In the FY2011 budget announcement last week, the Obama Administration proposed a program to bring to market some of the over one million patents held by Universities and Colleges. Called IMPACT- Innovation Model Program For Accelerating The Commercialization of Technologies- a vast majority of these one million patents are driven by $50 billion in Federal research dollars. Only a limited number of start ups (estimated at 550 in 2007) are spun off from this treasure trove of Intellectual Property. Recognizing this vast challenge and opportunity, the Administration and University of Southern California Provost Krisztina “Z” Holly proposes an ambitious new project.
The goal of the program is to stimulate innovation, create jobs and utilize these great assets held by our universities and colleges. These intellectual property assets are federally funded to the tune of easily over $50 billion per year.
In 2008 the Association of University Technology Managers (AUTM) estimated there were 3,388 federally funded research startups, and the impact of these startups is estimated by researchers at over $33.5 billion. The reality is that the potential is far larger. Universities traditionally either license the technology to established companies or it gets to market through faculty consulting, students going to industry themselves or on a smaller scale – University based startups. A large amount of IP sits on the proverbial shelf.
There are many programs created by universities and organizations like The Indus Entrepreneur (TiE) that help bring the Technology Transfer Offices closer to the entrepreneurs. But entrepreneurs are traditionally very wary of approaching universities and licensing issues. This program recognizes the difficulty of taking raw research and commercializing it.
The project calls for ten beta sites to get $2 million in funding a year for five years. These beta sites would nurture a culture of entrepreneurship through three key components:
- Gap funding: University research is typically early stage and translating these breakthrough works into commercial ventures is difficult. These grants would enable entrepreneurs or researchers to develop into a venture that has some “societal” impact. University based start-ups are traditionally not developed, as the Technology Transfer Offices (TTOs) are typically small and lack the reach and resources to reach and develop entrepreneurs. A typical TTO typically loses money as inventions can take up to ten years to generate royalty. The focus of TTOs is typically on larger licensing deals that generate revenue and rightly so.
- Community Building: In order for startups to succeed, they need an eco-system. We all know of the eco-systems in Silicon Valley in California or the Route 128 in Boston, MA or locally the I-270 Bio Tech corridor in Rockville, MD. These eco-systems have a local community that can enable these startups to succeed. From the ability to get out and build bridges with local entrepreneurs, businesses, talented engineers and marketers to Venture Capital firms, banks and prospective customers, this community building is key.
- Mentoring and Education: Young and first time entrepreneurs need a lot of education and strong mentoring. We have many great examples of companies that succeeded as a result of this including Dell, HP, RIM among others. Successful companies require talented teams who are nurtured and supported. Recognizing this need and addressing this early on will pay dividends. Addressing education through peer learning is critical as well. As a member of EO Network – www.eonetowrk.org, I can personally attest to how important peer learning and experience sharing can be.
Next week, I will review some of the similar programs and their strengths and weaknesses to date. Checkout more about the program at http://stevens.usc.edu/docs/IMPACT%20Initiative%20Whitepaper.pdf. Also see Krisztina’s op-ed in CNN at http://edition.cnn.com/2010/OPINION/01/29/holly.innovation.universities/.