FiscalNote Changes Corporate Government Risk Management

As a tech savvy teenager, Tim Hwang began changing how information influenced American politics and business-government relations. In 2012, his programs helped Barack Obama win the Iowa caucus. In 2013, as college students, Tim Hwang, Gerald Yao and Jonathan Chen formed FiscalNote headquartered in Washington, D.C.  FiscalNote was created to accommodate contracting the services of his new data seeking and data crunching applications. Even as a small startup, FiscalNote attracted the attention of some high profile venture capitalists. Most recently FiscalNote received ten million in a Series C round in 2016 and ten million in a Series B round in 2015.

FiscalNote, a university startup from Emory University, Princeton University and the University of Maryland, is combining computerized data collection methods with the analyzing power of artificial intelligence to produce applications that greatly increase a company’s return on its investments in governmental tracking. The java programs work faster and cheaper than beltway law firms and lobbyists so the effect of this new start up is likely to be enormous.

This start up can be understood as another example of technocrats converting expensive services from the purview of a mass of costly labor intensive experts to the relatively inexpensive realm of the shared economy. Retainers to well-heeled government trackers may become a thing of the past as this university startup demonstrates its power to identify relevant activity within the federal and state governments and its powerful ability to predict the fate of proposed legislation and regulations.

It is not surprising that this technological solution to the huge demand for governmental information arose in a university setting with their combination of technological resources, student and professor entrepreneurs, and existing knowledge about national and local governments and how they work. In 2013 the University of Maryland contributed to a FiscalNote seed fund drive.

While FiscalNote CEO Tim Hwang acknowledges that there are still a multitude of political “Black Swans” occurring, he believes that the information technology that underlies FiscalNote is second to none and it makes government information accessible, transparent, and actionable.

FiscalNote has produced three information analysis tools to date:  FiscalNote Prophecy, FiscalNote Sonar (focused on tracking the federal government), and FiscalNote Atlantis. So far, FiscalNote has focused on American government risks to business; however, it is currently planning to expand into assessing governmental risks to business overseas in Europe and Asia.

Following the passage of the Affordable Care Act, demand for FiscalNote services has been growing particularly fast in the health care field. FiscalNote’s success to date is in large part a measure of its ability to produce finished, market ready products that have been successfully employed by large corporate clients.

University Technologies Search

Finding technologies that are born and developed at US universities is often a challenge.  Sometimes entrepreneurs and investment groups seek out technologies from universities to commercialize.  Their first avenue of locating these technologies might be searching through university websites.  Most universities have some mention of available technologies.  One problem with this direction is that the list may be incomplete or unimpressive.

Why would this be?  While speaking with Gerard Eldering, President of InnovateTech Ventures and former technology transfer director, he concluded the following:

  • The Technology Transfer Office has not filed patents on the technology yet – The process of preparing a filing a patent application in a TTO can take many months. They may be willing to discuss a technology with you under an NDA, but won’t publish the technology until the patent application is filed.
  • They have not prepared good marketing material on the technology yet – This was the case with all of the technologies I recently looked at. It takes a considerable amount of effort to put together a good marketing package and iterate with the inventor. Many TTOs are understaffed and can get behind on these tasks.
  • They don’t want everyone to know about their best technologies – Yes, you heard me right, they might be holding back. But if they post a high potential technology on their website or a national database, they are going to get calls from all manner of prospective licensees including many unqualified. Furthermore they may have some specific licensing targets they want to approach before putting it out to the broader market.

Therefore, entrepreneurs and investors need to keep this in mind when looking for university technologies. Don’t expect to find the best technologies posted in public view.  Finding these technologies means going beyond a web search at the TTO website.   It may require contacting and establishing a relationship with the TTO.  Another avenue is working with a venture creation firm that already has the relationship established.

Observations from JPMorgan Week

The week of January 11th I had the opportunity to attend the Biotech Showcase in San Francisco during what is commonly called “JPMorgan week”. JPMorgan week is a cluster of life science investing conferences held simultaneously in San Francisco each January. It has become a must-attend week for entrepreneurs and investors involved in life science. It was a fascinating week and I saw many exciting companies and met many interesting people. This month I want to share three observations from JPMorgan week.

As you are aware January has been very bad for U.S. stock markets, and the beginning of the month was extremely bad for the Chinese stock market. In San Francisco I was prepared to have investors tell me that they were going to wait till the markets stabilized before they made more investments. I had several meetings scheduled with Chinese investors and anticipated even greater caution from them. But in fact none of the investors I met with were concerned with the condition of the markets. It gave me confidence that while there may be issues with slowing global growth, the drops in the markets we are seeing in January are not signs of a fundamental problem like back in 2007.

My second observation was that many of the life science startups have some connection to university research. While a number of the companies are actually university spinouts (which we track in Startup.Directory) many other startups which are not technically universities spinouts have some affiliation with one or more U.S. universities. These startups work with universities in a variety of ways including conducting contract research and clinical trials. I think this is a testament to the strength and depth of the U.S. university research community and I’m not sure if university research staff gets sufficient credit for the role they play in supporting startup company innovation.

Finally I was generally impressed by the breadth of innovation represented by the 300 or so companies presenting at Biotech Showcase. Furthermore hundreds of other companies were presenting at other conferences that week and I met executives from even more startups who were attending but not presenting. As I flip through the abstracts it seems like there are multiple companies with diagnostics, devices and therapeutics addressing virtually every major disease and many low occurrence (orphan) diseases and illnesses. Probably the majority of these companies will not succeed, but even if a small percentage of them do deliver a product to market they will, in total, enable dramatic improvements in human health care. So the next time you read an article lamenting the lack of innovation or progress in healthcare or other technology sectors, don’t despair. My time spent at JPMorgan week reassured me that innovation and entrepreneurship in healthcare is alive and well.

The Top 10 U.S. University Spin-offs

 

Some of the most successful startups originate from University research, so we sat down with our data partner Startup.Directory to pick out the 10 most exciting recent spin-offs from U.S. Universities, choosing from more than 500 that have been formed in 2014 or 2015.

The startups span a range of sectors including green technology, IT, materials, biotech, medical devices, and electronics. You can find out more about the startups in the profiles below.

NextPotential / Green Technology

Spin-off from: Arizona State University

Founded 2014

NextPotential converts CO2 emissions from power utility companies into clean- burning natural gas, which substantially decreases greenhouse gas emissions and provides a constant source of renewable energy. The technology provides companies with a way to continue to burn fossil fuels and save billions of dollars in excess costs while reducing the harmful effects associated with the industry.

SioTeX / Green Technology

Spin-off from: Texas State University

Founded 2014

SioTeX™, a specialty chemical and performance materials manufacturer, has developed a drop-in replacement for fumed silica called Eco-Sil™. The production cost of Eco-Sil is 70% lower than that of conventional fumed silica. Their technology uses rice hulls, an abundant biowaste, as the raw material. The process is much simpler than the conventional method, consumes substantially less energy, and involves few toxic reactants.

SmartUQ / IT

Spin-off from: University of Wisconsin-Madison

Founded 2014

SmartUQ is dedicated to developing cutting-edge analytics technologies to accelerate simulation-based decisions and successfully meet data challenges of simulation. Whether using Computational Fluid Dynamics, Finite Element Analysis, Agent-based Models, Coupled and complicated physics, Multiscale, Multiphysics, Electromagnetic simulation or other types of complex simulation, SmartUQ software can dramatically reduce the simulation and product development time, greatly improving decision-making and saving costs.

A-76 Technologies / Materials

Spin-off from: Rice University

Founded 2014

A-76 Technologies develops a multi-purpose product that acts as a preservation coating and lubricant and prevents corrosion in aggressive high salinity, high humidity environments. It works on a wide range of metal surfaces including noble metals, nickel, copper, aluminum, magnesium, and all grades of oil field steel, across a wide range of industries, including oil and gas, maritime, transportation, and household applications.

Alkahest / Biotechnology

Spin-off from: Stanford University

Founded 2014

Alkahest’s mission is to extend people’s health and activity into the advancing years of life. Resolving the challenges for individuals, families and society with aging is one of the most important challenges of our generation. Alkahest is founded on breakthrough science, which has opened new insights and created new opportunities to improve brain function against the negative processes of aging. The company is working to translate these opportunities and discoveries into transformative human therapies.

Emulate / Biotechnology

Spin-off from: Harvard University

Founded 2014

Emulate is focused on commercializing Organs-on-Chips as an automated human bioemulation platform that achieves a new standard for mimicking true human physiology so that responses to medicines, chemicals and diseases can be accurately predicted. Through co-innovation with collaborators and internal programs, Emulate is advancing product innovation, design and safety across a range of applications in drug development, personalized medicine, agriculture and chemical-based consumer products.

ExoVita Biosciences / Biotechnology

Spin-off from: University of New Mexico

Founded 2014

Exovita Biosciences is developing potentially transformative, exosome-based cancer therapeutics that harness the body’s natural defenses to fight cancer. Their initial focus is breast cancer, with the idea of leveraging the technology and resulting therapeutics to other forms of cancer such as pancreatic, colon and prostate.

Synlogic / Biotechnology

Spin-off from: Boston University and MIT

Founded 2014

Synlogic is focused on delivering the potential of next generation synthetic biology to patients. Synlogic leverages the most advanced technology platform available for the creation of therapeutic microbes with the goal to make significant advancements in the treatment of disease.

InvisionHeart / Medical Devices

Spin-off from: Vanderbilt University

Founded 2014

InvisionHeart is developing a cardiac data solution that serves clinicians who care for patients with potential heart conditions. The hardware technology enables physicians, nurses, and care providers to capture, communicate, and utilize patient ECGs in a manner that is both more efficient and cost effective than the current standard of care. At the center of the technology is a cloud-based healthcare IT platform that allows a network of care providers to collaborate, review and annotate patient 12-lead ECG tracings.

Accion Systems / Electronics

Spin-off from: MIT

Founded 2014

Accion Systems is printing propulsion systems for satellites based on a proprietary ion beam technology. The revolutionary new approach to in-space electric propulsion uses simple, modular thruster chips that can go anywhere on a satellite, in any number.

All of these companies are commercializing exciting new technologies that could impact all of our lives. We’re looking forward to watching how they progress.

You can also check out thousands of other global University spin-offs in the VentureRadar database.

A Unicorn or a Double?

One of the hot words in the startup press today is “Unicorns”. Unicorns are private companies with a value of more than $1 billion such as Uber, Snapchat and Dropbox. Many recent news articles are somewhat critical of the growing list of unicorns, many of which are unprofitable. Some articles raise concerns with the potential of a bubble in the valuation of these unicorns. Regardless if there is in fact a bubble, the existence of so many unicorns can lead to institutional investors getting overly focused on investing in baby unicorns.

A friend of mine recently gave me an update on a startup that he has been mentoring. It’s a neat little startup with a young management team, a cool consumer product a nice track record of initial sales. But for the moment it is a one product company, and that product has some unique features but it is not highly protectable, despite one or two patent filings. I could see the company hitting $5 million in sales, and maybe generating $2 million a year in profits without needing a large investment. If the founders ran it for 5 years with continued growth in sales and then sold it for 3 or 4 times EBITA, they would be in a great position to pursue their next idea. I would call that a solid “double”, as in a moderate but not huge success.

But, that’s not the path they are on. They got involved with a Silicon Valley incubator type program. Kudos to them for getting accepted (although there are some strings attached). But now my friend tells me that they have been introduced to VCs out there who are telling them that they have to show how this can become a $1 billion company – a unicorn. That worries me. These young guys are getting caught up in the legitimately exciting atmosphere of the Valley. And I really don’t think they have a baby unicorn. But with enough prompting they may come up with the billion dollar story, start believing it themselves and get an investment from a VC who has cash to burn and is desperate to find a unicorn.

Then maybe they prove me wrong. But if they do become a billion dollar private company, I hope they are profitable, unlike so many unicorns. But what I’m afraid will happen is they will get $20 million or $30 million in investment and then in a few years fail to show adequate growth and the investors won’t allow a modest exit. Rather, they will force them to keep burning through cash until they finally go bankrupt. Now these young entrepreneurs will have received a hard education and come good contacts, but have little else to show for the years of stress. I makes me wonder. Wouldn’t a good clean double be better than chasing a unicorn?