CTC announces winner of USC Business Plan Competition

The winner of the Second Annual Business Plan Competition was announced April 27 to over 300 people at the Marcia israel Awards Banquet in Town and Gown. The winner is the AdvanSage Team of Elias Guerra and Bart Bogust, MBAs, who teamed with renowned scientist Dr. Gerald Loeb of the Alfred Mann Institute for Biomedical Engineering at USC to create Virtual Visit, a simple TV set-top video communications device designed specifically for use by the elderly, allowing them to use their TV to visually interact with others. Virtual Visit will be marketed and sold directly to senior housing administrators looking to provide value-added services to their residents, and to the adult children who interact with their parent residents of these senior housing communities.

Pictured above from left to right are Mark Lieberman, Business Technology Center; Elias Guerra; Bart Bogust; Kathleen Allen, CTC Director; and Dave Belasco, Greif Center Business Plan professor. AdvanSage will receive a $25,000 cash prize in addition to six months free rent in the LA County Business Technology Center, a CTC partner, and mentoring from the CTC and Greif Entrepreneurship Centers.

The distinguished panel of judges that selected the winner consisted of Lloyd Greif, Greif & Co;. Geoff Bland, Wedbush; Jonathan Goody, Bay Equity Real Estate Acquisitions; Rick Citron, Citron & Deutsch; Bill Collins, Starboard Venture Partners; and Richard Koffler, Koffler Ventures. The awarding of the prize for the USC Business Plan Competition was the culmination of an exciting evening that recognized and celebrated entrepreneurship at USC.Dean Tom Gilligan emphasized that entrepreneurship is one of the most important contributions that the Marshall School makes to USC and to the community. Awards in a variety of categories were given and served to demonstrate why the Greif Entrepreneurship Center is consistently ranked among the top five programs in the U.S.

"The CTC congratulates all the participants in the Second Annual USC University-wide Business Plan Competition. The diversity of businesses and the degree to which schools collaborated within USC and even with schools in other parts of the country was very gratifying," noted CTC Director kathleen Allen.

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Closeup: Interview with DuWayne Peterson, founder Pasadena Angels Investment Group

What is the Pasadena Angels?

The Pasadena Angels is a group of “accredited investors” that are interested in investing in start-up and early stage companies. The group is not a fund and each member invests their own money. We focus on technology companies in both information technology and biotechnology, but have made investments outside those areas if it has some unique qualities.

What do you look for in an investment?

1. We only invest locally i.e the greater Los Angeles area There are many things we look for in an investment such as:

Does this company solve a big problem?
Do many people have this problem?
Is their solution better than competitors?
Do they have a reasonable plan to achieve a significant amount of revenue in three to five years?
Do they have the management to carry this out?
How much money do they need to achieve their goals in the short and long term?
What is the pre-money valuation for the first investment?
Does this opportunity provide a good return for the investors?

Once you get beyond the basic due-diligence qualifications, what are some of the unique “gut feel” indications you use that tell you whether or not you have a solid opportunity?

The great equalizer is the management team and particularly the Founder/CEO. If the leader does not respond well to criticism or shows signs of not welcoming mentoring or other forms of advice, then we quickly lose interest. Another factor is the lack of a viable exit so we can get our money out of the company in a reasonable time.

How are the deals with Angel Investors typically structured?

Our deals are usually structured as an equity investment with Convertible Preferred Stock. We also use Convertible Notes. Warrants are usually issued with both instruments. Our average investment in a company in the first round is $400,000 and the pre-money valuation is no higher than $2 million if the company is at the pre-revenue stage. Most of our companies need more than one round from Angels before they can qualify for Venture Capital funding or a deal with a strategic investor. Later stage Angel investments are valued based on the progress of the company.

What kind of participation should an entrepreneur expect from your group once the venture has been funded?

The difference between angel investors and other private investors is that angels give their time and money. Therefore we want to be involved with our companies. As a minimum we are on the board of directors and/or board of advisors. In many cases we serve in management positions usually on an interim basis, but we are very helpful in finding management talent for a company. We also have wide circle of contacts that are helpful from a marketing and public relations standpoint.

What kind of involvement do the Pasadena Angels have with the local Universities?

We believe Universities play a major role in supporting, educating and nurturing entrepreneurs and we try to be supportive of these activities and provide opportunities for students interested in entrepreneurism through our Intern Program. Our current activities with local universities are as follows:

USC- judging business plan competitions, presentations, and on advisory boards (CTC advisory board) mainly through the Marshall School and Engineering. Invested in one company started at USC.

Caltech- work with the Technology Licensing Office in reviewing potential start-ups. Invested in one company.

UCLA- judging business plan competitions, presentations mainly through the Anderson School.

Claremont Schools- our members are on Board of Trustees and advisory boards. We have assisted entrepreneurs in forming new companies and have invested in two companies.

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CTC Thought Leader Forum Focuses on Space Entrepreneurship

Emerging industries present opportunities and challenges, but there is no doubt that those who seek to create new industries or be a part of an emerging industry are true pioneers. Steadfast in their vision, they wade through the naysayers who tend to kee their eyes firmly focused on the past. It’s never easy when an upstart industry begins to challenge the traditional technologies and methods of its enormous and much older parent industry. Such is the case with the private space industry led by companies like XCOR Aerospace, SpaceX, and SpaceDev and the traditional space industry led by prime contractor giants, Boeing, Lockheed Martin, and Northrup Grumman. Some of the pioneers in the emerging private space industry and representatives of the prime contractors including NASA came together on April 4 for a Thought Leader Forum organized by the USC Marshall Center for Technology Commercialization. It was called: Space Billionaires: Educating the Next Generation of Space Entrepreneurs.

The day was about the business of space. “To date the space industry has been focused on engineering and technology. Looking into the future, the industry needs to think more creatively about developing new business models for space,” said Kathleen Allen, Director of theUSC Marshall Center for Technology Commercialization. “Even the big companies realize that the days of simply being a government contractor are changing.  Everybody needs to think more entrepreneurially.”

The Honorable Andrea Seastrand (pictured), Executive Director of the California Space Authority and long-time proponent of space enterprise, talked about the state of the industry and the importance of close collaboration among all stakeholders statewide to facilitate California’s competitiveness in the space industry.

A roundtable discussion, moderated by John Spencer from Red Planet Ventures and the Space Tourism Society who has been talking about space tourism for more than 20 years, took on the task of laying out the possibilities for entrepreneurs to find profitable business opportunities and accelerate the pace of space exploration. Discussants, George Whitesides of the National Space Society; Bill Collins of Starboard Venture Partners; Fred Best, director of NASA’s eleven research and commercialization centers; and Randy Baker, CFO of XCOR Aerospace carried on a lively discussion that frequently pitted the optimism of the entrepreneur against the more traditional vision of NASA. The bottom line was this: we can throw up a lot of roadblocks and spend time talking about whether private space enterprise, especially tourism, is realistic, but the fact of the matter is that a number of high profile entrepreneurs are putting a lot of money into launching companies to take advantage of the commercialization of space right now. And that effort is only going to grow.

One of the highlights of the day was a keynote presentation by Dr. Peter Diamandis, Chairman/CEO of the X price Foundation. He talked about two of his entrepreneurial efforts, Zero Gravity Corporation and the Rocket Racing League. Zero-G, is a company that offers the opportunity for thrill seekers to experience weightlessness. Weightlessness is achieved by flying a Boeing 727 through a parabolic flight maneuver. During the flight, passengers inside the airplane experience the type of "free fall” like that experienced when sky diving, but they are protected from the on-rushing wind. In addition to achieving zero-gravity or weightlessness, the plane can also fly a parabola designed to offer Lunar (1/6th) or Martian (1/3rd) gravity. The company maximizes revenues by using the planes for cargo during the week, and invites high profile individuals to participate in the experience as a way of advertising.

The Rocket Racing League is an aerospace sports and entertainment organization that combines the competition of racing with the excitement of rocketry. The NASCAR-style racing league features rocket-powered aircraft that will be flown by top pilots through a “three-dimensional track way” at venues throughout the world. With millions of fans who enjoy racing and air shows, and an even wider audience enthralled with humanity's next step into space, rocket racing is destined to become the future of racing. . According to Marshall MBA Roy Hogstedt who is an engineer at Northrup Grumman , the Rocket Racing League will feature customizable X-Racer planes based on the EZ-Rocket design developed by Mojave, California’s XCOR Aerospace, which will build the first generation of X-Racers. A prototype X-Racer will be demonstrated at the upcoming X Prize Cup. Diamandis reported that the first rocket races, currently slated for October 2006, are expected to see four X-Racer planes compete alongside one another, with the full 10-plane group to follow in 2007. While the initial set of racers will be built for the league, officials are actively searching for interested sponsors, teams and pilots. The liquid oxygen/kerosene fuel mix is expected to have a burn time of about four minutes, which would force pilots to repeatedly shut down their engines and glide, then restart as needed to surpass opponents. Because of their fuel type, X-Racers should also generate a 20-foot flame easily visible from the ground, which will be vital for spectators. Current league plans call for a Grand Prix-type competition in which X-Racers stagger their takeoffs and fly side-by-side in lanes spaced a few hundred feet apart. Cockpit cameras, global positioning systems and even a planned “virtual X-Racer league” – which league officials hope will allow video game fans to race alongside actual flyers during races – are on the drawing board to engage public interest in human spaceflight.

The conference concluded with a roundtable discussion about how we can prepare the next generation of space entrepreneurs. The roundtable was led by Rick Citron (pictured) , attorney/entrepreneur with Citron and Deutsch, a Los Angeles law firm. On the roundtable were Tom O’Malia, director of the Lloyd Greif Center for Entrepreneurial Studies; Guillermo Sohnlein, president of the International Association of Space Entrepreneurs; Karen Randall of the SETI Institute; and Madhu Thangavelu of USC’s Viterbi School of Engineering.. Citron’s message to entrepreneurs was “The engineers and dreamers who are making these things happen need to have a business team at their side. The business team figures out the reality, what it takes to bring management and capital to the table.” Thangavelu agreed. “Space enterprise is a highly creative, innovative and interdisciplinary arena,” Thangavelu said. “We need new blood and a whole bunch of imaginative people to project visions, debate ideas, present concepts—not just NASA projects—and that will surely have the potential to make human space activity richer, more interesting.”

Everyone agreed that the forum achieved its purpose. It brought together a good mix of industry, academe, and government to talk about space business: where it is, where it’s going, and what’s possible. And all agreed that in an emerging industry, anything is possible.

About the USC Marshall Center for Technology Commercialization

The USC Marshall Center for Technology Commercialization identifies, encourages, and supports technology entrepreneurship activities at the University of Southern California and its broader Southern California neighborhood. For over seven years, it has been the central source of information, research, education, and services related to the commercialization of USC technology through new start-up ventures. CTC assists inventors and companies with IP issues, business feasibility analysis, business plan development, start-up financing, management team acquisition, and related issues.