Description of commercialization process, analytic framework for evaluating relative university success -- separating "good" from "big" -- and recommendations for creating an effective organization.

1. Building an Effective
University Technology
U i it T h l
Commercialization
Organization
Jack Brittain, PhD
Pierre Lassonde Presidential Chair
Professor of Management
P f fM t
University of Utah
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2. Commercialization Activity Flow
College A
Center I
College B
Center II Licenses to
College C Existing
Companies
College D Disclosures
Center III & Patents
College E
Center Licenses to
College F IV
Start‐up
Companies
College G
College G
Center V
College H
Papers Patents Products
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3. Disclosures
700
600
CalTech
500
sclosures
MIT
400 Disclosures
umber of Dis
Predicted Disclosures
300 Top 50 Predicted
Goal 1 disclosure/$1 million
Nu
200
100
0
$0 $200 $400 $600 $800 $1,000 $1,200
Millions of Federal Research Dollars
(scatter plot is 80 selected reference institutions, including top 50, 2009 AUTM)
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4. Input –Outputs
(averages are red, goals are green; middle horizontal is “good,” top and bottom of red is below average)
Licenses Goal 35/$100 million Startup Goal 5/$100 million
Licenses Goal 37.5% of Disclosures Startup Goal 10% of Disclosures
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5. Commercialization Effectiveness*
250.000
Cleveland
Clinic
High Disclosure/
/ $100 Million
Low Conversion
Low Conversion High Disclosure/
High Disclosure/
200.000
in Federal Research
High Conversion
150.000 Mayo
y
Disclosures /
Clinic
Cal Tech
100.000
CMU
50.000
MIT
Low Disclosure/
Low Disclosure/ Low Disclosure/
/
Low Conversion High Conversion
0.000
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00
Start‐ups / $100 million in Federal Research
Jack Brittain * Association of University Technology Managers (AUTM) Annual Surveys, 2007-2011
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6. Typical University Challenges
Typical University Challenges
• Disclosure rate is low. Why?
– Operational issues? Probably
Operational issues? Probably.
– Culture issues? Probably.
• Conversion rate is low, licenses and startups.
Why?
– External engagement? Internal focus in office?
– 90% of why the revenue numbers are average
90% of why the revenue numbers are average.
• Start‐ups rate is partly disclosure rate issue
– Faculty engagement matters, problem is likely more
y g g ,p y
than just disclosure problem
– Program coordination matters: align efforts
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7. Technology Value Curve
Spinoff Value
Spinoff Value
Generation
• Prototyping
• Incorporation
Where Universities •LLogo/website
/ b it
Traditionally Add Value
• Corporate Secretary
• CFO Solutions
• Umbrella Insurance
•M k t
Market research
h
• Grants programs
PROOF OF COMMERCIAL MARKET
IDEA PROTOTYPE
CONCEPT LAUNCH EXPANSION
Commercialization Stage
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8. Spinoff Development
Spinoff Value Generation
Phase 1 Phase 2 Phase 3 Phase 4
Formation Business Operating Market
• Legal Formation • Business • Customers Entry
• Technology Model Testing • Marketing/
License • Product Product Sales Phase 5
• Product Validation • Investors • Strategic Long Term
Development • Product
Product • Key Managers
Key Managers Partnerships
P hi
• Logo, web development • Board of
Growth
• New Products
• Product grants Directors & New IP in
development • Angel & Seed • Bank Credit Development
grants Investors
COMMERCIAL MARKET
PROTOTYPE
LAUNCH EXPANSION
Commercialization Stage
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9. Small-Light-Fast
Small Light Fast
Money
• Small amounts with immediate
milestones (4 months or less)
 money chases success as milestones accumulate
• Li h regulation and administration
Light l ti d d i i t ti
 little administrative overhead in making awards
 University recommends, accountability is portfolio results
University recommends, accountability is portfolio results
• Fast decisions sustain technology development
momentum, facilitate continuity of effort
y
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10. Spinoff Development
Spinoff Value Generation
Phase 1 Phase 2 Phase 3 Phase 4
$1,000,000 Investment
Formation Business Seed Funds e g Kick Start
Operating
Angels & Seed Funds, e.g. Kick Start
Angels & Market
• Legal Formation • Business Plan • Customers Entry Total Potential
• Technology • Product Testing Startup Funding
• Marketing/
License Up to $1.2 Million Product
Validation Sales Phase 5
• Product Federal SBIR/STTR• Investors
• Product $2,455,000
• Strategic Long Term
Development development • Key Managers
development Key Managers ($1,445,000 is
($1 445 000 is
Partnerships
P hi
• Logo, web grants
$50,000 External • Board of
Growth
Grant Funding)
• New Products
• Product Technology Development
• Angel & Seed Directors &
development Grants (4 times)
Investors • Bank Credit IP in
grants $25,000 Foundation development
p
$5,000 Technology Commercialization
T h l C i li i
Micro Grant Grant (2 times)
COMMERCIAL MARKET
PROTOTYPE
LAUNCH EXPANSION
Commercialization Stage
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11. Utah Experience:
Grants Facilitated Investment
$600,000,000
$500,000,000
$400,000,000
$300,000,000
$200,000,000
$100,000,000
$0
2005 2006 2007 2008 2009 2010 2011 2012
Cumulative Grants Funding Cumulative Investment Funding
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12. Utah Experience:
Return on I
R t Investment
t t
$1,600,000,000
$1,400,000,000
$1 400 000 000
$1,200,000,000
$1,000,000,000
$1 000 000 000
$800,000,000
$600,000,000
$600 000 000
$400,000,000
$200,000,000
$200 000 000
$0
2005 2006 2007 2008 2009 2010 2011 2012
Cumulative Grants Funding Cumulative Investment Funding Value Private Companies
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13. Results
• Spanning Valley of Death
Spanning Valley of Death
• The Gully of Inconvenience
• Le era e in estor dollars
Leverage investor dollars
• Community engagement
• Entrepreneurs In Residence
• Commercialization Advisory Board
and Company Collaborations
and Company Collaborations
• University participates in equity upside
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14. Universities and the
Innovation Ecosystem
“Universities do not get enough credit for
the fact that as players in our innovation
ecosystem, they’re willing to gamble on
cash-strapped startups. At the end of the
day, who else is offering to pick up the
tab? … Warts and all, universities remain
willing to pay patent costs to support
expensive and increasingly sophisticated
IP strategies for startups who will likely
never b able to pay them back.”
be bl t th b k ”
- Melba Kurman, Triple Helix Blog, 25 Feb 2011
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15. Financial Returns
College A Center I
College B
Licenses to Industry
Existing
g Research
Companies
College C
College D Center II
Disclosures
& Patents License Royalty
Income Income
College E
College F
Licenses to
Start‐up Equity
College G
College G Companies
Returns
R t
College H Center III
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16. Enriches Research
• Translation process
generates questions
generates questions
• Creates new funding
opportunities
– Commercial sponsors tend
to be repeat customers
– Less than Federal, but can be
stable and grow steadily
stable and grow steadily
• Work with faculty who
want to be involved
– Does not matter if faculty opt out
– Faculty success generates interest
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17. Total Mission Integration
• Educational programs > 2600 students
 Defining educational experience
Defining educational experience
 Huge positive for faculty
• Donor gifts over $80 million
g $
 Lassonde Center/Institute
 Sorenson Discovery Center
AAnnual sponsorships over $1 million
l hi $1 illi
• University Venture Fund
 manages $18.5 million in Fund I
manages $18.5 million in Fund I
 Fund II target is $50 million
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18. Utah Transformed Operation
• 2004 “Technology Prevention Organization”
• Throwing technologies over the wall
Throwing technologies over the wall
“hoping the coyotes will raise them”
• Bottom half of TTOs, ranked 96th
2008 Sugar Bowl Trophy
• 2008 Tied MIT #1 AUTM survey for
number of technology spinoffs
• 2009 and 2010 #1
• 2011 #2, MIT #1
• FY 2006 to present:
FY 2006 to present:
• 1,117 disclosures, 456 executed agreements
• 388 new inventors
• 256 issued patents
Fortress Ruins • 142 start‐up companies
• $ g y y
over $200 million licensing and royalty revenues
• over $300 million commercial‐sponsored research
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19. Tech Ventures Team/Process
Glenn Prestwich >$1.2 million revenue >$100 million
Presidential Professor
Presidential Special Assistant Software Dev Center Seed Funds
Entrepreneurial Faculty Scholars Ron Weiss, MD Medical Accelerator • KickStart
retired ARUP CEO
retired ARUP CEO Energy Comm. Center
Energy Comm Center
• UpStart
≈420 faculty Faculty Outreach Venture Bench
• Lineagen
15% total faculty 5‐8 faculty case load • Vendice
Troy D’Ambrosio
y
• Navigen
Seasoned Entrepreneur Doug Lloyd/David Dolan
l d/ d l • Founder Fund
d d
Serial Entrepreneurs
Raised Capital > $600 million
Entrepreneur in Residence
• UVF
Director of Education Programs
> 100 business people
> 2600 students
Bryan Ritchie, Director and Associate VP
25 fulltime professionals + 30 student interns
Research Technology Commercialization/Commercial Research
$300 million 300 “Inventions” 120 Potential Licenses
federal research
Commercialization 30 Potential Companies
Company
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20. Utah Inventors, Startups, & Revenue
Faculty Inventors Revenues
$90,000,000
180
$80,000,000
160
$70,000,000
140
$60,000,000
120
$50,000,000
100
$40,000,000
80
$30,000,000
60
$20,000,000
$20 000 000
40
$10,000,000
20
$0
0
FY FY FY FY FY FY FY FY
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 2004 2005 2006 2007 2008 2009 2010 2011
Repeat Inventors New Inventors
Commercial Research Commercial Clinical Research Licensing
Start-ups
25
20
15
10
5
0
1970
1
1971
1
1972
1
1973
1
1974
1
1975
1
1976
1
1977
1
1978
1
1979
1
1980
1
1981
1
1982
1
1983
1
1984
1
1985
1
1986
1
1987
1
1988
1
1989
1
1990
1
1991
1
1992
1
1993
1
1994
1
1995
1
1996
1
1997
1
1998
1
1999
1
2000
2
2001
2
2002
2
2003
2
2004
2
2005
2
2006
2
2007
2
2008
2
2009
2
2010
2
2011
2
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21. Research and Innovation
Dr. Geoffrey Nicholson
inventor of the Post‐It™:
“Research is the
Research is the Innovation is the
Innovation is the
transformation of money transformation of knowledge
into knowledge. into money.”
As innovators, universities are unique in their
dedication to reinvesting innovation returns in
knowledge creation and dissemination
dissemination.
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22. Supporting Research Impact
• Leverage/OPM
– Grants
– Donors
– Effort
• Fund Critical Paths
Fund Critical Paths
– Monitor milestones
– Do not fund “no results”
– Post performance funding:
money chases success
• Outcomes depend on shots on goal
p g
– control strangles speed and momentum
– place small bets with immediate milestones
• C it l f
Capital formation is about outcomes
ti i b t t
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23. Changes Utah Made
g
• Total Mission Integration
– Integrated student programs enhance University, engage faculty
g p g y, g g y
– Industry sponsored research largest contribution to resources
• Cost recovery to investment model
– Cost recovery is inevitably a failure
– Investment logic produced tangible economic returns over long term
– Changed the nature of our work to the positive
g p
• Programs mitigate early stage risk
– Provide leverage for investors
g
– Platform for community engagement
– Encouraged capital formation
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24. Path to Excellence
1. Reinvent: Prepare to succeed (8‐12 months)
a) O
) Operational revisions
i l ii
b) Faculty and departmental outreach
2. Motivate: Faculty engagement (month 12+)
2 Motivate: Faculty engagement (month 12+)
a) Launch entrepreneurial faculty scholars
b) Leadership engagement President to Deans
Leadership engagement, President to Deans
3. Lead: implement coordination for all innovation
and entrepreneurship activities (ongoing)
p p ( g g)
a) Depends on trust of motive
b) Ongoing investments in program innovation
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