Speaker 1 0:00 It's wonderful to be here. As Ann mentioned, my name is Mike Chico. I'm a partner in the head of business and strategy at Roadrunner ventures studios. Road Runner is a deep tech focused venture studio based out of Albuquerque, New Mexico. And both Katherine and I are really excited to be here. Speaker 2 0:18 Thanks, Mike. And I'm Katherine Binney. I'm a product manager at Roadrunner venture studios. In that role, I do a lot of our work on sourcing and evaluation, kind of looking at ideas that we might bring into our studio and deciding which ones to move forward with, as well as a lot of time designing products, once companies are in the studio, and even before figuring out what are the commercial opportunities for various innovations coming out of labs and universities and what might it take to make them into successful businesses. So with that, I think we'll get started. Let me go ahead and share my screen. All right, and I'll kick it off to you, Mike. Speaker 1 1:00 Thank you, Catherine. So the goal of this talk is to talk is to share a little bit about how Roadrunner and investors more generally do deep tech due diligence. And what we mean by that is how we evaluate and look at IP for potential investment and potential, you know, effort and desire to build it into a company. Over the last six months at Roadrunner, we've conducted over 250 reviews of IP and technology primarily coming out of the National Labs in New Mexico, Sandia, Los Alamos, as well as the university system in New Mexico, given that's our home, and wanted to share a couple lessons learned from those reviews. Number one, the better. You can explain the ideas and IP and attractive way to investors, the easier the system and process will be. This seems obvious, but it's very important on how we frame the IP to make sure it matches up with the investment thesis of the of the fund. But also it matches up with an immediate path to commercialization. That kind of moves to lesson number two, which is a lot of times the scientists have conceptions of where the market for this IP can be. But as tech transfer professionals and as venture capitalists, a lot of times it's helpful for us to think about those markets slightly differently and come at them in terms of what is the most attractive market? Or where can the fundamental insight of this technology make the biggest impact? And framing the IP in that way makes it very attractive to outside investors. That rolls into lesson number three. So why does this matter from a commercial perspective? And we're very fond of saying that technology doesn't change the world products do. And products are what you sell into the market. And so how does this technology and how does the fundamental insight of this technology translate into a game changing product, or something that will pay money people will pay money for. And then finally, I think it's really critical to you know, critique and improve one's own pitch to investors. You know, it's very, very easy, and we're guilty of it as well to get myopic, and look at this technology over and over again and see, see it is obvious. But when you're reviewing lots of IP over and over again, you don't have that much time. And so improving the pitch and critiquing it ahead of time makes life a lot easier both for the tech transfer offices, and for the VCs. Go to the next slide, want to take a step back and talk a little bit about what a venture studio is. So within the venture landscape, venture studio really is your co founding partner on building companies around this IP. So rather than just write a check and make an investment of venture Studio x is a co founder with the scientists, the innovator, the idea person to take the idea from soup to nuts from lab to living room. That means we help adventure studios in general help on everything surrounding a business from Operations, Business Plan, product market fit, legal office space, but also on kind of the emotional journey that it takes to take one of these technologies from or on this really long journey from the lab to the living room. Now, venture studios were a concept in the 1990s. They've evolved since then there's more than 800 Studios across the nation. I'd say the vast majority of these studios are focused on consumer tech and focused on business to business SAS. That's where venture studios have really achieved a lot of success. I think where we're starting to see more evolution is into spaces like we're rolling our plays on the deep tech side. Venture studios have some built in advantages for the founders and they also have some built in advantages in terms of the exits and the fundraising venture studios are able to raise funds on a Quicker, quicker timescale and the exits tend to be higher. Then those companies that don't go through venture studio, and some examples of companies that have gone through venture studios, both in the deep tech and consumer side, but they're in a came out of venture studio, Dollar Shave Club, icon, 3d printing, and then snowflake are all products of venture studios. When we talk deep tech, you know, it's obviously a very wide spectrum of technologies. You know, these are the areas that we focus on at Roadrunner. And these are the what we would consider deep tech, from quantum science to semiconductors, space, high performance computing, clean tech, advanced manufacturing, I think, you know, it's important to note about these is we're really looking for technologies that are not just incremental improvements. And I think VCs generally are looking for technologies that are not just incremental improvements, but are fundamentally challenging the assumptions of these individual fields, and advancing those assumptions. And so in the energy space, for example, you know, we see a lot of really interesting technologies that are both incremental and quantum leaps. And, you know, venture companies generally try to target are the quantum leaps. Speaker 1 6:17 You know, our experiences a deep tech venture studio to date, is really focused on can we extract a fundamental insight from the technology that we can turn into a game changing product? As I mentioned before, we've looked at a lot of technologies out of the New Mexico lab and university systems. And we are really focused on those technologies that question the underlying assumptions of an industry, and are big if true. So if this happens, if we can make this product, it'll be a game changer for that industry. When we look at technologies, and we'll go a little bit more into the framework, you know, we think a lot about number one, can we co found a profitable company with the inventor that can reach a market in two to three years, and I want deep tech, you know, rarely can go all the way to market in two to three years. What we mean by this is, can we get it to the stage where it can be tested or piloted by a customer in two to three years. You know, it's critical for ventures in general, but particularly for deep tech ventures, to get customer feedback right off the bat, to really design with a customer in mind and design with what the end product may be. And so we're looking for technologies in our deep tech venture studio, that can get to that point, in a relatively short timeframe. What that translates to in terms of TRL is about four to five. And we're willing to do some development work to get there. But we need to be able to get some sort of customer validation within two to three years. So we get to the next slide. And then finally, I just want to, you know, think about venture studios as a de risking engine. So we follow a three step process. I don't think this is true across all the board, but it's generally true across venture studios. You know, first we think about the technology, can we de risk the technology and find a tech that is real, differentiated, valuable and aligned with our mission and value proposition? Then can we de risk the business? So can we think about the technology in terms of the product that it produces, and the customer that will be served by the technology? And when we're in this stage, we think a lot about what does it take to make it valuable, valuable and venture bankable. And then finally, we think about de risking the investment. So when companies exit the studio, they exit by having a first customer. And by having a first check, we're a really large series, a kind of round. And so what can we do to support the technologies and the companies to get large investments to move their mission forward? You know, deep tech tends to be expensive, it tends to require a lot of r&d. And so we need to set these companies up for success in the fundraising market, and help the inventors and help the founders find their footing on fundraising before they can go change the world. With that, I'll pass it over to Kathryn to talk a little bit more about our process and how we evaluate different technologies. Speaker 2 9:24 Thanks, Mike. So I'm pulling back the curtain, what does that diligence process actually look like? And how might individuals who are tech transfer professionals be able to make it easier for investors or deep Tech Studios to actually invest in their technologies? It's kind of as Mike said, a big question we're asking throughout our diligence process is whether a specific technology can become a viable, valuable venture bankable company that's aligned with our mission and value proposition. And I think those first three questions will be asked by most investors you'll encounter, whereas the last one is going to vary from fund to fund and investor to investor. So that first question, is this science viable? Typically, I think that looks like for an investor, whether you're trying to evaluate whether science passes what I call the sniff test, is this reasonably plausible? Is it grounded in a broader academic discipline? Has there been papers showing that it is? Legit? Has there been a peer review, that we typically rely on advisors, but investors are not PhDs, we're not really scientific experts. And so we ultimately need to trust the scientists who are those experts that they know their science. That's why you do transfer from labs and scientists. And we're more looking at whether or not others beyond the lab or the research university at came from agree that the scientific background seems reasonable. We also I think, in terms of viability, look at whether or not there's a reasonable path to market. So with deep tech, in particular, there's often even within things that are at at a technology readiness level of two, or three, or three or four that have been proved out in the lab, some of those companies will then take 10s of years and hundreds of millions of dollars to make it to market, whereas others might make it to market in two to three years and a couple of million dollars. And so early on in our diligence process, we have conversations with scientists and experts in the field to get a sense of key milestones that will be needed to be reached between lab and market. And whether those milestones could be achieved with venture scale backing, like anything you want to add on what we look for and determining whether technology is viable? Speaker 1 11:52 No, I think the only thing I'd say is a lot of times we look at big if true technologies. So this is not as easy as just saying, of course, it's coming out of a of a university, of course, it's coming out of a research lab, it's got to be viable. It's not only viable from a economic pour from a science perspective, but it's gonna be viable from an economic perspective. And we've got to get others to believe it too. Speaker 2 12:14 Which I think brings us to our next two questions, which are tightly intertwined, which is is this technology valuable and venture bankable? So in terms of whether or not it's valuable, what we look at is if there's a technology or a patent or some sort of disclosure, how does it compare to other things on the market? Is this something that's a total innovation and and tackle some sort of scientific or social problem in a new way? Or is it an incremental design improvement to the way things are, and I'll flag what what's valuable in terms of a science discovery, exciting science, just discoveries Don't always try to exciting market discoveries. I think incremental improvements can sometimes be really big scientific wins, but not always have the same win on the commercial side. Which is similar to what we look at when we're evaluating whether a technology can become a venture bankable business, we spend a lot of time looking at the value that the scientific invention might provide to end users both from a quantitative perspective, what is the exact difference compared to a current benchmark? And a qualitative perspective? Is this a technology that can actually change? How you are doing something? We look at the pool of people that might benefit from a new technology? Is it a really big pool of people, which would be good for being better basketball? Or is it smaller? How easy is it for people to take advantage of a new technology, sometimes they're a really big step with like really big, game changing technologies that are crazy expensive. And so even though it's a fundamentally new way of doing things, it is, the cost is outsized compared to the value would provide. And again, we really, really look at whether something's an incremental improvement or a step change. Something I think I'll call out with valuable adventure makeable. These are the areas where I think we as a venture studio do the most independent thinking compared to the information we get from scientists. And that's where I'd call out it's an area, I think we could really work collaboratively with tech transfer offices. Oftentimes, scientists and researchers have some decent understanding of where their technology might be valuable. But we spend a lot of time looking at adjacent markets, talking to customers, doing market research to discover not just is what the scientists claimed about who might benefit from it true. But also, are there other potential customers or end users that might benefit from a product based on this technology? How big is their problem? What is their problem? What motivates them? And in what ways might this technology enable a solution to those problems? And so the more I think that that information It can already be provided from tech transfer offices or scientists or researchers, the easier it is for us to collaborate on that vision. And the more we can get to that end vision, the more likely we are to actually commercialize the technology, make it look like you have something to add. Speaker 1 15:16 Yeah, I just wanted to call out that it's there are a lot of really fantastic businesses out there that are not venture bankable. The way the venture model works is you inherently have to try to find homeruns. And one of the sadder parts of what we do is when there's a really great technology or really strong business case for something that is not necessarily a home run, but could be a really strong business. Otherwise, if you don't take venture capital for it. And so I think it's thinking, you know, like Catherine mentioned, it would be, it is incredibly helpful when, you know, we work collaboratively with the scientists to discover is it actually venture bankable? Could this be a big enough win on both sides for the venture model to work? Or is this something that's more suited to, you know, developing it through non dilutive funding grants, or what other other ways and building a really strong healthy business, but it's not one with venture capital? Speaker 2 16:18 The last thing I'll mention here, before diving into more ways, deep tech due diligence can be easier is is a specific investment opportunity. So a specific technology aligned with mission and values. This is going to differ from fund to fund and from investor to investor. But I'll call out for example, some of the questions we ask that are particular to us and our model, or whether a technology or a company formed around a technology has funding already. We look for things that don't yet have funding, or don't yet have dilutive funding. Is the scientist behind innovation willing to come on board in some capacity as a an advisor or a full time person? Is the IP accessible? Can we actually license it and transfer it? And then is the innovation aligned with our focus areas? And so again, those questions will vary from investor to investor. But those are some of the ones we ask. In that due diligence stage, these are some of the activities we do and the ways that it can be easier. And typically, the easier it is, the more likely we are to get to a yes. So we typically, from a process perspective, conduct a discussion with the inventor of a new technology. We review a lot of materials from the inventor or from the tech transfer office. Once we've done both those things, we usually have additional questions over email, typically around the science sniff test. We do a lot of online research into a market and comparable technologies to try to understand what is the value that's currently available on the market? And what would this technology potentially displace. And we typically also rely on expert advisors who know a little bit more about the nuance of the particular sector in which a technology is located. Or to call out some of the things that make this diligence process easier. So the first one of the biggest one is a really simple explanation of technology. We are a pretty technical venture studio willing to get into the weeds and really dive in with a scientist on how things work. I would say in my experience, most ventures are not. And so the more you can make it so that people don't have to become scientists, the easier it is for them to get excited about the technology. Related to that, the more you can describe technology, along with relevant keywords situating that technology in a broader academic discipline, the easier it is for investors to go on and do their own diligence, because they have those keywords they could do in searches. To get a sense of what is out there. I think we have spent a lot of time on some innovations where we were really struggling to figure out what else was similar until someone finally gave us kind of the key word. And we were like, Oh, now we see 10 different articles, and we can see why this one is better than all these 10 different things that are already out there. Likewise, I think if you're looking to commercialize technology, the more your lab based experiments include comparisons to some sort of current state or benchmark, the more exciting they are to investors. So speed, durability, kind of all those kinds of comparisons. The more you can do them in a lab, the easier it is for an investor to imagine the market potential. We really appreciate a connection to investors and scientists so making that relationship easy to set up. Obviously, there's trade offs there because it's a time investment for the science Test. But it's something that's really critical for our due diligence process. Likewise, providing an advance technical materials for the technical side of due diligence, providing patents, research papers, public materials, etc, etc, we typically go through all those materials. And so the more they can be granted to us, I think, the faster it goes. And then finally, I'll call out that the target market envisioned by a scientist can often be very different from the target market we end up with. And I think the more you as a tech transfer professional can dig into whether or not kind of the scientists initial nascent understanding of the potential commercial applicability of their technology might be true. And whether there's adjacent markets, the easier it is also for VCs, to do that same analysis of whether or not it is the right market, or if there's an adjacent one. And providing to the extent that you have experts, investors, customers, that have done some of that research into what's the potential market for this technology, and can provide those connections to investors, the easier it is for them to do their own due diligence and assessment of markets. Like anything else to add here around the ways in which working with different universities and labs kind of increase the success rate for commercializing new tech. Speaker 1 21:25 All I would say is it's a very collaborative process. So the more collaboration between the tech transfer office, the scientists and the the venture arm, the better. And in a lot of a lot of times, we'll start one place, and then end up in a completely different place on the journey. But doing it together kind of builds the knowledge across the board on on what the venture firm is looking for, but also helps build the muscle for the scientists to think about the market and where they can apply their technology the best. Speaker 2 22:00 So once we've done our initial read of a technology, and we asked that question of could this be a viable, valuable venture backed company? If we the answer, we think is plausibly Yes, we think there's potentially potential there. A lot of possibilities in this market, a lot of potentialities in this market? Will we start to ask ourselves, well, what would it actually take to make that vision a reality? And for us, there's kind of four thrusts we look at. And we typically try to answer these questions, or at least have an initial understanding, before we actually make an investment or bring a technology into our studio. The first one is product, this is really big, and everything else kind of feeds into it. How would we actually convert a technology into a product? Typically, what is invented in the lab is not something that you would sell to an end consumer. And so can we envision what ultimately the thing you might sell is? And in what ways? Is it based on that lab? to kind of get to the answer to that question, we do a lot of customer deep dives, even before bringing in technology. We're trying to get a sense of who does but who would buy a product? What is the challenge that person is currently facing? What are the constraints that person's facing? What motivates them? So is this technology going to solve a problem that this person is already putting a lot of time and energy into trying to solve? Or does it solve a problem that, you know, they acknowledge they have, but it's not actually worth their time and energy to try to solve? It's just a minor annoyance. And this is where we typically tend to look at a lot of different customers to try to get a sense of who are the people for whom this is actually solving a major need? How big is that need? How much money do they have to spend on that need? And what actually is the instantiation of the technology and a form that would solve that need? We tend to go from then these individual people to a broader market analysis. How big is the market opportunity? What are sub segments that it could fit into? So oftentimes, you might say, hey, the semiconductor market is this big. But the semiconductor market is not actually the part of the market that you're gonna capture. And so what is the subset of that that is most relevant to your tech? Another interesting one, that tech transfer officials might also be able to do, what companies are good case studies for the trajectory of the technology, a lot of venture and investments in some ways is getting people to hear a story of the potential future of a technology and be able to envision it with you. And so if you can point to models of what similar transfer looked like or similar commercialization of technology looked like that can be a really good communication tactic for getting people to kind of see the vision. Similarly, and seeing the vision you often see potential challenges that are faced along the path of commercialization from lab to more again. And so knowing in advance what are the potential hurdles, knowing who competitors are competitors aren't necessarily a bad thing. But it's good to know who's out there and what your technology might be differentiated. knowing things about business models, we try to dig into what are the similar business models for customers and investors, that they typically see what could work best for this technology. And then we also dive again, into the tech validation really trying to understand from a technical perspective, the key milestones to get from the state of a technology in a lab to an actual product that can be sold to customers down the road. All right, Mike, anything else on this deeper validation stage? I think once we've answered these questions, we typically, once we think there's a, what it would take to build the viable, valuable venture backed company is something we can provide, that would be when we decide to bring a technology into our studio. Mike, anything else? Unknown Speaker 26:01 I think you got it. Speaker 2 26:05 Great. Well, I'll hand it over to you to kind of summarize the key takeaways that would be helpful for those who are on kind of the university and lab side of this. Speaker 1 26:13 Yeah, thank you. You know, I'd highlight three, three big ones. And we've talked about this a little bit today. But, you know, number one, investors are not experts. So we're very aware of our own limitations, and our own inability to understand all of the great science that's coming out of the labs. That's why we work with experts of our own bone. It's also why we rely on on folks like yourselves from tech transfer offices to help us, you know, find the really great technology coming out of these labs and universities. And I think the better that we can work collaboratively, collaboratively together to understand and validate the technology quickly, the easier the whole process becomes. And, you know, we always really appreciate whenever we see a new technology, if we can understand it, in a relatively quick fashion, it makes life much easier. I think, to the second point, and we talked about this, when we talked about venture bankable, you know, the venture model only works with a high growth high return model. There's a lot of really great technology and really good businesses out there that are not good fits for venture capital firms. And, you know, you know, one simple heuristic to use is, is there a path to a 10x return on this? For studios, that generally means that we need to be directionally correct, you know, we don't need to see the 10x return all the way there. But we need to see a way to get there. And a lot of times, like Catherine was mentioning, that means envisioning a slightly different market, or a slightly different path to commercialization than may have been in bid originally envisioned by the scientists. And that's what venture studios excel at, is taking the fundamental insight of the technology and applying it to different markets. And then finally, you know, not all novelty matters, I'd say the, you know, one of the most common things we see our scientists inventing for other scientists, you know, I'd say the most common commercialization plan we see coming out of universities and labs as well, I will sell this to other scientists and other universities and labs. And that can be a viable commercialization path. But the more we can ground them to ground, this tech and tangible customer problems that exist outside the labs, I think the easier it is to see that path to a 10x return, and really have the biggest impact possible with the technology. You know, we need to have this technology matter beyond just the lab and matter to the wider, you know, the wider product landscape. And for the technologies that don't fall into that they can still be really great businesses, but they're probably not great fits for the venture capital model. Speaker 2 28:59 Oh, just to two additional comments make if Unknown Speaker 29:02 that's okay, please. Yeah. Speaker 2 29:06 On the path to 10x returns, I think something to think about as a really early on is a 10x return is contingent on how much it takes to build it. And so the more it's going to take to build it, the larger that return has to be versus if it's smaller to build it. You don't need quite as big a return. And so that's something kind of to balance and thinking about, is this potentially venture bankable? The other one is not just I think in terms of novelty, scientists commercializing for other scientists, but also looking at improvements in the avenues in which they matter. I think a big scientific discovery might be you know, we figured out how to have the size of this device that lots of people uses us. But if everyone puts that device in a massive warehouse, it doesn't necessarily matter if it's twice as small, even if that's a very exciting scientific proof. meant and so real improvements might not matter in the commercial world. And so I spend a lot of time just looking at technology and saying great, like you have this invention is an improvement. Does that improvement matter to anyone? And if so, who and how much? Speaker 1 30:18 That's a really great point, Catherine, that is a common archetype we see is improvements that don't necessarily translate to end user improvements. We always like to talk about when we're commercializing a product, you want to be selling painkillers, not vitamins, you know, the difference between aspirin and your multivitamin is you take aspirin when you have a headache, and you're never going to forget to take aspirin when you have a headache. But a lot of us forget to take our multivitamins in the morning. And it's okay. It's not, you know, something that is very urgent to us. And so you want to be able to solve a critical problem for the customer. And if that critical problem doesn't match up with the technology, then more often than not, you find yourself selling vitamins, which can be a more challenging commercialization path. Speaker 1 31:15 You know, I saw a question in the chat, you know, how many technologies that were supported what percent was successful, the first three port codes that we have the first three technologies that we are pursuing within Roadrunner are across the spectrum. Hydroponics, and natives and fab.ai. All of these solve real world problems with cutting edge technology, they're validated in the labs, partly by experts, we think they all have very high upside with a small downside and a clear pathway to a product. Hydroponics is a technology that improves the alkaline alkaline method of electrolysis for the production of hydrogen. A native is a technology that enables vaccines to be stored and transported without Ultra record cold storage. And fab.ai is a knowledge engine for manufacturing that enables particularly 3d printing to be much, much more efficient. And to go from customer desire to principal file in a much faster fashion. You know, in terms of how we got there, we went through a lot of technologies. I'll let Catherine kind of go through the details there. But I think these are the first three companies that we've really focused on that road better. Speaker 2 32:32 Yeah, I think I'll add, we'd looked at something like 250 ideas and got to three companies in our studio. None of these companies have exited the studio. Yep. So we don't have long term success metrics. But I think that ratio to level set is really common among VC, I think that's a successful ratio for us, you have to look at a lot of things to find the winners. That isn't daunting for us. But it is something that I think we found can sometimes be surprising to our partners on the tech transfer side. And so, you know, I think if folks are continuing to ask to look at more and more things know that that's, that's really common, and they are still typically very interested in the partnership and very interested in the technologies. It just takes a lot of shots on goal to find the winners and venture. And we'll end with just you know, technology, it doesn't change the world. Mike, what what do you think changes the world? Unknown Speaker 33:35 I think products change the real Katherine. Speaker 2 33:38 That's really our tagline when we're doing due diligence is trying to figure out what is the product that can come from the technology? You'll have? Well, we'll move to q&a. But we do have our contact information available here for folks that want to connect after the webinar. Um, I'm just gonna go in order for the q&a. Do you target a technology readiness level TRL range for evaluating technology? Mike, do you answer this one? Speaker 1 34:10 Yeah, we target between four and five on the TRL scale. I think the most important thing to us rather than a strict TRL level is can we see a path to getting a pilot product to a customer within three years. That doesn't have to be a sold product. It can be a partnership between a Corporation and the ventures, the venture company, but there needs to be an inability to get something on the ground getting customer feedback within two to three years. Speaker 2 34:46 This next quarter the next question was you mentioned keywords how to VC slash studios both use specifically and in general initially find potential investments a Google search I Typically, it's through direct partnerships with tech transfer offices for us. I think you also the more you have a brand out there, the more people come to you, it's the stage that we're looking in is really hard to find on a Google search. And so looking through publicly available information, and also talking to scientists and tech transfer offices is a much larger share of how we find potential investments. Mike, anything to add there, Speaker 1 35:30 I think I just add that the keywords come in is when we're evaluating a technology that we've seen from a tech transfer office or seen from a scientist, helping set the context of that technology within the larger academic field is really, really helpful. So providing the keywords or the key search terms, or the key, like academic disciplines that this technology falls within, helps us, number one, find the experts quicker, that can help us evaluate the technology. And number two, understand the landscape a little bit quicker, so that we don't have to do a ton of searching for that upfront. The next question, do VC studios prefer to talk with tech transfer office separately, and then bring the inventor in? Often inventors and scientists have a narrow view of the market they're targeting, but tech transfer offices tend to think broader than the inventors? I think I'd say our ideal is both. You know, we'd like to talk to the tech transfer office, and we'd like to talk to the inventors. I think the euro, whoever asked the question is absolutely right. tech transfer offices think broader than the inventors and can do some of this market market research. But we've been very surprised by some of the, you know, engagement we've gotten with the scientists and, you know, the the willingness of the scientists to dive into that market as well. I think what's most important for us is that there is some sort of access to the inventor and scientist, once we get down the road a little bit. It's very, very difficult to evaluate commercial potential and evaluate the viability of the technology without having that scientist on board working with us in a in a capacity of some sort. Catherine, anything you'd add? Speaker 2 37:19 Yeah, I think typically, we often have a broader conversation with tech transfer offices about a large portfolio. Once we're digging in on a specific technology, I think getting to the scientist sooner rather than later can be really helpful, because we often have a lot of technical questions. So I'll be asking, have you tested it in this environment? Have you run this test? Have you run that? What about this? What about that? It gives us like the tech transfer office, those technical questions tend to give us a different understanding of the capabilities of the technology than might have been framed and initial disclosure. And oftentimes, those nuances were not disclosed to to third parties. And so it's easier to go directly to the source to get a sense of kind of the nuances of what's been tested and what the potential is. And for that helps us understand whether the initial market is the right one, or whether there's alternative markets, that might be just as good. I'd also add, if I had Kevin, or just even better to go ahead, Mike. Speaker 1 38:25 I'd also add that when we talk to the scientists, sometimes we come across technologies that are a little bit too early for us. But we see in a year or two, those technologies could be really, really valuable. And one of the things we love doing is talking with the scientist and the tech transfer office together and say, okay, you've got another year or two of research before commercialization. But here's maybe some test points that would be helpful to put into that research plan that would make this incredibly attractive to what we think a target market could be. And we found those kinds of collaborations very fruitful and really energizing both from the scientist perspective and from from our perspective, because it it seeds the ground earlier for commercialization. And can someone sometimes provide some ideas to the inventor on how they can shape their research? Speaker 2 39:22 And the next question was whether equity or social aspects or other aspects of creating more opportunity for more people enter into phase one or phase two review. I think that's something that entered into the fundamental formation of our studio at Roadrunner. We're headquartered in Albuquerque, New Mexico, we're really focused on improving local community tech transfer. And so I think we think in general the more you can build businesses out of technologies from labs that has dividends on the communities in which those labs are based. I came From a philanthropy actually before Amy, then the venture studio and so I think equity and social aspects and opportunity for people were really big on the philanthropic side, there's a lot more financial realities, when you're in the vet venture studio that make it not quite as open a playing field. This one isn't philanthropy, but it is, I think something in the heart of how we designed our studio, Mike, what would you add? Speaker 1 40:28 I think that's spot on. I mean, there are a ton of research dollars and a ton of really good innovations coming out of places that, frankly, have not attracted venture funding in the last 10 to 15 years, you know, California and New York, Washington State, maybe Oregon, maybe Massachusetts, are the hubs of venture capital. But there's a lot of innovations in places like New Mexico, or places like Oklahoma, or North Dakota or other, you know, other states in this country that need this kind of that need to get the attention that, you know, Uber for dogs or Uber for cats gets in San Francisco. And that's pretty core to our studio. I don't know if that's the case across the board. We can only speak for hours, but it's pretty core to what we're trying to do at Roadrunner. Speaker 2 41:24 Next question, how developed is your product development plan r&d costs, purchasing of components manufacturing, testing, watching etc, before deciding to invest? It varies a lot based on the specific opportunity. But I think generally it needs to be developed enough that we know with our support, the individual or company or technology can get far enough along their development path to prove something important to raise further funding. So that typically means we have some vision of this would need to be answered to convince others that this technology is investable. And roughly within an order of magnitude, this is what it's going to take to answer that question. So where one of our portfolio companies is a hydrogen company? And so the question would potentially be okay, we've proved this on an anode and a cathode. Now we need to prove it on a full cell electrolyzer, what might that take. And we typically have some sort of budget for that. And we would want to know that before we actually invest, Speaker 1 42:31 I would just note that we invest in a stage gated approach. So it's not all or nothing, we'll start with a little bit of money, see if we can make progress. Our goal is eventually to convince the world that how great the technology in the company is. And so we have an eye on what needs to be true to be able to convince the world of that. And generally, you need a product development plan to convince the world of that, but we need to prove out the key test points to get there, like Catherine mentioned. Our next question is about founders being hesitant, or sorry, professors being hesitant to become founders, because they're already stretched thin. And what's our philosophy on forming new companies with limited inventor involvement, it's really challenging to form a science based company without having the person who is the expert in that science be involved. Now, that doesn't mean they have to be CEO. In fact, often we would not like them to be CEO, it doesn't mean they have to be in full time employee. But there does have to be some sort of involvement. That can be a board seat, it could be having some of their PhD students come and help with the company that are very well versed in the technology. But doing this without kind of that technical know how and the technical expertise is, is challenging. We are also looking for people who really want to do this, who really want to build and are passionate about their science and technology. And in some ways, when, when we're investing this early, we're investing more in the person than the idea. And so, you know, there are definitely circumstances where we would invest where without having the founder on board full time, but we would some in some way, shape or form need them involved frequently, and we would need them to transfer the scientific expertise, whether it be via PhD students, postdocs, or, or otherwise into the company to let the company flourish. Anything you'd add there, Katherine, Speaker 2 44:31 what one I'd add, I think this could differ by investor to investor. So that's our stance. Here in particular, we're probably not speaking for the whole field. The second is, I think we have a model sometimes in which instead of investing in a technology, we're investing in a person who's forming a broader vision. And in those cases, kind of a we haven't encountered this yet, but hypothetically, if we already have pretty deep scientific expertise in house that wants to acquire some IP to augment what they're an expert on, I could imagine a world in which we might invest in a technology without the founder, because we already have a really significant expertise in house. But we haven't quite done that yet. So I can't quite speak to what that would look like. Speaker 1 45:20 The next question we have is sharing a summary in the context of the three V's of the companies that we have in the lab. So we can we can give it our best shot. Catherine, thank you. So three B's being viable, valuable and venture bankable. Starting with hydroponics? Hydroponics is a hydrogen hydrogen company. We believe the technology is viable. We've seen the lab results we've seen. We've seen the experimental data that makes us think that they have something special here specifically in the ability to match hydrogen production with renewable energy. Terms of valuable we think that there is a large market trend and a large market. tailwind, that would make what Hydroponics is building increasingly valuable. And then venture bankable, you know, we see a path to hydroponics being a 10x or more company. And we see that because we think that the need that Hydroponics is filling is really critical for the decarbonisation of the economy. And we think that the approach that the hydroponics inventors taking this novel and has defensible IP that will let us capture a large part of that need. Catherine, do you want to try an eight us? Speaker 2 46:39 Sure. So a netus has spent a lot of time it's a freeze drying, or dehydration technology for pharmaceutical compounds. I spent a lot of time looking again at the lab results and other formations of spray drink to understand that yes, this is a different approach. And yes, the technology, the test results so far, are trusted in the scientific basis and seem to represent something different and real. It also seems like that difference matters to companies, we spent a lot of time talking to pharmaceutical experts to get a sense that yes, if you can do this, if you can prove it out at scale, this would solve a challenging component for them. There's a lot of money and time spent on formulations, this would potentially make that easier. And it's a really big market. I think pharma in general is a really big market, I spent a lot of time looking at manufacturing trends in pharma and seeing whether there are comparative companies that have grown very large. And there were some that had kind of 100 million dollar exits. And so from that perspective, I determined that yes, this technology is likely to be venture bankable. And so we brought it in. And I'll hand it back to you for Mike with Fab AI. Speaker 1 48:00 Yeah, so fab is a manufacturing focused AI company building a knowledge base and tool chain for particularly 3d printing right off the bat, to make adoption of 3d printing significantly easier. From the end user perspective, you know, from a valuable from a valuable perspective, or first from a viable, you know, the the key technological insight that we see fab needing to deliver on is the ability to match a probabilistic large language model type programming with a deterministic engineering engine. And we did a lot of research to understand if that's possible, and if we can ground, the AI in reality, and we determined that is possible. And that is the focus of the proof of concept we're building to prove to the world that it's possible. So it's viable, in that sense, valuable. We think that manufacturing is critical, both for the both for the industrial base, the United States and for our ability as a country to meet the goals that we've set forth with recent legislation like the chips Act and the IRA. And then venture basketball. We think that there is a large addressable market here that we can that we can target with, with this technology. You know, we see 3d printing in particular as a technology that's been held back by user interface challenges and held back by its own inability to explain itself to a broader customer base than the Boeing's of the world. And we see fab AI as a big unlock in that race. The next question we have hearing about a lot of ventures labs and venture studios. Venture creative model is creating opportunities for companies to engage virtually has this work painpoints. We are a distributed team across the country. We do a lot of work virtually we also do a lot of work in pairs. And I think, you know, just speaking from my own experience, and Katherine would love your perspective here too. There's a lot you can do virtually, there's a lot you can do to engage. But at the end of the day, we need some time in person with a scientist, because we're building this and CO founding it collaboratively. You know, being in person is really valuable, at least for a bit. Speaker 2 50:23 Agree, I think there's a question of pain points, I would say for many of these technologies. Eventually, having an opportunity to brainstorm live and jot things down on paper is really helpful for answering the question of like, how does this tech actually work? But we typically do most of our initial engagements virtually. And that's been really doable for us and saves kind of makes it fairly efficient. Speaker 1 50:51 What would you propose is a more socially responsible metaphor than painkillers versus vitamins? I think one way to think about this is where on Maslow's hierarchy of needs, does the solution fall? Is it addressing some of the lower level needs that we all have some fundamental challenges that we all face? Or is it addressing, you know, problems that are not as critical? And I think that's, that's one way we can think about vitamins and painkillers. You know, we like to address the challenges that are, you know, critical and need to be solved and have a large applicability to the rest of the world. Speaker 2 51:33 Lead from a product manager perspective, I typically ask the question as is this a need that someone is paying money to solve? Or is it a need that they say they have, and they're not paying money to solve? And typically, you're going to have a lot more traction, if it's actually a problem that people are already spending money and time on. Is a packet of short technology summaries an effective first way to communicate technology to inventor studio? Yes, I love these. I go through a lot of them, it's great. Speaker 2 52:07 From some conversations with other venture studios, they were strongly against giving up any equity and a license standard in our startup license as are similar non negotiable, you look for in your agreements. Mike, I'll hand this over to you. Speaker 1 52:19 There's not a hard and fast non negotiable, but equity tends to be very tricky for a lot of reasons. For a lot of these deep tech companies, it's going to require a ton of investment to get there. And any dilution on the capitalization table that we have makes it a little bit more tricky. So it's not a hard and fast No, but particularly as we get into the higher equity levels, and you get to non dilution provisions that come as writers often on these equity agreements, it becomes more and more challenging. One thing we really love in these licensing discussions, though, are opportunities to do a test and learn license or you know, they'll come in different names, but opportunities to test and explore and grow the product collaboratively upfront before we make a full life before we have a full licensing discussion. Speaker 2 53:17 Thank you for the webinar. Would you say that a venture builder is the same as a venture studio in terms of goals, operational side due diligence process? I don't toe I think there's a couple of different names for the studio model, venture builder sound similar, but it would depend on the particular one? I think likely yes, but it's not quite yet a super universal term. Speaker 1 53:41 The great, like, are you getting involved in bringing in business expertise and building a team? Absolutely. I think the venture studio model exists to do everything that is not the science on behalf of the company. So we you know, at Road Runner, and I can only speak for Roadrunner focus on you know, what people do we need to surround the scientist with? Where do we need to find the right expertise? What kind of folks do we need to bring in to make sure we can develop the product and then sell the product? Often, the scientist or researcher is not interested in being the CEO. They're interested in being the chief science officer or the chief technology officer. And so more often than not, we're bringing in CEOs or other commercial types to surround the scientists in the technology with the best team possible to commercialize it. And then involves not just you know, full time employees, but advisors and others who can help bring it to market. Speaker 2 54:39 Do you do prior art invalidity and freedom to operate searches to some extent, we also plan to include a lot of that with companies once they're already in the studio and we're a little bit more clear on what the end product is. Speaker 1 55:00 Do you see IP valuation and go to market for AI algorithms based technology? Any different any comments on how to approach? I assume this is talking about the variety of tools out there that are looking to value and help build the go to market plan for the technologies. We haven't engaged too much with them. I think the AI technology for go to market approach is interesting. It gives you a quick sense, but we haven't seen it do really creative company building to date. And I think that's where it runs up against some some challenges. I haven't personally dealt with IP valuation tools at all. Catherine, I don't know if you have today, Speaker 2 55:45 I read this question a little bit different as like is the diligence process different if it's an AI algorithm versus in which case a little bit like I think we are less likely, we're much more likely to look at patents for things that are physical. And for AI, I think there's a much higher chance that it can be replicated or is harder to protect from patents. And so there's a little bit more of an emphasis on team and market entry strategy and ensuring there's defensibility and customer acquisition as opposed to pure defensibility. On the algorithm side of things. What would you add there, Mike? Speaker 1 56:22 No, I think that's right. And that's a better reading of the technology of the question than I have. Speaker 2 56:27 We also do use some AI to help us Britain start with some time so it's a fun fun Newfield. Can you share the favourite website or any additional info, I popped up our website in the chat which includes a summary of our portfolio companies. And Unknown Speaker 56:46 fab AI has website that we can also share in the chat. Do you consider average podcaster? Speaker 2 56:54 Do you also consider opportunities right other seed stage investor is already on board go ahead and like Speaker 1 57:01 we look at companies that have not taken diluted funding to date. We're not opposed to investing alongside other investors in like a pre seed round. But we do not look at companies that have already taken diluted funding. We see a lot of companies, however, that have taken SBIR STTR ours and other government and academic research grants and we love those because they're validation for the ideas. Speaker 1 57:34 What sort of equity stake do you take on these companies does the universities you work with Grant parties the right patient rights and their licenses are ones executed before your company got involved? From an equity stake perspective, it's very deal by deal dependent. We try to take between 15 and 35 to 40% of the of the company as a co founder. That's very specific to us. I think if you look at startup studios that do business to business SAS, you'll see they'd take closer to 60 to 70% of equity. If you look at you know angel investors will see less, we generally take an equity stake and also make an investment via a safe note at the time that we take an equity stake. So that's how we'll structure our investments. I don't know the answer to the second question. So I'm going to refrain on answering it I apologize clear. Speaker 2 58:24 I have not I think typically our we become stakeholders in a company and we're we're usually not directly actually doing anything with the technology but rather rather providing support to the universe to the company that's doing support with the technology which might help answer that question, but further follow up might be needed. Speaker 1 58:49 If the tech transfer Transfer Office does not have any equity, how do they reward the scientist inventor who does significant work with the company after the license displays do you give them equity or offer consulting contract once the company is founded, the license is in place any engagement with that company is part of a commercial agreement. So we do not expect anyone to work for free. We could give the scientist or founder equity as you know, aligned with their participation in the company or a consultant contract if they would prefer to do it that way or, you know a full time offer. And that's generally how we structure we structure it with the scientist or founder. I will Speaker 2 59:33 also add usually the licensing agreement from the university there we've seen versions that are not equity based but rather more royalty and milestone payment based which is another way in which the investor or inventor can get economic upside from the invention Speaker 2 59:59 Alright, I think that That's all the questions we had so thank you everyone so much for coming um I'll hand it back to Anne Transcribed by https://otter.ai