Business Incubator Series: Stephen Fleming, Enterprise Innovation Institute, Georgia Tech – Atlanta (Part 6)

By guest authors Irina Patterson and Candice Arnold

Stephen: One of the larger donors to Georgia Tech Edison Fund is the Charles Edison Fund. That is the fund that was set up by the son of Thomas Edison. They allow us to use the Thomas Edison name.

The reason I really like calling it the Georgia Tech Edison Fund is because Edison was an unusual individual in that he not only invented the light bulb, but he also invented General Electric. He was a very astute businessman.  I’m proud of our partnership with the Edison family.

That fund – we don’t publicize the size of it – [consists of] charitable donations. It has made five small investments so far. As I said, we’re negotiating a sixth right now. Those have to be companies where we think that a relatively small amount of capital can be useful, that it wouldn’t just evaporate quickly. Then again, they have to have a strong connection to Georgia Tech.

Irina: When did you start managing that fund?

Stephen: In 2007 or 2008; it took awhile to get it set up because we had to make a lot of lawyers happy.

Irina: Where do you usually get your applicants from?

Stephen: Anywhere. We encourage them to join the incubator, but they don’t have to. Typically, most of them are Georgia Tech students, either graduates or undergraduates who are looking for a bit of capital to get started.

Irina: So, entrepreneurs don’t have to join the incubator, they can just apply for funding?

Stephen: Right.

Irina: Is the same true for the first fund?

Stephen: For the first fund, they have to be members of the Advanced Technology Development Center, ATDC. Again, it’s pretty easy to become a member of ATDC.

Irina: Do you take equity in the companies?

Stephen: Typically, it would be convertible debt. Basically, just so we don’t have to set a valuation for the company, we would invest in a convertible debt instrument.

Irina: Who, usually, decides if you’re going to invest?

Stephen: The ATDC team. It’s an ATDC entity. I sign the papers, so I guess, sooner or later, I have to agree. But it’s a team effort.

Irina: How many applications do you usually get for that fund?

Stephen: One a month, maybe. I’ve never actually tracked it.

Irina: What about the third fund?

Stephen: The third is the most complicated of the bunch. That’s why I left it for last. The third is through what’s called the Georgia Research Alliance (GRA).

The Georgia Research Alliance is a public-private partnership managed by the state of Georgia and a number of the larger corporations in Georgia. The brand names that people would have heard of, AT&T and Georgia Power, companies like that.

Georgia Research Alliance does several things. One is to money available for the commercialization of university technologies in Georgia. There are six research universities, PhD-granting universities, of which four are public – Georgia Tech is one of those – and two are private, Emory and Clark Atlanta. Those six member universities are able to bring innovations and ideas and business plans to the Georgia Research Alliance and apply for commercialization funding. It’s a complicated process and has a number of steps.

There’s a Phase 1 award. Phase 1 can be up to $50,000. Phase 1 is a pure grant made to the university from the GRA funds. That is for the commercialization of university intellectual property or translational research. That’s a competitive grant that has to be approved by directors from the six research universities. In other words, it may be a Georgia Tech invention, but the other universities, University of Georgia, Georgia State, Emory, [Clark Atlanta], and the Medical College of Georgia all look at that and vote as to whether that company deserves that particular grant.

That $50,000, as I said, is a pure grant. It can be the first money in. There doesn’t have to be anybody else who believes in the company at that point. As a matter of fact, there doesn’t even have to be a company. Typically, there is no corporate entity at that point because this is still a grant to the university.

This segment is part 6 in the series : Business Incubator Series: Stephen Fleming, Enterprise Innovation Institute, Georgia Tech – Atlanta
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