SUN Fund
Startup Nursery Fund
The Startup Nursery Fund (SUN Fund) was created by Ikove Advisory Partners to allow external, strategic investors to co-invest alongside Ikove's proprietary Nursery and capitalize on exclusive opportunities related to the commercialization of disruptive intellectual property and startup companies.
About the Fund
The SUN Fund will primarily invest in technologies during Concept, and Seed Stages to address the substantial capital gap commonly referred to as the “Valley of Death”.
Over the last three years, Ikove has launched ten disruptive startup companies, generating over $100MM in equity value through this strategy. The founders personally invested over $2MM to develop and validate the model, and subsequently brought an additional $20MM+ of investment into the portfolio to further support and grow the companies.
Strategy Overview
Market Opportunity
- 25% of US R&D budget is invested via Universities representing over $70+ billion per year in R&D spending. However <1% of University R&D budgets are spent on Technology Commercialization efforts.
- Funding from Angels (too complex) and from VCs (too early) is limited: <1% of venture capital investments are made in concept level technologies. <20% of venture capital investments are made in pre-revenue companies.
- As a result, revolutionary IP is left sitting on the shelf unused, at leading universities, financed by taxpayer money.
Opportunities in Ohio/Midwest
- The Midwest region is the #1 Economic region in the US, ahead of California and NY.
- Of the total US Research and Development, 25% of this spending is focused in the Midwest, but less than 4% of Venture Capital investments are allocated to the region. California in comparison received 55% of VC investments.
- The Midwest has the lowest costs for technology firms whereas it costs 42% more to operate in San Francisco!
- Central Ohio commands a $6 billion R&D budget, led by institutions like The Ohio State University with close to $1 billion, and the Air Force Research Laboratory with over $4 billion in R&D spending.
"Valley of Death"
A significant capital gap exists between university funded R&D and VC funded rounds, known as the "Valley of Death" where 95%+ of patented university innovations go unfunded and never reach commercial market.
Investment Strategy
Concept: Invest up to 60% at Concept, Taking founding equity in a newly formed company.
- Companies follow two models: Direct licensing via University or Joint Venture with existing IP rich companies.
Seed / Later: Invest up to 60% at Seed / Later stages, validated by market and 3rd party investors.
- The SUN Fund will invest up to 60% of its assets in the follow-on rounds.
