University technology transfer – why so difficult?
By Donald Dodge
Universities produce lots of research, patents, and base technologies. Few of them ever make it to the commercial market. Yet, lots of recent college grads start companies that bring amazing innovations to market. Why the disconnect? The obvious conclusion is academic versus business thinking. Not so fast. If that were true, corporate research labs would transfer most of it’s research into new and existing products. The truth is a very small percentage of corporate research ever makes it to market.
The biggest factor seems to be the fundamental differences between research and product development. Research focuses on advancing technology without being constrained by business requirements. Product development starts with examination of customer needs and business requirements, and matches existing technologies to the problems.
University Research & Entrepreneurship Symposium - Today I attended the URES 2010 conference in Cambridge, MA. I saw 10 new startups that are spinning out of university research labs. These startups represent the best technologies and teams that have commercial viability. The technology was impressive, and the teams presenting were like any other tech startup team. The startups included;
- HydroGen Technologies – Boston University
- Hestia – Purdue University
- CoSi – University of South Florida
- Orthogonal – Cornell University
- FloDesign Sonics – Western New England College
- BioFilm Sciences – Harvard
- ReThink Energy – University of Waterloo
- i-Matsh – Dartmouth College
- The Imagination System – Penn State
- Cence-Me – Dartmouth
There were 10 more companies on the Life Sciences track that I did not see. Most of these do not have web sites yet since they are still inside university labs.
Last year four of the 20 companies that presented were funded by VCs. That 20% funding rate is far higher than the normal 1% to 2% of companies most VCs fund. Of course these startups have been screened by a panel of VCs before presenting, so we are only seeing the best.
Technology Licensing Office – The big universities have Technology Licensing Offices that handle technology transfer on behalf of the university. MIT in Cambridge has one of the best TLO’s in the country. VCs are constantly looking at technologies from MIT and other universities, but my guess is they represent less than 5% of the companies they fund, probably much less. What are the issues with TLO deals?
Disagreement on value of technology:
- No proven customer/market fit for the technology
- Key technology researchers will not transfer with the technology
- Complicated Intellectual Property (IP) ownership issues
- Long term royalties that may not make sense for the product evolution
Its All About The People – VCs invest in people not technologies. Entrepreneurs have a balance of business sense and technology smarts that is very rare. Matching entrepreneurs to technology wizards is where VC firms add a lot of value. They have a list of serial entrepreneurs that they know and trust. Magic happens when they match these entrepreneurs to cool new research.
Don has been in the software business for more than 25 years. He started his software career with Digital Equipment, aka DEC, in the database group. He was part of the leadership team of five software start-ups. Forte Software was the first multiplatform object oriented development environment. AltaVista was the first search engine on the web. Napster was the first P2P file sharing network. Bowstreet was the first web services development environment. Groove Networks was the first secure P2P collaboration platform.
