models. Emotion Media, LLC (EMM), is based in Tulsa and provides media services to the $7 billion dollar professional pho-tography market. EMM has developed a proprietary DVD technology that gives photographers a higher quality, less expensive way to present and sell their photos. DVDs are created in a fraction of the time (minutes vs. hours) using technology automation and include a professional, pro-duction quality media presentation with music, motion, and special effects. Exerbotics, LLC, is located in Tulsa and manufactures ad-vanced technology equipment and devices for commercial fi tness applications such as: Collegiate/Professional Ath-letics, Physical Medicine Rehabilitation and Occupational/ Industrial Medicine. This technology has been engineered, manufactured and tested in Oklahoma. Exerbotics’ patent pending technologies are the only real advancement in re-sistance strength training equipment – ever. Access to Capital 24 25 SeedStep Angels, founded in 2009 as a source of risk capital for start-up Oklahoma companies, moved forward in 2011 with growth, best practice, and investment initiatives. January 2011 marked the kickoff event for the Tulsa chapter of the SeedStep Angels. Marianne Hudson, the Executive Director of the Angel Capital Association, traveled to Tulsa to give a keynote speech to a dozen interested Angel investors regarding the state of the Angel investing industry. The group formally met for the fi rst time in February. It has screened 12 companies, seen six companies present, and has made an investment of $200K in DermaMedics. In Oklahoma City, the focus shifted to integrating national Angel best practices within the group. The group had the opportunity to attend private events with out-of-state experts – Bill Botts, Bill Payne and Tom Churchwell – all of whom are successful entrepreneurs or venture capitalists. The SeedStep Angels group also focused on building relationships with regional Angel groups surrounding Oklahoma. These relationships will be used to syndicate Oklahoma deals to outside investor networks to properly aggregate capital in investment rounds for Oklahoma companies. Good relationships with other Angel groups are also key to sharing best practices and to avoiding the mistakes other groups have made in the past. Initially, SeedStep Angels has been in contact with the Midwest Venture Alliance out of Wichita, Kansas. In 2011, the Angels screened 23 companies, saw 10 companies present, and made three investments. In 2012, the group looks forward to continuing to work with the Angel Capital Association and pursuing best practices by instituting a formal group due diligence process, creating a membership committee, and growing through recruitment of Angels in rural areas of Oklahoma. SeedStep Angels FY2011 INVESTMENTS DermaMedics has developed and markets topical anti-inflammatory products to prevent burns in cancer patients and patients undergoing cos-metic procedures, as well as products to treat a variety of common skin dis-eases such as psoriasis, acne, eczema and rosacea, and skin aging. Expert TA has created Web-based home-work assessment software that is capable of human-like grading of complex ques-tions like those found in engineering, physics and mathematics courses. Search and Clear had developed a Web-based collaborative software platform for any type of business that depends upon collaboration and communica-tion, such as the entertainment industry, health care, attorneys, information tech-nology, fi nancial institutions and gov-ernment contractors. Access to Capital Investment 1 Investments 3 26 27 Institutional Governance 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 adopted the following charters for its Board of Directors and Board Committees: Board of Directors Charter of Governance: Sets and ensures fi delity to i2E’s mission. Reviews and approves organizational strategy, goals, plans, and budgets. In addition the board is charged with establishing policies, approving major engagements in public policy, and ensuring that management systems are in place for compliance. Executive Committee Charter: The function of the Executive Committee is to exercise powers of the Board of Directors on matters which arise between regularly scheduled Board meetings or when it is not practical or feasible for the Board to meet. This Committee also reviews and monitors all compensation, benefi t and human resource policy matters, plus monitors and evaluates the performance of the corporation’s CEO. Finance and Audit Committee Charter: The primary purpose of this Committee is to assist the Board of Directors in fulfi lling its fi scal oversight responsibilities. It serves as an independent and objective party to monitor the integrity ofthe Corporation’s fi nancial accounting and reporting processes and internal control system. Nominating and Governance Committee Charter: The Committee assists the Board in developing and overseeing the Corporation’s policies and procedures regarding Board composition and recommendations of candidates for nomination to the Board. Investment Committee Charters: The Board engages two Investment Committees, the Technology Business Finance Program Committee and The Oklahoma Seed Capital Fund Investment Committee to consider and approve applications for investment within the requirements of the investment programs. Code of Ethics and Confl ict of Interest The i2E Code of Ethics and Confl ict of Interest Policy outlines principles and standards of honesty and ethical accountability by which all board members and employees agree to adhere to with respect to the company and its associates. Board Evaluation The Board completes a board evaluation survey annually. The results of the evaluation are compiled and presented to the full Board for review and discussion. BOARD OF DIRECTORS Roy Williams, Chairman, Greater Oklahoma City Chamber Michael LaBrie, Secretary, McAfee & Taft Jonathan Adamson, Argonaut Private Equity Howard Barnett, Jr., OSU - Tulsa and OSU-CHS Leslie Batchelor, The Center for Economic Development Law James Bode, Bank of Oklahoma, N.A. Michael Carolina, OCAST Bob Craine, TSF Capital, LLC Steve Cropper Phil Eller, Eller Detrich, P.C. Suzette Hatfi eld, Crawley Ventures David Hogan, HoganTaylor, LLP Phil Kurtz, Benefi t Informatics Hershel Lamirand, III, Oklahoma Health Center Foundation Merl Lindstrom, ConocoPhillips, Inc. Dan Luton, OCAST Scott Meacham, Crowe & Dunlevy Fred Morgan, The State Chamber Mike Neal, Tulsa Metro Chamber David Pitts, Stillwater National Bank Mark Poole, Summit Bank Stephen Prescott, OMRF Darryl Schmidt, BancFirst Sheri Stickley, OKBio Wes Stucky, Ardmore Industrial Development Authority Dick Williamson, TD Williamson, Inc. Duane Wilson, LDW Services, LLC Don Wood, Norman Economic Development Coalition i2E TEAM Tom Walker, President and CEO David Thomison, VP of Investments Rex Smitherman, VP of Operations Sarah Seagraves, VP of Marketing Wayne Embree, VP of Entrepreneur Services Tom Francis, Director of Investment Funds Josh O’Brien, Director of Entrepreneurial Development David Daviee, Director of Finance Richard Rainey, Venture Advisor Mark Lauinger, Venture Advisor Sonja Wilson, CFO-in-Residence Scott Thomas, IT Manager Grady Epperly, Marketing Manager Kenneth Knoll, Concept Investments Manager Michael Kindrat-Pratt, SeedStep Angels Coordinator Casey Harness, Business Analyst Jim Stafford, Communications Specialist Jay Sheldon, eMedia Specialist Katelynn Henderson, Event Specialist Cindy Williams, Investment Assistant Jennifer Buettner, Executive Assistant 28 13% 14% 12% 3% 58% FY2011 Revenues Other Revenues OKC Technology Business Launch Initiative OCAST Funding Governor's Cup Sponsorships & Grants Fund Management Fees FY2011 Expenses 12% 12% 67% i2E Seed Capital, LLC Other Expenses Commercialization Services Donald W. Reynolds Governor’s Cup Concept Financing Program 6% 3% Sources of State Funding: OCAST provides funding for i2E Commercialization Services, the TBFP Concept Fund and is the primary investor in the Oklahoma Seed Capital Fund. Statement of Financial Position FY2011 FY2010 Assets Current Assets Cash & Cash Equivalents 219,589 295,646 Accounts Receivable 191,895 271,695 Certifi cates of Deposit 697,001 474,674 Total Current Assets 1,108,485 1,042,015 Furniture, Fixtures and Equipment, Net 43,580 50,557 Investment in Oklahoma Seed Capital Fund 78,822 78,822 Other Assets 4,551 4,551 Total Assets 1,235,438 1,175,945 Liabilities and Net Assets Current Liabilities Accounts Payable 8,474 30,994 TBFP Reinvestment Fund Payable 120 106 Accrued Liabilities 51,462 42,172 Deferred Revenue 63,570 – Total Current Liabilities 123,626 73,272 Accrued Liabilities, Noncurrent 4,551 4,551 Total Liabilities 128,177 77,823 Net Assets Unrestricted 312,369 283,418 Unrestricted - Board Designated 794,892 814,704 Total Unrestricted Net Assets 1,107,261 1,098,122 Total Liabilities and Net Assets 1,235,438 1,175,945 i2E FY2011 FINANCIAL REPORTS Statement of Activities FY2011 FY2010 Revenues OCAST Funding 1,812,821 2,074,782 Governor's Cup Sponsorships & Grants 402.299 438,625 Fund Management Fees 375,000 220,093 Grants – 46,864 OKC Technology Business Launch Initiative 423,968 – Other Revenues 101,866 120,784 Total Revenues 3,115,974 2,901,148 Expenses Commercialization Services 2,081,411 1,852,680 Concept Financing Program 194,487 203,987 i2E Seed Capital, LLC 375,061 220,024 i2E Management Company, LLC 310 28,673 Donald W. Reynolds Governor's Cup 374,917 379,933 Other Expenses 80,649 137,514 Total Expenses 3,106,835 2,822,811 Excess of Revenues Over Expenses 9,139 78,337 Net Assets at Beginning of Year 1,098,122 1,019,785 Net Assets at End of Year 1,107,261 1,098,122 i2E is a 501(c)(3) private not-for-profi t corporation focused on wealth creation by growing the technology-based entrepreneurial economy in Oklahoma. We are able to accomplish our mission through support from the Oklahoma Center for the Advancement of Science and Technology (OCAST). We would like to thank OCAST, the state of Oklahoma, and all of our partners for their ongoing fi nancial support. The success of i2E and our client companies also relies on the contributions of many individuals and organizations who invest their time, expertise, and capital in Oklahoma’s start-up technology companies. The economic impact statistics used throughout this report are based on client company responses to i2E’s annual impact survey and internal database. 840 Research Parkway • Suite 250 • OKC, OK 73104 2 West Second Street • Suite 210 • Tulsa, OK 74103 800.337.6822 • www.i2E.org facebook.com/OKGOVCUP twitter.com/i2E_Inc |
Date created | 2012-01-17 |
Date modified | 2012-01-17 |