DARPA Embedded Entrepreneurship Initiative Kacy Gerst SBIRSTTR Symposium

DARPA Embedded Entrepreneurship Initiative Kacy Gerst SBIR/STTR Symposium 10/07/2020 Distribution Statement A: Approved for Public Release, Distribution Unlimited. 1

What problem are you trying to solve? DARPA Observation 1. The military’s time advantage is dramatically reduced due to inefficient transition of DARPA technologies. George Heilmeier DARPA Director 1975 -77 2. DARPA’s portfolio includes technologies that have the potential to shape the future of multibillion-dollar industries. Yet impact is dramatically slowed by a lack foundational entrepreneurial work and a lack of understanding of private sector market dynamics. On the LCD industry having been established outside the U. S. : 3. Foreign investors are aggressively pursuing superior (DARPA-developed) technology within their national, civil-military fusion strategy. Polymer News (1993) “In retrospect, I can't help wondering what would have happened if our team, suitably augmented, had been given the responsibility for developing the business opportunity as well as the technology. ” G. H. Heilmeier, “Some Reflections on Innovation and Invention, ” Distribution Statement A: Approved for Public Release, Distribution Unlimited. 2

DARPA Embedded Entrepreneurship Initiative Enabling national security capabilities to take root domestically DARPA Solution Step 1. Embedded Entrepreneur § Augment technical team with seasoned entrepreneur § $250 k/Performer for 1 -2 years § Goal: Robust go-to-market strategy for defense and commercial markets, attract U. S. investors Step 2. DARPA Investor Working Group (IWG) § § 30 top-tier, U. S. investors provide 1 -on-1 mentoring. Represent over $29 B assets under management Currently vetting 65 additional investor requests to join Promising Results from Pilot (2 years, 20 current Performers) § § $74. 2 M in U. S. venture capital raised in the last 18 months $0 foreign investment to date 9 Seed and Series A rounds closed, 2 Series B rounds closed 7 joint development agreements and 2 licensing deals with corporate partners Distribution Statement A: Approved for Public Release, Distribution Unlimited. 3

DARPA Embedded Entrepreneurship Initiative Enabling national security capabilities to attract U. S. capital Embody Inc. Bio fabricated (3 D printed collagen) ACL, Achilles, rotator cuff Military Importance: Military musculoskeletal injuries compromise readiness, drive disability claims. 1 68, 000 service members in nondeployable status every year due to musculoskeletal injuries 2 Challenge: Funding hole post-DARPA, lack of interest from investors, not enough funding to prepare key FDA filings, classic valley of death Embedded Entrepreneur Support: Hired seasoned commercialization executive Provided techno-economic modeling that: • Identified major tech cost drivers (in-house raw material production) • Prioritized high value market segments (ACL vs Rotator cuff) • Significantly increased Embody’s current valuation and fund raise Results: Closed $9. 3 M Series A funding round with U. S. investors March 2020, successfully filed for FDA 510(k) June 2020 1 https: //www. usmedicine. com 2 Grimm PD, Mauntel TC, Potter BK. Combat and Noncombat Musculoskeletal Injuries in the US Military. Sports Med Arthrosc Rev. 2019 Sep; 27(3): 84 -91. doi: 10. 1097/JSA. 0000000246. Distribution Statement A: Approved for Public Release, Distribution Unlimited. 4

DARPA Embedded Entrepreneurship Initiative Enabling national security capabilities to attract U. S. capital MBio Diagnostics, BTO Rapid, highly sensitive, multiplexed point-of-care diagnostics for COVID-19, sepsis and cardiac markers Challenge: Talented technical team, no experience taking a product through the FDA and to market. Despite multiple government grants, MBio struggled to attract U. S. investors. Embedded Entrepreneur Support: Carrie Mulherin: Long career leading successful medical diagnostics startups. • Conducted comprehensive strategic market analysis • Identified clinical needs and gaps to drive regulatory path forward • Helped create product requirements document for a portfolio of products targeting: emergency department, critical care units, and remote testing sites that are important in the COVID-19 fight • MBio merged with Brava Diagnostics, bringing diagnostic industry experience in-house Results: Quickly beefed-up business expertise; Embedded Entrepreneur and DARPA connections helped identify numerous potential investors. MBio closed $11 M Series B in August 2020, all U. S. investors. Distribution Statement A: Approved for Public Release, Distribution Unlimited. 5

DARPA Embedded Entrepreneurship Initiative If successful, we will significantly increase the likelihood that DARPA funded technologies take root in the U. S. and provide new capabilities for national defense. We will decrease the time from invention to military capability. Contact DARPA’s Chief of Commercial Strategy at Kacy. Gerst@darpa. mil Distribution Statement A: Approved for Public Release, Distribution Unlimited. 6