Innovation and Entrepreneurship

1. Innovation and Entrepreneurship Request for the Establishment of a For-Profit Associated Entity

2. Structure

3. UNCW Research Foundation (RF) • Pursuant to State statute and UNC regulations, the constituent institutions are encouraged to establish university associated entities.(N.C.G.S. §116-30.20) • These associated entities provide operating efficiencies in a variety of areas – and are particularly helpful in the areas of fund-raising and intellectual property management and development. • The UNCW RF was established to support and develop university intellectual property and enhance the university’s role in business and economic development in North Carolina. • The UNCW RF is a recognized 501(c)3 and 509(a) supporting entity of the University operating consistent with UNC Reg. 600.2.5.2, governing the establishment and operation of university associated entities.

4. Chancellor Strategic Initiative:Center for Innovation & Entrepreneurship (CIE)Serving as a catalyst for economic and business development in the Wilmington metropolitan area Accelerator = Value Added Incubator + Fund Entrepreneurship Support New Company Funding Sources

5. CIE Mission: The CIE provides support for entrepreneurs, business structuring and concepts, translational UNCW intellectual property, management support, identification of funding alternatives, business maturity development, and advice and counsel from the Small Business and Technology Development Center (SBTDC).

6. Fulfillment of Need for the Inclusion of Early, Mid and Late-Stage Funding Opportunities • VENTURE CAPITAL FUND • Privately managed and operated • Committed to local and regional business development and location in NC • The Fund will be assisting newly established portfolio companies operating initially in the CIE

7. Profits Interest in Favor of UNCW RF • VC Fund has no formal or contractual relationship with UNCW, mitigating possible exposure to the institution. • In lieu of rent at the CIE, the Fund will confer an equivalent capital credit or profits interest to the RF as consideration for the fund’s occupancy in the CIE. • In order to carry that interest, the profits expectancy needs to be placed in a for-profit entity so the interest neither compromises the tax-exempt status of the Research Foundation in the eyes of the IRS nor subjects the RF to unnecessary risk.

8. Structure

9. Request for Approval • For these reasons, the university is proposing the approval of a for-profit blocker corporation to receive and hold the profits interest on the RF’s behalf. • UNC 200.2.5.2[R] requires BOG approval of the establishment of a for-profit associated entity.

10. Q&A

11. Liability & Tax Solution:Use of For-Profit Blocker Corporation

12. § 116-30.20.  Establishment of private, nonprofit corporations. The Board of Governors of The University of North Carolina shall encourage the establishment of private, nonprofit corporations to support the constituent institutions of The University of North Carolina and The University System. The President of The University of North Carolina and the chancellors of the constituent institutions may assign employees to assist with the establishment and operation of a nonprofit corporation and may make available to the corporation office space, equipment, supplies, and other related resources; provided, the sole purpose of the corporation is to support The University of North Carolina or one or more of its constituent institutions.

13. Private Funding Connections NC IDEA FUND Individual Angels Pivot Pitch (GroTech and Southeast Interactive) IndieGogo Seahawk Innovation Fund