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- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
The pathway to bringing laboratory discoveries to market is poorly understood and generally new to many academics. This book serves as an easy-to-read roadmap for translating technology to a product launch - guiding university faculty and graduate students on launching a start-up company. * Addresses a growing trend of academic faculty commercializing their discoveries, especially those supported by the National Science Foundation and National Institutes of Health * Offers faculty a pathway and easy-to-follow steps towards determining whether their discovery / idea / technology is viable from a business perspective, as well as how to execute the necessary steps to create and launch a start-up company * Has a light-hearted and accessible style of a step-by-step guide to help graduate students, post-docs, and faculty learn how to go about spinning out their research from the lab * Includes interviews by faculty in the disciplines of materials science, pharmaceuticals, medical devices, information technology, energy, and mechanical devices - offering tips and discussing potential pitfalls to be avoided
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Seitenzahl: 407
Veröffentlichungsjahr: 2017
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Table of Contents
Cover
Title Page
Foreword
Preface
Acknowledgments
About the Author
1 So, You Have a Game‐Changing Discovery… Congratulations!
Brief Review of Academic Entrepreneurship
State of University Technology Transfer
Study of Academic Entrepreneurship
Academic Start‐Ups Are “Early Stage”
Overview of the Process
Summary
References
2 Now What? Protect Your Intellectual Property
Types of Intellectual Property
Patenting and Public Disclosure Considerations
University Patenting Process
The Anatomy of a Patent
How to Read a Patent
Summary
References
3 Are They Buying What You’re Selling? The Search Phase
Example
Example (Continued)
The Value Proposition
Summary
Reference
4 Friend or Foe: The Tech Transfer Office and Licensing
License Agreements with Existing Corporations
University IP Licenses to Start‐Ups
Summary
References
5 Proof‐of‐Concept Centers: Bridging the Innovation Gap
Proof‐of‐Concept Centers (POCCs)
SBIR/STTR Programs
Summary
References
6 Start‐Up Management: You’ve Got to Kiss a Lot of Frogs…
Founder’s Term Sheet for RegenLive
Management Structure
Summary
References
7 Graduate Students and Postdocs, Start Up Your Career
Introduction
Why Do It?
Challenges and Opportunities Spinning Out from the University for Students
Faculty Member Participation
Faculty Member Not Participating
None of the Above
Formal Education
Business Plan Competitions…Not Just for Undergrads
Conclusion
References
8 Incubators and Accelerators: It’s Time to Move Out
Incubators
Accelerators
Summary
References
9 Do You Believe in Angels? Financing Your Company
Business Plan
Finding Investors
Venture Capital
Summary
References
10 Your Roadmap: Avoid the Potholes
How to Create a Successful Company
Summary and Going Forward to Your Successful Venture
References
Suggested Reading
Key Terms
Index
End User License Agreement
List of Illustrations
Chapter 01
Figure 1.1 Start of the path toward commercialization of an academic discovery.
Figure 1.2 The social capital needed for academic research and translation of that research into a commercial product or service can be very diverse.
Figure 1.3 Research and dissemination of research findings typically follow the path (top) where there is a disconnect between the university flow to commercialization of the discovery as a product or service. To facilitate translation of research findings, a few key components to the process may be added to the university system, such as a proof‐of‐concept center, seed funds, and an incubator or accelerator in the region.
Chapter 02
Figure 2.1 A patent can exclude others from selling your invention, but does not prevent you from infringing on someone else’s patent.
Figure 2.2 Preferred university disclosure and patent application process. Still possible to patent if you are 12 months past external disclosure.
Figure 2.3 Standard field codes for patents (Brown and Michaels, PC, 2016).
Figure 2.4 Sample front page of patent.
Chapter 03
Figure 3.1 Test your market hypothesis by doing interviews and then refine your hypothesis. The endless loop is intentional to continue the process through product launch.
Figure 3.2 Platform technologies can result in multiple products and applications, making them attractive for investment, and market analysis will inform which application(s) to focus on first.
Figure 3.3 Typical market uptake projections for revenue over time for many start‐up companies: “hockey stick” curve.
Chapter 04
Figure 4.1 Paths to licensing technology to existing or start‐up company from a university.
Figure 4.2 Exclusive license terms for five universities (2016).
Chapter 05
Figure 5.1 Transition from discovery to commercial product has many transitions. Support from university or regional business development community is critical to drive the research discovery forward along the commercialization pathway, which is different from advancing the research and requires different sources of support from research grants.
Chapter 07
Figure 7.1 Transition options for building skills going from graduate or postdoctoral student to start‐up.
Figure 7.2 Some partnership models describe founding teams for translation of academic research among faculty and students.
Chapter 08
Figure 8.1 When a start‐up is ready to move out of the lab, there are options with accelerators and incubators.
Figure 8.2 Characteristics of incubator and accelerators.
Chapter 09
Figure 9.1 Different crowdfunding platforms.
Figure 9.2 Intrastate crowdfunding: states allowing investment by nonqualified investors.
Figure 9.3 University venture fund investments from 1973 to 2010.
Figure 9.4 Research and development is heaviest at the beginning of the start‐up, while sales and marketing increase as the start‐up progresses. To have a smooth transition between the two, communication and collaboration are needed between them in the company.
Figure 9.5 Faculty involvement in the start‐up is high early in the start‐up life cycle when the technology needs to be transferred to the employees of the company and valuation is modest. This can reverse through the life cycle of the company and is a risk for the academic founder monetarily.
Figure 9.6 Faculty member equity stake in a start‐up can decrease dramatically with increased capitalization of the company over the company’s life cycle.
Guide
Cover
Table of Contents
Begin Reading
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Academic Entrepreneurship
How to Bring Your Scientific Discovery to a Successful Commercial Product
Michele Marcolongo, Ph.D.
Drexel University, Philadelphia, PA, USA
This edition first published 2017© 2017 John Wiley & Sons, Inc.
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Library of Congress Cataloging‐in‐Publication data is applied for
ISBN: 9781118859087
Cover design by WileyCover image: Courtesy of Michele Marcolongo
To all academic entrepreneurs and aspiring academic entrepreneurs, I hope this roadmap will save you time and increase your success.
To my husband, Paul, who is always supportive, loving, and amusing; our sons, Noah and Dan, who are innovative and inspire me every day; and my parents, who instilled in me a belief that I could make something from nothing.
Foreword
The research university as we know it today is, in many ways, a direct result of the needs of the nation during World War II. In response to the war effort, the federal government of the United States launched into an unprecedented expansion of investment in science and engineering‐based research in, of all places, academic institutions. Powerhouse institutions, such as MIT and the University of California, Berkeley, led the way in developing significant technical advances that had a direct impact on the outcome of the war.
Because of the success of the partnership between academe and the federal government, Vannevar Bush, the head of the Office of Scientific Research and Development at the time, was asked to develop a plan to maintain and enhance federal programs for research. The result was the creation of his seminal work: “Science: The Endless Frontier.” In it, Bush described the difference between so‐called basic and applied research and made the case that the federal government should establish a systematic way of supporting basic research in academic institutions. Under this model, applied research was left to the private sector and industry.
The bargain that was struck in separating basic/academic research from applied research is the genesis of the so‐called Valley of Death. This phenomenon is common to those who support the commercialization of technology out of academic labs and is a direct result of the structure Vannevar Bush used to distinguish between the type of research that takes place in academic institutions and the type of research that takes place in industrial settings.
For decades after World War II and in spite of the Valley of Death, the United States led the world in its ability to transform basic research into products and services to advance human progress. This ability is widely recognized as a source of comparative advantage around the world and has aided in the development of innovation hubs centered around leading institutions: most famously Silicon Valley in the San Francisco Bay Area.
Evidence suggests that technology can effectively be spun out of academic labs. The question before us now is can we do it better. My strong belief is that the answer to this question is yes, and Academic Entrepreneurship helps to point the way.
My work at the National Science Foundation (the brain child of Vannevar Bush), first as a program manager in the Small Business Innovation Research (SBIR) program and then as the founding lead program director for the Innovation Corps (I‐Corps), has given me insight into business creation from academic institutions. During my time at NSF, I had an up‐close and personal view of over 400 companies encompassing software and services, many of which had a direct connection to academic work. Through the I‐Corps program, I was privileged to be involved with approximately 200 additional teams, all academic, and in multiple disciplines.
What I have found is a profound difference between the capacity for research and the success of innovation. Recognition of this difference is the key to improving the transformation of ideas into successful businesses.
Geoff Nicholson the former vice president of 3M had a saying, “Research is turning money into knowledge. Innovation is turning knowledge into money.” It is true that great researchers are not necessarily great innovators and successful innovators are not necessarily competent researchers.
From my work with many academic spinouts, I have found the following things to be true. Academically trained scientists and engineers excel at discovery. Faculty, postdocs, and students have certain skills that enable them to identify potential commercial opportunity. They are able to ask, “Does this new technology provide value to potential customers?”
Despite the ability to ask and answer the important “exploration” questions, these highly creative teams struggle to pull resources together to turn their creative pursuits into valuable enterprises. It is this challenge that Academic Entrepreneurship addresses.
Academic institutions, with their vast intellectual resources, should be a breeding ground for great leaps forward in innovation. We need to break down the barriers of false dichotomy that exists between the separation of basic and applied research. We know that technology transfer from research institutions is a powerful source of human progress, but there is room for improvement. The future potential of academic venture creation is vast and not at odds with the endless frontier.
In the following pages, Michele explores the elements that lead to turning knowledge into money. Academic Entrepreneurship explores the importance of IP, customer discovery, team building, and early‐stage financing. It is a significant contribution to our understanding of the commercialization process and represents an area of practices that deserves our attention.
Errol Arkilic, Ph.D.
Founding NSF Innovation Core (I‐Core) Program Director
Founder of M34 Capital
Preface
What do Bose, Genentech, and Gatorade all have in common? They are all companies that were founded based on technology from academic research.
Academic research is fascinating. It allows you to explore and discover to the farthest reaches of your imagination and scientific skills. Academic researchers are trained through graduate school and often postdoctoral studies with a system of apprenticeship or mentorship under an advisor who guides the research. Under this system, we are taught the scientific method, how to pose relevant questions, critically review prior work, analyze data, report findings, financially support the work through grants, run a lab, and train the next generation of researchers.
Today, there is considerable interest of university faculty, national lab researchers, medical doctors, postdoctoral and graduate students in expanding academic research toward development of products or services that can directly serve society and drive economic development. More often than not, our graduate student and postdoctoral mentorship did not and does not include a systematic approach for translation of research to commercialization.
This book is intended as a guide to help you navigate the process of commercializing your academic discovery. While there are numerous outstanding books on entrepreneurship (see Suggested Reading), the academy offers some unique challenges to commercializing technologies for those on the inside. It’s difficult to find a clear translational path to follow. The paths vary institutionally and geographically across the country. This book serves as a guide to academic entrepreneurship with all of its exciting opportunities as well as real challenges. Consider it a “how to” commercialize your academic findings.
The motivation for consolidating this “how to” was numerous requests for advice from colleagues in my university and across the country who were starting companies. From my position as a Professor of Materials Science and Engineering, I have been a cofounder of two start‐up companies from my academic work and have cofounded a technology company outside of the university system. Work with my start‐up companies has given me intimate insights into the start and in one case so far, to the finish line of the commercialization process. In addition, I’ve served in the university provost’s office developing programs to better help researchers translate their scientific discoveries. My work was not done at Stanford or MIT, who have had great systems in place for translating research for decades, but at a top 100 university that was and is developing its methodologies around commercialization. So whether in Silicon Valley, Boston, or any other academic location, the strategies in this book will help to guide you through this exciting process.
But one person’s perspective is limited, so I’ve interviewed numerous colleagues in university start‐up ecosystems across the country to learn about their experiences and have included their insights as inserts in the chapters. You’ll hear from technology transfer officers, regional economic development partners, venture capitalists, attorneys, faculty members, and students who have founded companies to translate academic research.
My hope is that this book will give you a framework for your technology commercialization. There is no “right way” or “only way” to proceed, but some considerations discussed here will make the commercialization path smoother for you and give you a foundation on which to base your many decisions. From my own experience in biomaterials and medical device research, it has been a great satisfaction to see a research concept evolve into a real patient treatment.
The book begins with a brief review of academic entrepreneurship for those interested in some historical context and data. In each of the subsequent chapters, you will find information on protecting your intellectual property, exploring market need, negotiating with the university technology transfer office, providing proof of concept for your product or service, assembling your management team, making postdoctoral and graduate students as founders of academic start‐ups, hiring incubators/accelerators, and financing your company. In a final summary, the top reasons why start‐ups fail (academic and nonacademic) as well as examples of how some succeeded are analyzed.
Additional topics addressed that are unique to academic start‐ups include conflicts of interest (among you, the university, and the start‐up company), tenure, and promotion considerations for faculty members in light of entrepreneurial activities, challenges, and opportunities, having academic colleagues as business partners, managing relationships between advisors and students in academic start‐ups, keeping your day job while founding a company, or deciding to leave the academy entirely.
My hope is that by learning about the processes, stumbling points, successes, and general experiences of numerous people in the academic entrepreneurship ecosystem, you will have a roadmap to successfully commercializing your important research discovery. Welcome to the entrepreneurship community.
Michele Marcolongo
Philadelphia
Acknowledgments
I would like to thank numerous friends and colleagues who have provided advice and feedback during the writing of this book. From casual conversations to lengthy sit‐down discussions, your input was essential. Each of the people in the university entrepreneurship ecosystem who agreed to provide an interview for this book helped to shape and bring the book personal insights from a variety of perspectives. Many thanks to each of you. As you all are extremely busy and talented people, your time and candor in our discussions were a great gift.
I appreciate the thorough reading of the manuscript by Tom Edwards and Errol Arkilic whose helpful feedback was both thoughtful and encouraging.
Thank you also to Leslie Campion who provided essential support in the preparation of the manuscript for publication and used her tremendous talents to create the cover art for the book. This necessary work takes a special skill to complete, and there is a good likelihood that without her talents the manuscript would not have been fully and finally published.
A special note of thanks goes to my family. My husband, Paul, and my sons, Noah and Dan, for their support of my sitting at the kitchen counter for many hours lost in the manuscript. Noah was especially kind to use his keen literary skills to edit the manuscript of the book before it could ever be given to the editor.
Thank you as well to Wiley for the editorial and production staff who were encouraging as well as skillful in finalizing the publication in every aspect.
About the Author
Dr. Michele Marcolongo, Ph.D., P.E., is the department head and professor of Materials Science and Engineering at Drexel University in Philadelphia. She has been a leader in the university entrepreneurship ecosystem where she has previously served as associate vice provost for research, associate dean of intellectual property development for the College of Engineering, and senior associate vice provost for translational research. She served on the Operations Boards of the Nanotechnology Institute and the Energy Commercialization Institute, which directed proof‐of‐concept commercialization funds for 14 universities in Pennsylvania. Dr. Marcolongo’s field of research is biomaterials or materials that can be implanted into the body to replace diseased or damaged tissues. Dr. Marcolongo has cofounded two companies with from her research in biomaterials: the first, Gelifex, was sold to a major orthopaedics manufacturer, and the second, MimeCore, to commercialize a platform technology of biomimetic proteoglycans. In addition, she cofounded the health IT company, Invisalert Solutions. She is a fellow of AIMBE and Alpha Sigma Mu. Dr. Marcolongo received her doctorate in Biomedical Engineering from the University of Pennsylvania.
1So, You Have a Game‐Changing Discovery… Congratulations!
Vision without execution is hallucination.
—Thomas Edison
Some of the best days in the life of a researcher are those where you get the data back from a key experiment to find that you have proven your hypothesis, met your design objective, or just flat out made a new discovery. That excitement and sense of fulfillment is, in part, what drives academic faculty. The discovery and the dissemination of those important findings are the well‐deserved products of tenacious research endeavors.
There may be a day when you realize that your discovery has real promise outside of the lab—it could be a game changer. But what’s the best way to get this discovery from the lab to commercialization? Academics are trained in graduate school and during our postdocs in how to run a lab, design experiments and write grants, analyze data, write papers, present scientific findings, and teach. To date, the academic community has not used this same apprenticeship model for systematic training in aspects of entrepreneurship, especially academic entrepreneurship and all of the steps and decisions that need to be made to “translate” your discovery to commercialization (Figure 1.1), where it can become a product or service to meet a need in our society.
Figure 1.1 Start of the path toward commercialization of an academic discovery.
And yet, many academics roll up their sleeves and try anyway. Without training and often with little guidance, academics make their way through intellectual property (IP) law (United States and international), market assessment, value propositions, licensing agreements, negotiating business relationships, finding a good corporate partner, and starting and financing a new company. This book is intended to provide a process that will allow a step‐by‐step approach to evaluate and realize commercial potential of your research findings. To supplement the methods, there are summaries of interviews with notable members of the academic entrepreneurship ecosystem including investors, heads of proof‐of‐concept centers, incubator directors, and numerous academic entrepreneurs themselves. To get started on your path to entrepreneurship, please go to Chapter 2. For a very brief history of how we got to this point in academic entrepreneurship, continue through the rest of this chapter.
Brief Review of Academic Entrepreneurship
How did we get to the point of academic research turning into commercial products and services? Some academics are not interested in commercializing a research finding (but probably not many of those reading this book). They’re driven solely by the probing of new knowledge and not by bringing the fruits of that knowledge back to society in ways other than the traditional methods of publishing findings and training students. Indeed, if universities don’t provide a place for fundamental research, where will it be done? With notable exceptions, corporations that used to have major internal research centers have cut those back dramatically with a preference for outsourcing or acquiring early‐stage research. Early‐stage research and discovery is a concept that is critical to the advancement of basic knowledge, but expensive to support with the constraints and impatience of real‐world corporations today. The Bureau of Economic Analysis (BEA, 2014) cites a decrease in research and development (R&D) growth from 7% in 1965 to 2% in 2013, with a 50‐year average of 4.6%. From 2007 to 2013, the average was 1.1%. This corresponds with, but may not be causal to, a reduction in the number of corporations that publish in scientific journals, which have gone from 17.7% in 1980 to 6.1% in 2007 (Fortune, 2015). A tremendous source of research is our national labs whose members contribute research, but with a focus that is primarily mission driven, potentially limiting the breadth of basic research questions. Along with teaching and service, research is a primary mission of an academic faculty member who then disseminates those findings openly to the scientific community. Can we maintain this “purity” while extending our definition of dissemination of findings to include translating discoveries toward commercialization where they can more directly address societal and technological challenges?
In the book Open Innovation, Henry Chesbrough summarizes the evolution of research within the government, universities, and corporations (Chesbrough, 2006). From the turn of the twentieth century until World War II, the US government was generally uninterested in supporting university research. The government’s few scientific interests were in understanding gunpowder as well as in developing a system of weights and measures. For corporate protection, the US patent system was initiated. During this same period, basic science was in an amazing state of discovery in universities across the world. This was the time of Einstein, Bohr, Roentgen, Maxwell, Curie, Pasteur, and Plank. These were “pure” scientists. However, pre‐World War II universities lacked funds to conduct significant experiments themselves. During this time period, Thomas Edison invented the phonograph and electric light bulb. Edison, however, was considered by the university scientific community to be a “tinkerer” of “lesser ability,” who had compromised himself and corrupted the process of scientific discovery. Thomas Edison held 1093 patents. Corporations during this time needed to work toward innovative products, so they began internal R&D within the companies. They were able to hire top scientists with jobs for life, creating academically stimulating corporate environments. Corporate scientists performed basic research that in some cases also led to product development. The centralized R&D organizations were critical to growth and business opportunities for the high‐growth corporations. At that time there was little connection among government, university, and corporate research (each being mostly closed systems).
After World War II and through the 1970s, the US government’s interest in supporting research was greatly enhanced. President Franklin D. Roosevelt realized that the United States needed to import much of its scientific knowledge and technology from Europe for weapons development during World War II. Roosevelt charged Vannevar Bush to study ways that the United States could increase the number of its own trained scientists. He wanted to simultaneously aid research activities in the public and private sector and increase federal funding of basic research in universities. Roosevelt envisioned a strong and independent scientific reservoir in the United States, in part as a defense strategy. To satisfy these needs, the National Science Foundation (NSF) was formed to coordinate efforts between government, universities, the military, and industry. The GI Bill of Rights was also enacted to fund tuition for veterans returning from war. As universities found themselves with a new influx of research funding from NSF, academic science was elevated to more equal partner with the government and industry. The government was now funding basic research in universities whose faculty, through open publication, were expanding the pool of knowledge available to society and industry.
After World War II, colleges and universities trained many new undergraduates and graduate students. This decentralization of knowledge enabled industry to increase internal R&D. There was expansion in Bell Labs, GE, and DuPont in addition to the formation of Watson Labs at IBM, Sarnoff Labs at RCA, and then others at HP and Xerox. Employees from Bell Labs and IBM received Nobel Prizes, and those at DuPont discovered new chemical fibers and materials. Chesbrough summarizes that this was the “golden age for internal R&D.” The United States enjoyed growth of the postwar industry for over two decades. But the corporate closed innovation system was soon to come to an end.
Consider the US economy during the 1970s. The Japanese and German markets were taking off, and it looked as if the United States would lose the high‐tech industry, while the economy was experiencing double‐digit inflation and unemployment (AUTM, 2012). The federal government had a policy of taking all federally funded university inventions and licensing them to companies nonexclusively. With the lack of IP protection against competition (because of the nonexclusivity of the license agreements), companies were not actively pursuing the university inventions. The federal government held 28 000 patents with fewer than 5% licensed to industry (GAO, 1986). While numerous scientific advances were being made, it was felt that the great investment in university research from the American taxpayers, then billions of dollars, was not significantly making its way back to those taxpayers to advance the standard of living and economic viability of the United States.
In 1980, two US senators got together and formed legislation that again changed the innovation paradigm for the United States. The Bayh–Dole Act (1980) was motivated by widely held belief in the late 1970s that the United States would no longer be industrially competitive. Senators Birch Bayh (Indiana) and Bob Dole (Kansas) initiated a law that created a uniform patent policy for federal agencies that support research. The major focus of this law was to enable small businesses and nonprofit organizations (universities) to retain title to inventions made under federally funded research programs (http://www.autm.net/Bayh_Dole_Act1.htm).
Bayh–Dole Act led to new provisions to universities that are funded by federal agencies:
Nonprofits, including universities, and small businesses may elect to retain title to innovations developed under federally funded research programs.
Universities are encouraged to collaborate with commercial concerns to promote the utilization of inventions arising from federal funding.
Universities are expected to file patents on inventions they elect to own.
Universities are expected to give licensing preference to small businesses.
The government retains a nonexclusive license to practice the patent throughout the world.
The government retains march‐in rights.
Now and for the past thirty‐plus years, universities no longer provide free‐of‐charge, federally funded research findings to companies to advance industry. With the advent of Bayh–Dole, the universities themselves can protect the IP of their findings, and even though the research will still be published and knowledge shared openly, industry is no longer legally permitted to take the protected ideas of universities and use them to advance their products and profits. This primary change set a new dynamic for innovation that has undergone many iterations to bring us to present‐day university policies. Corporations are able to license IP (exclusively or nonexclusively) directly from universities or national labs if they would like to commercialize discoveries from federally funded research. This option is extended to faculty members who are able to license university‐owned IP through the vehicle of a start‐up company.
State of University Technology Transfer
The Association of University Technology Managers (AUTM) was founded in 1974. In 2016, the organization had 3200 members from 300 universities. The mission of the organization is the support and advance technology transfer globally. AUTM has summarized the statistical productivity of university research toward innovation and economic development with citations from “The Gathering Storm,” the 2006 report of the National Academy of Sciences. To summarize, since the initiation of the 1980 Bayh–Dole Act, university research helped create whole new industries, such as biotechnology. In addition,
More than 5000 companies formed around university research resulted, many nearby the universities where the original research was performed.
University patents in 2005 totaled 3278 up from only 495 in 1980.
In 2005 alone, universities helped introduce 527 new products to the marketplace. Between 1998 and 2005, 3641 new products were created.
University technology transfer creates billions of dollars of direct benefits to the US economy every year.
According to the former president of the NASDAQ Stock Market, an estimated 30% of its value is rooted in university‐based, federally funded research results, which might never have been commercialized had it not been for the Bayh–Dole Act (AUTM, 2012). All the while, researchers in the United States led the world in the volume of articles published and in the frequency with which these papers are cited by others. US‐based authors were listed in one‐third of all scientific articles worldwide in 2001 (Committee on Science, Engineering, and Public Policy, 2007).
AUTM (2012) reports the following metrics:
22 150 total US patent applications filed
14 224 new patent applications filed
5145 issued US patents
5130 licenses executed
1242 options executed
483 executed licenses containing equity
Total license income: $2.6 billion
705 start‐up companies formed
4002 start‐ups still operating as of the end of FY2012
There are some interesting inferences that can be drawn from this data. First, in consideration of the amount of federal research dollars spent in the United States in 2012 ($40 billion), there were 22 150 patent applications filed and 5 145 patents issued. Broadly, there is approximately 1 patent filed for every $7.7 million in federal research dollars spent. The long lag between patent filing and review makes the issued patents a lagging indication of productivity. The resulting licenses were 5130. There were 705 start‐up companies formed, and these employed approximately 15 000 people. The data showing that 80% of licensed patents went to existing companies indicates that academia is still supporting corporate industrial growth in the United States and that companies in some industries are interested in licensing directly from universities. The 20% of licenses that went to start‐ups is interesting in that this segment is a significant portion of the licenses. This can be compared with 2002 data that showed 14% of university licenses went to start‐ups (Shane, 2004). Pro and con Bayh–Dole advocates have fairly strong opinions of the consequences to this law, which was summarized in a quote by James Pooley who says, “At the end of the day, what we’ve learned from Bayh‐Dole is that by harnessing the capitalistic system, we get a lot more technologies out to market and, arguably, a lot more spread into other areas as well” (Slind‐Flor, 2006). Academic entrepreneurs now make up a growing and significant part of the industry that translates knowledge from universities toward commercialization. Because this is an important market phenomenon, academics in another part of the university, the B‐school, have become interested in studying this population to learn about academic start‐ups.
Study of Academic Entrepreneurship
Business school academics have developed an independent discipline that studies and analyzes academic entrepreneurship. The academic entrepreneurship literature is rich with insights of some key areas: characteristics of an academic entrepreneur, which universities are best adapted to successfully support academic entrepreneurship, organization, and policies of the technology transfer office and environmental context network of innovation, social networks, and relational capital. The motivation for understanding these drivers is clear: policymakers, universities, and business leaders desire a clearer knowledge of the characteristics of academic entrepreneurs and the policies and practices that promote them. Some characteristics of an academic entrepreneur and the likelihood of an academic becoming an entrepreneur have also been investigated.
The characteristics typical of an entrepreneur:
Ability to take risks (but not excessive risks)
Innovative
Knowledge of how the market functions
Manufacturing know‐how
Marketing skills
Business management skills
Ability to cooperate
Good nose for business
Ability to correct errors effectively
Ability to grasp profitable opportunities
For 1780 academics examined for participating in technology transfer, “individual attributes, while important, are conditioned by the local work environment” (Bercovitz and Feldman, 2008).
Academics were more likely to become academic entrepreneurs if:
They were trained in institutions that had accepted technology transfer.
They were closer to their graduate training (those farther away from graduate training had less participation).
Their department head was active in technology transfer.
Respected members of their academic community were participating in technology transfer (sometimes known as the “Porsche effect”).
If, instead, academics find the social norm of the department or the community is not supportive of technology transfer, even if they received training in entrepreneurship, they will conform to local norms rather than prior experience.
Tenure/tenure‐track faculty taking on entrepreneurship were also affected by the standard by which their contributions are measured for tenure and promotion. Assessment for tenure and promotion for STEM faculty are scholarly output (typically analyzed by the amount of externally funded research support, scholarly papers and other scholarly work, training of doctoral students, and academic reputation) in addition to teaching and service accomplishments. Academic entrepreneurship is not included in the performance reviews of most academic faculty members, although several universities have recently adapted entrepreneurship activities into the tenure and promotion metrics. Therefore, especially during the critical pre‐tenure years, as well as at the associate professor level, academics are indirectly discouraged from pursuing academic entrepreneurship by not being rewarded for these endeavors. As universities are becoming more interested in the advancement of their research innovations to commercialization, policy change will surely be necessary to facilitate this activity in a major way without penalty for the faculty member in tenure and promotion (Stevens et al., 2011). For those who decide to pursue academic entrepreneurship anyway, there are some interesting findings of how start‐ups from academics differ from other high‐tech start‐ups.
Academic Start‐Ups Are “Early Stage”
Because university start‐ups often initiate from a discovery and not necessarily from a clearly defined product and market need, university start‐ups can take a great deal of additional R&D before they can become a viable businesses according to Lubynsky (2013). This is often a frustration to the academic inventor who has worked, perhaps many years already on the initial invention, only to hear repeatedly that the technology is really “early stage” by investors and the broader business community. Lubynsky studied 10 start‐ups out of MIT, most of which were led by graduate students with concepts developed in collaboration with their faculty mentor during the course of their doctoral work. Even in MIT’s entrepreneurial community with substantial resources and support for academic entrepreneurship, out of 10 start‐ups, 2 failed after about 10 years, 2 were acquired after 8 and 10 years, and the remaining 6 were still in business with duration ranging from 0.5 to 10 years at the conclusion of his analysis. Regardless of the outcome, the research phase of the start‐up lasted between 3 and 10 years. Lubynsky concludes that academic ventures are different. Many academic entrepreneurs believed that the only effective path to advance the technology was to form their own start‐up. Another interesting finding of the study relates to the importance of students (graduate students and postdoctoral researchers) in academic entrepreneurship with students being major contributors to the academic start‐ups. While the students were critical to the start‐ups that were successful, they also found challenges in the companies that were studied. Two common conflicts for the student entrepreneurs were with their faculty advisors and with business student partners in business plan competitions. Part of the challenge for all of the academic entrepreneurs was the transition from well‐developed academic networks to networks in the entrepreneurial community.
Robert Langer, Ph.D.
David H. Koch Institute Professor
Department of Chemical Engineering
MIT
Only a few more and MIT’s Bob Langer will have more patents than Thomas Edison (1093), not to mention 1250 journal articles. Wow.
Bob’s accomplishments for the scientific world are impressive by any standards, and he has been recognized with numerous prestigious awards. But what might be most notable is Bob’s dream to “use his background in chemistry and chemical engineering to improve people’s lives.” Founder of 28 companies to date, Bob’s academic entrepreneurial efforts have fulfilled this dream over and over again.
An entire book should be dedicated to understanding the brilliance and tenacity of Bob Langer. Here we’ll focus on some of Bob’s observations about academic start‐ups.
An article on The Langer Lab by Harvard Business School (Bowen et al., 2005) summarizes Bob’s own process of the “four elements of an ideal research project” and notes the “symbiotic relationship between science and science‐based business”:
A huge idea
conceived by recognizing a critical societal need that could be met by inventing a platform product
A seminal paper
based on research to establish the science underlying the product concept and its efficacy
A blocking patent
derived from patent disclosures written in parallel with the research process, the goal being to have patents filed before the research paper’s publication
Preliminary in vivo studies
in animals that demonstrated the efficacy of the research
Some academics are lucky enough to hit on these four elements a couple of times in a career, but Bob and his lab have the creativity, intellect, and drive to do this almost annually. The resulting companies have given Bob tremendous insights into the academic start‐up process.
When discussing what he wished he had known before embarking as an academic entrepreneur, Bob had a ready reply: “1. How to find good investors; 2. How to find a good CEO; and 3. How important it is to have a really good plan before you do lots of research.”
Bob has had a business partner for each of his companies. Now, he doesn’t have any trouble finding a good CEO, but in the early days it was more difficult. “It’s hard to know when you have a great CEO, but easy to know when you have a poor one.”
With his broad experiences in start‐up companies, Bob can offer many perspectives, but perhaps most unique is his vast experience with exits. Most academics with start‐ups may have an exit opportunity one, two or maybe three times…Bob could do a statistical study on his!
Many founders have trouble letting go of control of their company with a sale. How does Bob approach exits? By the time there is a decision of an exit, he feels it’s a joint decision. Aside from IPO’s (to bring resources into the company), there are two reasons why exits occur: The first is financial interest. If a preemptive offer is extended (2–3X), then investors are interested in the deal. The second may be unique to the medical sector where the commercialization and sales process is complicated and a lot of capital is needed to do the work. Sometimes before the product is launched, another company will buy the start‐up and put in the investment to take the product to the clinic. With mergers you lose control, but gain resources to advance the technology.
When you transition your start‐up to a larger company, there still are challenges. Financially, “milestone‐based payments are bad,” especially when you don’t have control over the budget or work any longer. Some companies do a good job of taking on technology, but others may have priorities that are not aligned to those of the start‐up. What forces them to do a good job is the contractual arrangement. These terms can vary widely, but in general they are intended to cover what happens if there is a lack of progress after the sale, for example, additional payments are to be made or technology is to be given to the start‐up.
There is “no particular answer for a company and many variables.” Exits depend on whether the technology is a one‐trick pony or platform. For a platform, Bob wouldn’t want to sell quickly because you have more “shots on goal.” “Developing the technology across lots of product spaces is a good thing.”
Does Bob like all of the financials and board meetings that go with the company management? Not really. He prefers more creative endeavors. However, Bob recommends that the founders have a representative on the board of the start‐up. It’s the best way to “really know what’s going on, including understanding the financials.”
How has Bob managed his tremendous success in translating his research findings to commercialized products to help people? I’ve had “lots of good students, lots of opportunities and made lots of mistakes.”
All of our mistakes should be so fruitful.
Social capital describes the resources you use to execute your objectives through your network. There are differences in the networks that are necessary for academic research and academic start‐ups. Social capital evolves from your network and helps you best complete your work (De Carolis and Saparito, 2006). For a faculty member, the social capital may be the dean, department head, the research office administrator, the registrar, program director, purchasing representative, students, and fellow professors, among others. For an entrepreneur, this network may include quite a different circle, such as the patent and contract attorneys, business entrepreneurs in your sector, accountants, local economic development administrators, technology transfer officers, corporate players in target sector, angel investors, and venture capitalists (Figure 1.2). The intersection of these networks of social capital is divergent for the most part with little overlap. A university system that provides a faculty member with the opportunity to develop social capital in the entrepreneurship ecosystem may more efficiently drive commercialization.
Figure 1.2 The social capital needed for academic research and translation of that research into a commercial product or service can be very diverse.
The current state of academic entrepreneurship is in different stages of maturity among the different research institutions across the country. Challenges include creating a supportive ecosystem, methods for navigating the university processes and policies, and moving a start‐up forward while maintaining an active research lab. The National Academies Press has published a report (2013) that discusses trends in the innovation ecosystem through a collaboration between the Academies of Sciences and Engineering and the Institute of Medicine. Their analysis summarizes the state of national universities toward supporting innovation (Olson and Dahlberg, 2013):
The knowledge and experience of individuals are the primary drivers of innovation.
Science and technology expertise alone is not enough to ensure innovation; the skills of finance, business development, production, and management are useful.
Innovation is stimulated by the movement and interaction of individuals from different sectors.
The culture of a region and its institutions shapes the nature of these interactions.
Openness to new ideas and a tolerance for failure are important.
Culture is not easily changed, and creating clones of Silicon Valley might be the wrong strategy.
Innovation is a contact sport and might be facilitated by a concentration of talent that increases the rate of interaction.
General principles do not explain everything. Significant differences exist among institutions, regions, industries, and sectors.
Among the most interesting observation by the members who collaborated on this report is that “general principles do not explain everything.” It is interesting that while there is an overall process for translating research to commercialization, there is not a governing path to ensure success. The process is multifaceted, and each component of the business development has its associated risks that need to be managed uniquely for each case. This being said, there is a general process that can be put forth as a framework to take a scientific discovery on the journey to commercialization.
