SG 0.3c - Creating VitaTech - a US-based NewCo to obtain government funding for longevity research

Seasonal Governance Community Proposals
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SG 0.3 - Creating VitaTech - a US-based NewCo to obtain government funding for longevity research

Summary
There are numerous exciting longevity-related research projects being undertaken in US universities and national labs, but most of these projects never reach the commercialization or investable stage. Advancing a good candidate to the FDA-ready IND stage requires $3-5M in funding, which is beyond the current scope of VitaDAO’s funding. There is an opportunity to leverage non-dilutive funding from foundations and the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs to advance these technologies to commercialization stages. To achieve this, we propose to form a US-based for-profit company called VitaTech, which will licence longevity technologies developed in US universities, apply for non-dilutive funding from SBIR/STTR and foundations, and develop the technologies into commercializable assets. VitaTech will operate as a subsidiary/affiliate of VitaDAO.

Relevance to Strategic Plan
Creation of VitaTech will accelerate the acquisition and development of research assets. The establishment of VitaTech will accelerate VitaDAO’s mission by facilitating the development of selected technologies and leveraging public funding. VitaTech will play a crucial role in bringing these technologies to market, benefiting not only the NIH but also the wider public.

Budget
The proposed budget is for $50K from VitaDAO to get VitaTech up and running and to apply for its first two grants. This amount and any ongoing charges would be paid back to VitaDAO from any awarded grant. VitaTech will commit to return a portion of any receipts (e.g., drug sales, licence purchases, and/or any other ROI) to VitaDAO treasury.

VitaDAO’s available funds
For context, (as of Feb 1st, 2023) VitaDAO funded 15+ projects with $3.5m+, and has ~$4.5m in liquid funds remaining (before further fundraising), which will be used for:

  1. Funding new projects
  2. Operations, including sourcing, incubation, evaluation, & community growth
  3. Follow-on funding, including for projects VitaDAO will spin out

Motivation
The primary objective of VitaTech will be to accelerate the commercialization of longevity technologies through a search and build approach. On behalf and in close collaboration with the VitaDAO community, VitaTech will search technology transfer databases of US universities (e.g., UCLA), federal research institutions (e.g., NIH), and identify promising longevity technologies. VitaTech will gain access to these technologies through licensing agreements and/or Cooperative Research and Development Agreement (CRADA) if agreed on a project per project basis by VitaDAO. VitaTech will apply for non-dilutive funding from SBIR/STTR and foundations to advance these technologies to commercialization stages (e.g., performing additional experiments to satisfy IND submission requirements).

Specification

Project Team
VitaTech’s management team will be composed of experienced professionals from the VitaDAO community with expertise in technology licensing, product development, and business development. The team will be responsible for identifying licensing opportunities, negotiating licensing agreements, managing the development of the licensed technologies, and overseeing the commercialization of the resulting products on behalf of and in close collaboration with VitaDAO following governance and operational processes established by VitaDAO. The management team will also be responsible for managing the company’s finances and applying for non-dilutive funding. The current team consists of Tuan Dinh, Eli Mohamad and Tim Peterson

Description
One-Liner: VitaDAO to Establish VitaTech, a US-Based For-Profit Company to License Longevity Technologies from US Universities and Research Institutions and, Raise Non-Dilutive Funding to Develop Them into Commercializable Assets

** Implementation**

Success Metrics Number of projects that are funded by nondilutive fundings. Number of startup spinouts. Total funding raised.

Timeline : 2 projects in 2023 and 5 in 2024*

  • Agree
  • Revisions Requested (Detail in Comments)
  • Disagree

0 voters

6 Likes
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I feel this is a good move, would be wonderful to see spin-out companies from VitaDAO. Love the company name too.

However, where my concerns lie is how the company would operate within the governance and operational processes established by VitaDAO.

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Can you expand on that? As I understand, this would be an independent company (although a VitaDAO subsidiary), not subject to our operational processes. It behaves like any startup in a similar position: acquire IP, raise $, build team, commercialize. Vita gets the value from the stock, royalties or IP-NFTs.

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I think this is a great idea, but there are some implementation concerns.

If the money is already spent, I’m not convinced NIH will ‘pay back’ VitaDAO the $50k via an SBIR/STTR. VitaDAO may need to recoup costs in a different way. Maybe VitaTech pays VitaDAO consulting/deal-flow fees for help with some of these things. Why would it be within fiduciary duty to VitaTech to give another co a set % of returns?

Who the team is will be critical to the success or failure. Who from the VitaDAO community would be chosen for this, and what is their track record with SBIR/STTRs?

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Thanks. Great questions. The money from NIH will not be used to payback VitaDAO. VitaTech will be subsidiary of VitaDAO, with members of board of directors coming from VitaDAO. In the company charter, we can specify the % return on investment for VitaTech to be used to fund VitaDAO activities (including purchase of $VITA) as long as it keeps VitaTech financially solvent.

The VitaTech team will work with and get approval from the VitaDAO Longevity WorkGroup to select projects/IPs to go after. There is a decent number of folks in our community that has experience with SBIR/STTR. Much of the grant writing will be done by professional grant writers and the PIs at the universities. Once we’ve got the award, most of the work will be done by CROs and PIs. We can start with a small team (2-3 people) and scale-up to a bigger team as the model tests out. It would be a great experiment to test out how a for-profit work within as a subsidiary of a DAO.

Besides the fact that we can use non-dilutive fundings as force-multiplier for VitaDAO’s efforts, peer-reviewed NIH awards would help to legitimize our projects and generate PR. The likelihood of success depends much on the merits of the underlying science and the business plan. NIH grants up to $7M to take drugs into clinical trials and many companies (particularly CNS) rely on SBIR/STTR as one of the main sources of fundings in their early years.

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Who exactly is involved in the makeup of the VitaTech management team? That wasn’t clear in the proposal

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I think many of these details need to be ironed out first. Who will be the “small team”? What is their SBIR/STTR experience? If selecting projects for STTR/SBIR potential is a new responsibility of the Longevity WG, do they have any projects already in mind? The choice for grant funding is non-trivial, because the company as a whole will be evaluated. If VitaTech is pursuing too many disparate things (even within a strict definition of the longevity field), it will get dinged for lack of focus.

PIs can help with the science portion, but the business/legal part also needs to be rock solid. “Professional grant writers” lack that subject matter expertise.

From a PI standpoint, I can see doing a lot of writing on an STTR because I will get a good chunk of that money. But the SBIR comes from the business and the amount that can go back to the university is limited. Companies are limited in what they can outsource for SBIR: (33% Ph1, 50% Ph2). If there’s not equity in the company for the PI, you may need a good royalty setup (to the PI, not the uni) to get them on board for the SBIR stage. Otherwise, why are they going to license their idea to VitaTech instead of spinning up their own company or going with someone else?

An alternative strategy might be to add another layer. VitaTECH’s role would be to spin up new cos to help PIs commercialize their tech. If VitaTech could provide all the business/legal stuff PIs hate dealing with, that would be a huge value-add. This way you can give the PIs and VitaTech equity in the new startup, each company could be focused on one or two leads, and it would isolate potential failures/liability from each other. It would also give each company a better shot at the SBIR/STTR, and allow each company to exit if/when the lead succeeds.

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I see, it’s clearer for me now, thanks.

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Thank you, bowtiedshrike, for your great questions and suggestions as always.

Currently, the initial candidates for the small team are Eli (who has contributed to writing three successful SBIRs, co-authored a $300M SBIR program with the White House and BARDA, and raised over $250M from investors and government sources for various companies), Tim (who has had two successful SBIRs for his company) and Tuan (helped raise $40M from nondilutive fundings from SBIR, federal grants, and foundations). VitaDAO will also have the opportunity to vote on who will join the VitaTech team.

We are considering different mechanisms to motivate the PIs to work with VitaTech. Royalty to the PI as you pointed out is a potential mechanism. Additionally, your point about VitaTech spinning out new startups is spot on. It is part of our overall commercialization strategy. Once we get the assets through certain stages, we will spin them out and provide PIs with some equity in the NewCos.

3 Likes
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I am in favor of this move considering the potential long term benefits this has to offer. However I recommend that the VitaDAO Governance structure should be modified to reflect this update in contributor type.

Since this type of contributor entity does not fall under the exiting categories of VitaCore or Service Provider, I suggest we either expand the definition of core contributors to include legal entities along with individuals or form a separate category altogether. Responsibilities and commitments of such entities should be clearly defined in the governance framework.

In terms of risks, a legal entity by definition has it’s allegiance primarily to contracts executed by a state and not smart contracts. This means that if push comes to shove, this entity will have to follow the rules laid out by a state over any rules written in the VitaDAO constitution. In order to deal with such risk, the DAO itself could have a legal wrapper. One recent legislation example which can help: Utah Innovates Decentralized Autonomous Organizations Legislation

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Why would this not be a Service Provider that is owned by the DAO?

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There is no interface between smart contracts and legal contracts atm. So in theory, one can write in a document that this legal entity is owned by the DAO, but the final implementation of whether or not this legal entity will comply with the wishes of the DAO is dependent on the owners of that LLC. If they don’t comply there is no legal contract or smart contract which can compel this entity to oblige

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You mean, unless we make a legal contract that details this? We have an entity that can sign contracts, right @Taliskermalt ? Also, you can have Board Members that represent VD which can impact compliance with VD wishes, similarly how VCs have their own Board Members in startups.

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I think it makes sense for it to be a service provider partially owned by the DAO… I don’t think the DAO can cover salaries nor own the ops of this completely. But we should think about this further.

How would you organize this, Shrike?

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The DAO isn’t just smart contracts either. Most of the onchain votes are not implemented automatically by smart contracts, but instead by the community. I’m not sure how the DAO could compel execution of any vote that VitaCore + WG heads refused. Plus all of the legal stuff is already held by a legal entity.

Molecule is entangled with VitaDAO and it’s classed as a Service Provider.

@EliMo I would let the lawyers figure out the best structure. But I would view VitaTech as the US Service Provider for the legal entity does everything for VitaDAO. Give 51%+ voting shares/Board seats to VitaDAO and remaining shares as needed (maybe to Molecule, some to team running VitaTech, more to VitaDAO, or reserve some for future collaborations). Give an explicit mission to advance VitaDAO’s mission, NDA within VitaDAO family of NewCos and whatever pass through royalties model and risk isolation is used by VCs who use this model. The team will have to ignore DAO when that conflicts with federal law, so build that in to contract. Let them report annually.

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Correct, we have legal agents who are authorized to sign on behalf of the DAO when directed.

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Intelispark is a great company that can help with STTR/SBIRs…not just on the technical side, but thinking through the best home for your project. The accelerator I’m part of uses them for our participants. They are solid.

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Perfect. Thanks! Will look into Intellispark.

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Has anyone worked with Curie.bio ?

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I know the team at Curie.bio well. Feel free to reach out.

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