Fiona Murray Role Of Universityin Entrepreneurial Ecosystem


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Fiona Murray Role Of Universityin Entrepreneurial Ecosystem

  1. 1. The Role Of The University In Creating An agement Entrepreneurial Ecosystem loan Scho of Mana Lessons From MIT ool Professor Fiona Murray Sarofim Family Career Development Professor MIT Sl Associate Director MIT Entrepreneurship Center Co-Head Technological Entrepreneurship, Innovation & Strategic Management Group 1
  2. 2. Enlightenment Recognized “Useful” Science & was Key to Foundation Of Industrial Revolution agement "The business …of the Royal Society is to improve the knowledge of natural things, and all useful Art, Manufactures, Mechanick practices, loan Scho of Mana Engynes, Engynes and inventions by Experiments... " Experiments wrote Robert Hooke in 1663 (Lyons 1944 pp. 41- ool 42) ) MIT Sl 2 2
  3. 3. By Nineteenth Century – Tight But Informal Relationship Between Universities & Industry R l ti hi B t U i iti I d t agement Establishing industry-relevant University of Delaware & DuPont disciplines University of North Carolina & tobacco processing p g loan Scho of Mana MIT establishing chemical Education- future scientists engineering education for industrial research labs & Germany (& UK) universities role ool for entrepreneurship in the founding of the chemical industry Ideas - Individual faculty Merck’s consulting relationships giving advice, exchange of i i d i h f to professors at University of MIT Sl views & consulting Pennsylvania 3 3
  4. 4. Gradual decoupling of universities (especially in Europe) from industry – emergence of “Ivory Towers” Ivory Towers agement WHAT GREAT SCIENTIFIC MYSTERY CRIES FOR MY ATTENTION TODAY?..... TODAY? loan Scho of Mana MIT Sl ool 4 4
  5. 5. Connection Between Scientific Knowledge & Economy Reaffirmed By Vannevar Bush In Post-WWII US y …….But On New Terms “Advances in science when put to practical use mean agement more jobs, higher wages, shorter hours, more abundant crops, more leisure for recreation, for study, for learning how to live without the deadening drudgery which has g g y loan Scho of Mana been the burden of the common man for ages past…But to achieve these objectives … the flow of new scientific knowledge must be both continuous and ool substantial” wrote Bush in “Science: The Endless Frontier” 1945 MIT Sl Articulated as a commitment to “basic” scientific knowledge Separation of knowledge production from economic growth 5 5
  6. 6. Organized with a Clear Separation Of Knowledge Production “Basic” R “B i ” Research h Work for fun, W kf f agement freedom & love of Universities knowledge loan Scho of Mana Unclear boundary – firms typically “waiting” to pick-up people & ideas from ool universities Firms Work for $$ & MIT Sl desire to do something useful “Applied” Research & Commercialization 6 6
  7. 7. But in 1970s/1980s (US) impatience with perceived weak impact of universities p US CCongressional d b t on effective use of i l debates ff ti f agement Federal funds – studies suggested small % ideas used by firms loan Scho of Mana Pressure on US university funding Institutional confusion over ownership of patents ool Re-conceptualized role of university as source of new ideas, newly educated people - an f id l d t d l MIT Sl engine for economy. 7 7
  8. 8. Implemented via the 1980 Bayh-Dole Act Ownership of patents generated in a university using Federal agement funding => universities Burden on universities to ensure the commercialization of these loan Scho of Mana patents (of all ideas) – structured via licensing arrangements Requirement to favor small, entrepreneurial firms MIT Sl ool 8 8
  9. 9. What policy makers really wanted was a shift towards “Pasteur’s Quadrant”… Pasteur s Quadrant … agement Pure science - Science with edom & wledge universities useful focus Bohr Pasteur focus on new know loan Scho of Mana Work for fun & free ool n r Application-oriented A li i i d Random research research - firms neither basic nor applied? Edison MIT Sl Work for $ & focus on useful knowledge Adapted from Donald Stokes, “Pasteur’s Quadrant” (1997) 9 9
  10. 10. What they got instead was a narrow focus on patenting t ti MIT Sl ool agement loan Scho of Mana 10 10
  11. 11. U.S. University Response to the Bayh-Dole Act MIT Sl ool agement loan Scho of Mana About 10,000 patents granted per year to US universities on about US$30billion per year research funding ~ $3M/patent! 11 11
  12. 12. Recent recognition that Patenting & Licensing likely to lik l t provide small % of univ research $ ( 4%) id ll f i h (~4%) MIT among the most successful licensing operation th t f l li i ti agement But in 2006 MIT received only $30M in licensing revenues on a research base of $1.1B (95% Federal $) loan Scho of Mana Research base $1.1BN (2006) ool Invention Disclosures ~ 523 Patents filed ~ 321 (of which ~100 granted so far) Licenses executed ~ 121 Start-ups created ~ 23 (eight with equity) ~one MIT Sl per $ $50M in annual funding Office of 15 licensing professionals 12 12
  13. 13. Recognition of a highly complex (& “inefficient” process) ) agement Of 14 institutions in MA only 5 make more than US$1M loan Scho of Mana per year in licensing after costs. ool MA start-ups on an ongoing and long-run research base of about $3.5BN from MIT Sl Federal $ annually & running revenue of about $150M/yr 13 13
  14. 14. Reorientation toward university as locus of ideas & people (& money)….broader role in entrepreneurial l ) b d l i t i l ecosystem not on maximizing licensing revenue agement Funding loan Scho of Mana MIT Sl ool People Ideas 14 14
  15. 15. Ideas – Commercialization and licensing guided by faculty interests & maximizing impact on commercial world not revenues Faculty: P t ti F lt Patenting, commercialization & li i li ti licensing as way i agement to have an “impact”, excite students, create jobs, (& occasionally get rich!!) loan Scho of Mana University: Tech transfer is important for impact not as a dominant revenue stream (even at the large universities) ool TLO: Focused on efficient execution of licenses to allow for commercial outcomes and effective “bundling” of IP – seeking to avoid mistakes of 1990s e.g. Oncomouse MIT Sl 15 15
  16. 16. Ideas – Licensing to start-ups structured to allow for effective commercialization strategy agement loan Scho of Mana A123 – most recent successful MIT spinout to IPO Founded from idea from lab of Prof Yet-Min Chiang (Materials ool Science & Engineering) - new Li ion battery material Patented by MIT – Exclusive license from MIT to A123 in 2001 - minimum guaranteed payments of $50,000 per year MIT Sl – Single digit equity to university (sold on IPO) – with benefits shared 1/3:1/3:1/3 (worth $5.2M at IPO) – Founding faculty gains additional “founders equity” depending on role in company p y – Co-founders (and investors) were alumni…. 16 16
  17. 17. Analyzing entrepreneurial strength of MIT alumni & their i th i impact on the local entrepreneurial economy t th l l t i l agement Median Estimated Estimated Percent of Median Sales Total Total Sales Jobs Companies Employees ($Millions) Employees ($Millions) loan Scho of Mana More than 10,000 0.3% 15,000 1,523 1,339,361 1,389,075 ool 1,000- , 10,000 1.8% 1,927 308 1,043,932 235,532 Less than 97.9% 39 <1 900,001 226,671 1,000 , MIT Sl Total 100.0% 155 <1 3,283,294 1,851,278 Over 25,000 active MIT alumni companies (as of 2003) – scale & impact dramatically > direct tech transfer (which amount to <500 companies). Like tech transfer companies, impact focused on <5% of companies (which create over 90% jobs and sales) 17 17
  18. 18. Proportion of Founders from Three Selected Academic A A d i Areas of MITf (% all MIT alumni companies founded during the decade) agement loan Scho of Mana Decade of First Firm Founding 1950s 1960s 1970s 1980s 1990s ool EE & CS degrees 20.4 26.5 18.7 25.4 22.7 Life Sciences degrees 0.0 00 2.7 27 4.0 40 4.9 49 4.7 47 MIT Sl Management degrees 16.7 14.3 13.5 13.8 15.8 18 18
  19. 19. University Factors Important to Venture Founding* % Rating University Factors as Important in Venture Founding* (%) agement loan Scho of Mana Graduation Decade 1950s 1960s 1970s 1980s 1990s MIT’s Entrepreneurial Network 26 25 32 40 50 ool MIT Business Plan Competition 0 1 0 3 30 MIT Entrepreneurship MIT Sl Center C t 3 1 2 1 12 Technology licensing activities 1 0 2 4 11 *Survey respondents could check all relevant categories. 19 19
  20. 20. Amplifying MIT’s Internal Entrepreneurial Ecosystem MIT Sl ool agement loan Scho of Mana 20 20
  21. 21. Mentoring: Example of Coordination Across Ecosystem y Deshpande Entrepreneurship Venture Mentoring Center Center Service agement Name Catalyst Entrepreneur-in- Mentor Residence/Focus Area loan Scho of Mana Mentor-Team 1 to 1 1 to Many Many to 1 Ratio Time Frame Project Semester Indefinite ool Technology Founder Senior Exec Type of Mentor Commercialization Specialist Expertise Domain Generalist & Generalist MIT Sl Domain Teams Mentored Grantees (Faculty & Students Entire MIT Researchers) R h ) Community C it # of Mentors 30 5 100 21 21
  22. 22. MIT Entrepreneurship Center : To “educate” MIT men & women to be the next generation of successful entrepreneurs creating innovation-based new ventures worldwide. Courses b ilt upon “M C built “Mens et Manus”: tM ” Mentoring M t i : agement • Entrepreneurs-in-Residence • New Enterprises • Entrepreneurial Finance • External network • iTeams • Biomedical Strategy Networking : • Energy Ventures • Product Development loan Scho of Mana • CEO Receptions (Fall & Spring) • E-Lab • Human Side of New Ventures • Brown Bag Luncheons (Weekly) • G-Lab • Tech Innovation Principles • Web Site/Social Networks • Silicon Valley Study Tour Conferences : ool • MIT Venture Capital Conference (December) • MIT Energy Conference (March) • MIT Private Equity Symposium (April) Clubs include: • MIT Sales Conference (April) • $100K Entrepreneurship Competition • MIT Clean Energy Prize External Programs ( g (Exec Ed) : ) MIT Sl • MIT Energy Club • MIT Entrepreneurship Development Program (1 wk) • MIT Global Startup Workshop • MIT Innovation Club Thought Leadership : • MIT Sales Club • MIT Entrepreneurship Review • MIT Sloan Entrepreneurs &Execution Club • MIT VCPE Club • Faculty and Distinguished Guest Speaker Series 22 22
  23. 23. Matching people & ideas - i-Teams (15.371) – a semester –long class between Sloan & Engineering t l l b t Sl E i i DIGITAL PROGRAMMABLE  APERTURE LCD screen in which select pixels are  agement opened to capture varying  Shot  Shot  Shot  perspectives 1 2 3 “PROJECT” – real technology under development in MIT lab (typically with IP) loan Scho of Mana TEAM – mixed group of students (Sloan, Engineering, Science, Media Lab) ool ADVISORS – class faculty, a Catalyst (outside expert) & project PI & other members of the lab MIT Sl GOAL - Evaluate the commercial potential of your technology project. Define commercialization strategy - technology & market execution plan. BUILD – lasting network & expertise. 23 23
  24. 24. Conclusions: Enhancing a University’s E t E h i U i it ’ Entrepreneurial I i l Impact t agement Remove barriers to entrepreneurship from university rules IDEAS: Orient university licensing office away from licensing y g y g loan Scho of Mana revenue focus toward encouragement of new enterprises PEOPLE: Build internal entrepreneurship education programs, ool with integrated academic and practitioner faculty participants PEOPLE: Engage alumni in university ties with faculty & students. MIT Sl MONEY: If neighboring infrastructure is weak, university may need to supplemental “incubation” & $ TIES: C TIES Create active student business plan competitions, project t ti t d tb i l titi j t mentoring & other chances to match money, ideas & people 24 24
  25. 25. Entrepreneurial Impact: p p The Role of MIT agement or http://www kauffman org:80/newsroom/mit- loan Scho of Mana entrepreneurs.aspx ool With special thanks to Professor Edward Roberts for sharing his report results. MIT Sl 25 25