Burton Lee - University Research Panel - Intl Technology Law Assn 4th Conference - Tallinn Estonia - June 3 2011

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Intl Technology Law Assn Conference, Discussion panel, June 3, Tallinn, Estonia on the subject of university startups, spin-outs, and spin-offs. Panel members: Dr. Burton Lee, Stanford; Dr. Matthias …

Intl Technology Law Assn Conference, Discussion panel, June 3, Tallinn, Estonia on the subject of university startups, spin-outs, and spin-offs. Panel members: Dr. Burton Lee, Stanford; Dr. Matthias Holling, ETHZ, Zurich; Dr. Alar Kolk, Tallinn Technical University, Estonia; Dr. Erik Puura, Tartu University, Estonia; Matti Ylimutka, Aalto Entrepreneurship Society (Aaltoes), Aalto University, Helsinki, Finland

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  • 1. Panel on University Research: Spin-outs and Spin-offsDr. Burton H. Lee PhD MBA, Stanford Engineering, Moderator International Technology Law Association Fourth Annual Tallinn Conference www.itechlaw.org “Addressing the Challenges of the Technology Company in the Expansion Phase” Friday June 3 2011 10.55am – 12.30pm Panel Session Tallinn, Estonia
  • 2. University Research: Spin-outs and Spin-offs• Dr. Matthias Hölling, Spin-Off Program, ETH Transfer, Zurich• Antii Ylimutka, Aalto Entrepreneurship Society/Aalto Venture Garage, Aalto University, Helsinki• Alar Kolk, Tallinn University of Technology, Tallinn• Dr. Erik Puura, Director, Institute of Technology, University of Tartu, Tartu• Moderator: – Dr. Burton Lee PhD MBA, European Entrepreneurship & Innovation, Stanford University, Palo Alto
  • 3. Panel Format• 60 Minutes – Presentations & Short Questions• 30 Minutes – Open Discussion and Q&A
  • 4. Dr. Burton Lee PhD MBA Panel ModeratorEuropean Entrepreneurship & Innovation Engineering School Stanford University, Palo Alto Burton.Lee@stanford.edu
  • 5. Key Issues in the Nordic Region• University TTO models and performance• University entrepreneurship education• University-industry cooperation• Roles of student-led Entrepreneurship Societies• Selection of university research focus areas by professors• EU FP7 research project outcomes, IP generation and commercialization• University reform and institutional changes
  • 6. Update on Stanford University Initiatives Entrepreneurship and Spin-outs • Stanford Angels & Entrepreneurs – Initiative of Stanford alumni • Stanford Student Enterprises (SSE) Labs – Aka “StartX” – Based at AOL in Silicon Valley, CA – Student-led initiative • Stanford Office of Technology Licensing – Recent 2010 Data and Results
  • 7. Stanford OTL: Disclosure & Licensing History 1970 2010 Cumulative ActiveDisclosures 28 457 ~8400 ~3000Licenses* 3 90 ~3000 ~850Royalty Income $50,000 $65.5 M $1.33 BStaff 2 35* Majority of disclosures are never licensed; many disclosures have one license; some disclosures have multiple licenses
  • 8. Stanford OTL: The Upside • In FY09-10, $65.5 million in royalties 60Royalty ($ millions) • From 1970 through 2010, 40 ~$1.33 billion cumulative royalties 20 • Typically, 10 to 15 years may elapse between initial 0 invention disclosure and any FY69-70 FY76-77 FY83-84 FY90-91 FY97-98 FY04-05 significant royalties Fiscal Year
  • 9. OTL: Looking Closely at Royalties 350 • In FY09-10, $65.5 million from 300 553 disclosures – 32 out of 553 disclosures 250 generated over $100,000 each# of Disclosures 200 – 2 out of 32 generated over $1 million each 150 • From 1970 through 2010 100 – 66 inventions generated 50 $1 million or more – 3 out of 8000 is BIG WINNER 0 FY05-06 FY07-08 FY09-10 • Royalties from large portfolio of Fiscal Year inventions less than $10K $10K - $100K $100K - $1M $1M - $10M greater than $10 M
  • 10. OTL: Conversion Numbers ~ 50% of disclosures are filed as patent applications some disclosures potentially licensable as ~8-9 disclosures copyright or biological materialsreceived per week 20 - 25% of disclosures, including those patented, are licensed
  • 11. OTL: Revenue vs. Expenses • OTL is self-supporting $12,000 – 15% of revenue > operating expenses $10,000 • Operating budget of ~$5.0 $8,000 million/year($ thousands) $6,000 • Patent expenses of ~$7.1 million/year $4,000 • OTL has given ~$45.2 million to $2,000 Research Incentive Fund administered by Dean of Research $0 FY69-70 FY76-77 FY83-84 FY90-91 FY97-98 FY04-05 • OTL has given ~$14.4 million to the Fiscal Year Research & Graduate Fellowship Fund 15% of Revenue Operating Expense
  • 12. OTL: Equity from Licenses 20 • Stanford’s philosophy – Equity is one component of a whole financial package – Historically, most income is# of Licenses involving Equity 15 generated from earned royalties (~$965 M vs. ~$365 M) 10 – Equity is liquidated soon after IPO – We can’t hold equity if licensee conducts clinical trials here 5 • Equity from licenses 0 – ~190 companies cumulative FY91-92 FY96-97 FY01-02 FY06-07 – ~105 companies currently Fiscal Year – Equity liquidated to date ~$365.5 million
  • 13. Incentivizing Research Commercialization inside the University Distribution of Royalties inside Stanford University (1970-2010)
  • 14. Proper Selection of Research Focus Areas for IntellectualContent – and Commercialization Potential - is Essential
  • 15. Research @ Stanford $1.15Bn out of $3.8Bn Annual BudgetThe “business model” of Stanford University, briefly summarized + an additional $189Mn in industry-sponsored research during FY2010
  • 16. Its All About the Research …
  • 17. Poor Selection of University Research Focus Areas by Professors• A major determinant of university IP production and commercialization strength• Professors in Europe often choose research topics based on their own local knowledge and networks – Small, local networks – out of date with latest development in the West – Do not survey research programs in US, Japan, UK, Germany, Finland • www.nsf.gov, www.nih.gov• Result: – Research areas that duplicate research in US, elsewhere – Research topics that are out-of-date and old – Research themes with relatively little commercialization potential• Important role for national STI agencies to establish national research roadmaps, priorities and areas of interest as a guide to universities
  • 18. Key Questions I• University TTOs: – What are the most effective models here? – Where do Baltic Region universities stand here in comparison to other European universities?• What are current models of university entrepreneurship education? – How effective are these programs? – What is current thinking/practice in Estonia/Baltics here?• Current bottlenecks in university-industry cooperation in Estonia/Baltic Region; successful examples, future benefits• How can Baltic Region universities replicate the successes of the student-led Aalto Entrepreneurship Society?
  • 19. Key Questions II• EU FP7 research project outcomes – How much IP is generated? – How much of FP7 results are commercialized? Spin-outs, etc• Selection of university research focus areas by professors as a major determinant of Baltic university IP production: – How is this done today, is this approach effective, what can be improved here?• What institutional changes are required at Baltic Region universities? – University reform as an unaddressed issue in Baltic Region national innovation agendas
  • 20. Dr. Matthias Hölling Spin-Off Program ETH Transfer, Zurich
  • 21. KTT between Academia and Private Sector – Core Relationships Graduates Contractually bound Partners in the Publications, Private Sector Congresses, Partnerships Research Exchange Programs, Education etc. scientific Private Sector excellence Currently unused research results & resources Research Core of the Technology Tansfer Academia Activities Adapted from: Andreas Steiner, Marina de Senarclens, UWS 2004June 7, 2011 ETH transfer – Linking Science and Business - Matthias Hölling 25
  • 22. Tasks in the Tech Transfer Business Business Development Acquisition of new projects Licensing Sale of products and services Negotiation Coordination with researchers License contracts Spin-off Support Consulting for researchers License controlling and admin. Management of Spin-off Process ... to Spin-offs ... without research project Renting of rooms Know-How, ... with research project Inventions, LicensesProtection of IP Copyrights Funding,Consulting for Project ContractsresearchersEvaluation of inventions ServicesPatenting Consulting for researchers Admin. support / controlling Internal Project Management & Support Negotiating & drafting contracts Personnel, Commun., Legal, etc. Industry Project June 7, 2011 ETH transfer – Linking Science and Business - Matthias Hölling 26
  • 23. The “Endowment” from As basis for aa University (ETH Zurich) successful company Faculty (ETH 415 Professors) Staff (6’300 FTE) Students (16’342) Excellence in research (21 Nobel Prizes) Good Ideas Publications (over 5’000 referred publications) Collaborations with industrial partners (>550 in 2010) Good People International collaborations Market Insights Budget for research and IP protection Functional technology transfer  Clear IP assignments  IP protection, invention disclosures  Licensing Track record from existing spin-offs (215)June 7, 2011 ETH transfer – Linking Science and Business - Matthias Hölling 27
  • 24. Spin-Off Definition Conditions for ETH Spin-Off:  ETH technology, Know-how or SW  Founders are ETH students, employees, or alumni … and  The business idea and plan are sound and sustainable  The team demonstrates entrepreneurial skills A private company of ETH employees or graduates that commercializes products or services based on technologies developed at ETH Zurich.June 7, 2011 ETH transfer – Linking Science and Business - Matthias Hölling 28
  • 25. ETH Zurich Spinoff Support Review of business idea / plan and help with incorporation Pioneer’s Grant  “proof of concept” funding for prospective founders Licensing of intellectual property (IP): patents, software, know-how, etc.  Preferred licensee Renting of rooms and infrastructure  under preferred conditions  up to 2 (+1) years (if available) Consulting & Coaching  Business Plan, Business Management, Sales, Negotiation, etc. Link to seed money, BA’s and VC’s  Venture Incubator, others Contacts to training, coaching, media, PR, etc. Label „Spin-off Unternehmen der ETH Zürich“June 7, 2011 ETH transfer – Linking Science and Business - Matthias Hölling 29
  • 26. The Spinoff Innovation Value Chain And Support Structures Available to our Spin-offs PoC, Research Pilot, Prototyp Product Development Preparation Foundation Growth MaturityInternal *ETH Zurich directly involvedSupportStimulation /Training /Coaching /Collaboration Kommission für Technologie und Innovation KTIInfrastructureFinancing SlElClA Swiss Private Equity & Corporate Finance June 7, 2011 ETH transfer – Linking Science and Business - Matthias Hölling 30
  • 27. Antii YlimutkaAalto Entrepreneurship Society/Aalto Venture Garage Aalto University, Helsinki
  • 28. www.aaltoes.com facebook.com/aaltoes twitter.com/aaltoes
  • 29. How it all began? Fall 2008 • MIT • Bengt Holmström • Less talk, more action Rolemodels: • Silicon Valley • Stanford • BASES
  • 30. The CommunityA community of over 5000students, researchers, alumni &entrepreneurs AES team of 40 entrepreneurs, Students & researchers 6 Board Members Startups http://www.aaltoes.com http://facebook.aaltoes.com
  • 31. CultureStarting upFounders
  • 32. Aalto Venture GarageAn oldindustrial hallconqueredand renovatedinto a co-workingspace bystudents
  • 33. Suomi hyvinvoinnin jälkeenThe biggest panel discussion so far about rebooting the Finnish economy focusing onentrepreneurship. Jorma Ollila/Nokia, Shell Petteri Koponen/Jaiku, Lifeline Vtures Risto Siilasmaa/F-Secure Wili Miettinen/Hybrid, Microtask Björn Wahlroos/Sampo & Nordea Tina Aspiala/Eat.fi
  • 34. Next up…
  • 35. Antti Ylimutka +358 (0) 40 7268383antti.ylimutka@aaltoes.com Twitter: @andynosebone Skype: andynosebone
  • 36. Alar KolkTallinn University of Technology Tallinn, Estonia
  • 37. Innovation 1918 - 2018Entrepreneural University For Science Alar Kolk Open Business Model & Internationalisation!
  • 38. Why universitiesneed to found spin-offs?
  • 39. The most prominent spin-offs and inventors? ...academy dropouts!!!
  • 40. We teach our students that start-up is not cool!Students’ future career aspirations , GUESS 2008
  • 41. Students value the innovation services but our universities do not deliver! The use of the university services , GUESS 2008
  • 42. iTUT iTUT – innovative and international Tallinn University of Technology 2011 - 2015international + innovation
  • 43. iTUT key topics:How to recruit our professors? How to recruit our students? How to make money? If you can’t explain it simply, you don’t understand it well enough. – Albert Einstein
  • 44. Integration & Balance! ScienceTeaching Innovation
  • 45. MeKTor y!Modern Estonian KnowledgeTransfer Organisation for You!  Interdisciplinary platform  Attracting international students  Integration of study and practice
  • 46. Research Problem ApplicationsOriented Research Oriented Research Science Quality Innovation $
  • 47. iTUT value chain... Ideas DevelopTechnology MeKTory Test iTUTech Growth NorTic ProtoFond Tehnopolis TUT International Mobile Media …creates value for professors, students and companies – enhances our ecosystem!
  • 48. Spin-off Ecosystem
  • 49. Spin-off Ecosystem A spin-off ecosystem is a self-organising platform aimed at creating a entrepreneural environment for networked organisations that supports the cooperation, the knowledge sharing, the development of open and adaptive technologies and evolutionary business models.
  • 50. Spin-off Ecosystem People Investors Legal Branding Coaching Shareholder Customers Business planRequierements Personal network Patents Exclusive license Institute IP Know-how Publications Software Network Valuation Professors Growth Professors Management Universities Capital How much? Pre-moneyInvestors For what? For what? Deliver innovation services and develop tools in collaboration with you partners!!!
  • 51. vs
  • 52. Dr. Erik PuuraInstitute of Technology University of Tartu Tartu, Estonia
  • 53. Some aspects of university – industry collaboration Erik Puura Director of the Institute of Technology Head of industrial relations and innovation
  • 54. We are participating in the informal network ofthe university knowledge transfer managers calledUPPSALA ROUND TABLE• University of Uppsala• University of Gröningen• University of Helsinki• University of Linköping• University of TartuUniversity-industry collaboration methods and outcomes areoften discussed
  • 55. We have structured university-industry relations into4 activities:• PUSH: we offer what the university has already producedor is capable to provide (IP, knowhow, services, competence)• PULL: we visit the companies without knowing exactly whatthey need; the outcome can be very surprising• STRATEGIC PARTNERSHIP: many activities, incl informalmeetings• OPEN KNOWLEDGE TRANSFER: using media channels
  • 56. OPEN KNOWLEDGE TRANSFER: using media channels including our own channel
  • 57. PULL: we visit the companies without knowing exactly whatthey need; the outcome can be very surprising• the experts have outstanding communication/sellingcapabilities, not necessarily science/technology background• the first contract may be small and irrelevant for the university,even some help with project development (for SME-s)• the offer includes project preparation for external funding
  • 58. PUSH: we offer what the university has already producedor is capable to provide (IP, knowhow, services, competence)• the experts have science/technology background• the offer includes project development and external funding application preparation (if necessary)• new method: open doors day for entrepreneurs every year
  • 59. ON THE ROLE OF SCIENCE PARKS IN ESTONIAThe classical schemeRESEARCHERS MAKE AN INVENTIONTTO HELPS TO DEVELOP A COMPANYSCIENCE PARK HELPS WITH INCUBATIONis realised not so oftenScience Park in the university town uses human capital,wide knowledge, competences, creative atmosphere
  • 60. TIME USE, ACTIVITIES AND RESULTS OF A RESEARCHER STUDENTS TOP SPECIALIST IN COMPANIES, GOVERNMENT ETC TEACHING 15 AUTHOR’S 10 GRADUATES RIGHTS FUNDAMENTAL RESEARCH WRITING TEACHING MATERIALS WRITING NEW 5 PhD STUDENTS 25 PROJECT PROPOSALS PUBLICATIONS TEACHING APPLIED RESEARCH MATERIALS PROJECTS RESEARCHER 15 2 AN IDEA WITH COMMERCIALISATION POTENTIAL ADMINISTRATION AND 13 DEVELOPMENT CONSULTATIONS ANALYSIS MANAGEMENT 6 ? ? 4 PATENT COMMISSIONS SPIN-OFF COUNCILS DEVELOPMENT LICENCE PROJECTS 5 Time use - 100 alltogether © Erik Puura
  • 61. SOME FINAL REMARKSThe discussion, if TTO is needed or not, is nonsense;but TTO has to be flexible and provide customer-orientatedservicesThe discussion, if researchers need to do basic or appiledscience, is nonsense – if ever possible, one should do bothProtecting IP is just like brushing teeth. You do not do itonly because you want to get rich.But also you do not brush your teeth 6 hours per day.Knowledge is the only resource, use of which increases itsreserves THANK YOU
  • 62. University Research: Spin-outs and Spin-offs• Dr. Matthias Hölling, Spin-Off Program, ETH Transfer, Zurich• Antii Ylimutka, Aalto Entrepreneurship Society/Aalto Venture Garage, Aalto University, Helsinki• Alar Kolk, Tallinn University of Technology, Tallinn• Dr. Erik Puura, Director, Institute of Technology, University of Tartu, Tartu• Moderator: – Dr. Burton Lee PhD MBA, European Entrepreneurship & Innovation, Stanford University, Palo Alto
  • 63. Working in Silicon Valley, Europe, Latin America and Washington DC• Senior financial, technical and strategy advisory services for global technology innovation organizations• Professional Services – Technology startup and growth companies • Interim CXO and Advisory Board roles • Expert guidance & decision-making at the interface between market/customers, technology and finance • Business development – industrial and government • Business plan preparation/research/review; Government Grant proposal preparation/review • Coaching and mentoring of CEOs and other CXO-level managers • Assistance with government regulatory and policy agencies – Angel, venture capital and private equity Investors • Fund strategy, team selection and market positioning • Due diligence: technical, financial, strategy and business models – Public and non-profit R&D laboratories • Technology transfer & partnerships; venturing and spin-out of companies; strategy and business development; grant applications – Research universities • Innovation-related models, policies and practices • Technology transfer and licensing; industry partnerships and relations; development and strategy; grant applications – National and regional government agencies • Innovation policy formulation, analysis and review; cluster development strategy; economic impact studies • Science & technology policy formulation, analysis & review: space, aviation, nanotechnology, software/AI/robotics, manufacturing• Selected recent clients – US/European technology startup companies – alternative energy, robotics/AI, software, Internet, nanotech – Venture and private equity funds – aerospace, nanotechnology, ICT, computing, advanced materials, clean tech – Office of the Prime Minister, Ireland; European Commission; National Science Foundation; NASA, National Academies• Dr. Burton Lee PhD MBA, Managing Director – Contact: Burton.Lee@innovarium.net Based in Palo Alto, CA near Stanford University – Bio/References: LinkedIn Profile – Lecturer, European Entrepreneurship & Innovation, Stanford School of Engineering Copyright 2011 Burton H. Lee and June 4 2011 68 Innovarium Ventures