Collective Genius by University of Kentucky College of Communications & Information Studies

Collective Genius Innovation, Entrepreneurship, and the Commercialization of University Research

H. Dan Oâ&#x20AC;&#x2122;Hair, Dean College of Communications and Information Studies University of Kentucky July 2011

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Collective Genius Innovation, Entrepreneurship, and the Commercialization of University Research Analysis of Responses to a Request for Information (RFI) by the White House Office Of Science And Technology Policy and the National Economic Council

H. Dan Oâ&#x20AC;&#x2122;Hair, Dean College of Communications and Information Studies University of Kentucky July 2011

Table of Contents

Executive Summary

Background

Analysis

Critical Issues

Recommendations 21 Appendix A 27 Appendix B 35 Appendix C 39

Executive Summary The role that universities play in economic development has received substantial attention in recent years. As government budgets tighten, policymakers, as well as taxpayers, increasingly expect a positive return on investment from scarce public resources. Indeed, with the considerable investment that the federal government makes in grants and contracts to university researchers, it is understandable that policymakers are searching for ways to leverage higher returns from these investments. In 2009 the White House Office of Science and Technology Policy issued a Request for Information (RFI) asking for input into the issues of university commercialization, the valley-of-death, innovation and entrepreneurship, and proof of concept centers. A total of 205 individuals and organizations representing consortia, foundations, non-profits, proof of concept centers, private companies, and universities responded to the RFI in 2010. This report is an analysis of those responses and summarizes the input from the various respondents. A 5-stage, iterative process was employed for summarizing comments into a manageable set of common themes. The final analysis resulted in twelve categories to portray the data: Challenges, Collaboration, Communication, Ecosystem, Education, Entrepreneurship, Funding, Leadership, Interdisciplinarity, Proof of Concept, Risk, and Strategy. While the responses were varied and eclectic, one theme was conspicuous and ubiquitous—America’s research universities are squandering resources, talent, and economic opportunities by succumbing to the “valley of death,” or the inability to transform research into meaningful products and services. Alternative points of view were expressed and sharp lines of argument were evident in a majority of responses. One clear message was consistent among most—few regard the status quo as desirable. Most agree that the valley of death is alive and well, but not all sing with harmonizing chords. Some approaches lay the responsibility at the feet of the federal government with strong calls for additional funding of research programs targeted for universities and research laboratories. Others feel it is the local communities that should take greater interests in the research findings of universities and develop stronger partnerships that could bridge the valley. Still others support ideas that it is angel and VC investors who should step up to the plate and enrich university research with more early-stage funding as a way of incentivizing commercialized research. Many others lay the blame directly on universities and an archaic research culture. The report concludes with five recommendations that seek to invigorate the innovation and entrepreneurship processes at universities and to advocate for research commercialization. A predisposition in formulating the recommendations was for proactive strategies by universities instead of simply asking elected officials to improve funding in existing program or changing tax structures. Recommendations were prioritized into the following areas: (1) privileging transformational leadership, (2) cultivating strategic partnerships, (3) fostering entrepreneurial thinking, (4) nourishing innovation ecosystems, and (5) transforming university culture.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Background

America has a broken innovation ecosystem that does not efficiently create the right incentives or allocate enough resources to generate new ideas, develop those ideas with focused research, and turn them into businesses that can create good jobs. . . . America simply does not have an efficient system to take new ideas from government, academic, and private sector research labs and translate them into commercially viable products and businesses. -Gary Locke, Secretary, Department of Commerce The U.S. has most successful academic research system in the world supported by sophisticated and rigorous grant programs that are designed to generate the best research from the most qualified researchers. Unfortunately, there is no comparable infrastructure or expertise in place to maximize the economic exploitation of the research generated by our leading academic researchers. This explains why we as a nation have had such a difficult time in successfully commercializing our research findings. -James Hussey, NANO Inc.

Imagination, intelligence, and tenacity can transform a great idea into a thriving business or a global enterprise, but entrepreneurial success is a function of many factors—such as adequate financing, a good support structure, and of course favorable timing. In the churning world of small business, however, firms come and go as quickly as the Greek God of opportunity, Kairos, whose ephemeral presence offers a fleeting chance of success to those prepared to grasp it. There are many obstacles thinning the ranks of would-be entrepreneurs, but self-imposed unrealized potential—a business that never gets started because the would-be entrepreneur did not act on his or her idea—is the most insidious. While research confirms what common sense suggests, that the intellectual prowess found at the nation’s universities has tremendous innovation and commercialization potential,1 there is also a strong sense that much of this potential goes unrealized. What Thomas Edison famously said decades ago is equally true today, “the value of an idea lies in the using of it.” As the quotations above illustrate, serious concerns have been raised about the ability or willingness of American

research universities to push their research findings out into the marketplace. In September 2009, President Obama released his national innovation strategy; at the center of this initiative were two closely related goals-sustaining economic growth and creating quality jobs. Intrinsic to this strategy is capitalizing on basic research at U.S. research universities and the ensuing commercialization of research discoveries. Unfortunately, the commercialization of university research is a persistent challenge often referred to as “the valley of death.” By their very nature, university researchers are most talented in seeking answers to questions that are not necessarily practical or suitable for the end-user. This “valley” that separates viable research discoveries from reaching consumers, patients, and businesses costs the U.S. economy billions of dollars in unrealized economic valuation. The current administration has begun a set of initiatives to bridge the valley of death between university research and business. One such initiative was the issuance of a Request for Information (RFI) by the National Economic Council and the Office of Sci-

1 Jinyoung Kim and Gerald Marschke, How Much U.S. Technological Innovation Begins in Universities?, Federal Reserve Bank of Cleveland (April 2007): <http://www.clevelandfed.org/Research/Commentary/2007/041507.cfm>.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

ence and Technology Policy entitled “Commercialization of University Research” with the goal of facilitating a partnership with all stakeholders (including universities, companies, Federal research labs, entrepreneurs, investors, and nonprofits) to identify ways in which we can increase the economic impact of Federal investment in university R&D and the innovations being fostered in Federal and private proof of concept centers (POCCs). The RFI was published in the Federal Register on March 25, 2010 [Federal Register Volume 75, Number 57; Pages 1447614478] with a deadline of April 26, 2010. http://www.eda.gov/PDF/WH%20RFI%20Annou ncement.pdf The RFI was constructed to gather input and ideas for promoting the commercialization of federally funded research. The first section of the RFI focused on soliciting best practices for the commercialization of university research. The second section of the RFI turned it attention to Proof of Concept Centers and their ability to stimulate the commercialization of early-stage technologies by bridging the ``valley of death.'' Information obtained from responses to the RFI are expected to be used by the National Economic Council and the Office of Science and Technology Policy to shape the Administration's future policy on the commercialization of federally funded research.

RFI: Commercialization of University Research Part I: With Respect to University Research, Promising Practices and Successful Models What are some promising practices and successful models for fostering commercialization and diffusion of university research? What is the evidence that these approaches are successful? How could these promising practices be more widely adopted? Examples include, but are not limited to:

• Business plan competitions • Coursework, training programs, and experiential learning that give faculty and students the skills they need to become entrepreneurs • Programs that encourage multidisciplinary collaboration between faculty and students in different disciplines • Models for promoting open innovation and an intellectual property ``commons'' • University-industry collaborations that increase investment in pre-competitive research and development that is beyond the time horizon of any single firm • University participation in regional economic development initiatives and efforts to strengthen ``clusters'' Bootstrapping Innovation Ecosystems Some universities participate in regional innovation ``ecosystems'' with dense concentrations of venture and angel investors, experienced entrepreneurs and managers, and a mix of large and small firms. These universities also have faculty who have been involved in commercialization of research and entrepreneurship, and can serve as mentors and role models to faculty or students. How can universities and their external partners expand their ability to commercialize research in the absence of these favorable conditions?

Part II: With Respect to POCCs Underlying Conditions and Infrastructure • What underlying conditions are necessary to enhance the success of a POCC? How can regions with less significant angel and VC investment cultures support POCCs and start-up business activity? Can current POCC successes transfer to other regions and universities? • How important is active participation by strong local business community in a POCC?

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

• How can Federal agencies, research institutions, Federal researchers, and the

• How could such assistance also bolster State and local government programs?

private sector work together to foster more successful POCCs that accelerate commercialization into the marketplace? • In addition to Federal resources, what existing state, regional or local government funded resources or programs supplement the POCCs in bridging the ``valley of death''? Successful Practices • What are examples of successful practices? • Is there any evidence that indicates POCCs are an effective mechanism to foster local or regional economic development and job creation? • What lessons can be learned from other successful models such as technologybased economic development organizations that support POCCs? • Describe educational programs associated with POCCs that better prepare students to work in entrepreneurial environments? • At POCCs, what lessons have been learned regarding: Leadership and team composition, project selection, optimum scale of effort, importance of brick-andmortar facilities, geographic scope of participation, and multi-agency involvement? Other Questions • For those institutions with POCCs, how would you describe what you do and how you do it? • How can research and development assets supported by the Federal Government be leveraged to support POCCs, such as a multiagency, multi-disciplinary database of supported research?

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Analysis

So where does America stand relative to its position of five years ago when the Gathering Storm report was prepared? The unanimous view of the committee members participating in the preparation of this report is that our nation’s outlook has worsened. . . The Gathering Storm increasingly appears to be a Category 5. -Rising Above the Gathering Storm, Revisited: Rapidly Approaching Category 5

Responses to the RFI were placed on the U.S. Economic Development Administration’s website in a location entitled “Commercialization of University Research Request for Information (www.eda.gov/commrfi-responses). The 205 responses were published and I am assuming that this was close to the total number received. The responses were grouped into the following categorizations by the EDA: • Alliances (2) • Associations (3) • Consortium (3) • Foundations (2) • Government (6) • Private Individuals (21) • Institutions (3) • Non-profits (20) • National Science Foundation Engineering Research Centers (5) • National Science Foundation Industry/ University Cooperative Research Centers (2) • Proof of Concept Centers (10) • Private Companies (30) • Universities (98)

The author compiled a large database that included direct excerpts from most respondents. Some responses were quite biased—rants— and deemed unusable. Verbatim excerpts were taken from the responses and placed in a matrix that identified the author and the author’s company or institution (see Appendix D). Excerpts were identified and selected primarily through a focused set of criteria intended to capture (a) the essence of the response; (b) uniqueness from other responses; (c) emphasis on entrepreneurship and innovation; and (d) clear recommendations for furthering economic development. The data were cleaned for obvious errors and formatted in a consistent manner. The author re-read through the resulting data base (matrix) and identified additional errors not related to content. In all phases of the transcription process, verbatim original language was retained unless the language was incomprehensible. In order to reduce the large data set to a manageable level that allowed more sophisticated analysis, a proven qualitative analysis technique known as constant comparative analysis was employed with these data. Constant comparative analysis, based on grounded theory,2 argues for the inductive discovery of knowledge through the systematic analysis of the data. This ap-

2 Glaser, B. (1978). Theoretical sensitivity. Mill Valley: Sociology Press; Glaser, B., & Strauss, A. (2006). The discovery of grounded theory: Strategies for qualitative research. Chicago: Aldine. (Original work published 1967); Strauss, A. & Corbin, J. (1998). Basics of qualitative research: Techniques and procedures for developing grounded theory (2nd ed.). Thousand Oaks: Sage.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

proach stresses consistency, reproducibility, and generalizability, and is helpful for generating key concepts for large collections of data such as those found here. The reasons for using this approach are twofold: first, existing research in the areas of interest is controversial and therefore substantial research must be conducted before any hypothesis or conclusions are constructed; and second, the very nature of the phenomenon is often proprietary, consequently limiting access to the population and reducing the methodologies available for research. Consistent with Glaser and Straussâ&#x20AC;&#x2122; formulation of the constant comparative method process, four steps were taken in this analysis. First, key ideas were marked with a series of codes extracted from the text. Second, extracted codes were grouped into similar concepts. Third, concept categories (and labels) were formed from these concepts. These categories later became the basis for the creation of the recommendations. Fourth, continuous iterative coding was employed to reduce categories and refine elements within them. The experience of processing the data showed that constant comparative analysis is particularly useful for the examination of large corpora of data, such as the rich data produced by responses to the RFI. Initially, 112 independent themes evolved from the analysis (see Appendix C). The data appearing in the categories are almost entirely verbatim comments from the responses. Only minor stylistic and grammatical editing was applied to the comments. The reader will notice some level of redundancy and duplication as well as fragmentation and awkward phrasing due to maintaining the integrity of the verbatim responses. From those themes, 12 Critical Issues emerged that summarized the respondent data more succinctly. The following section presents those critical issues with implications drawn from data.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Critical Issues

“It has been the risk takers, the doers, the makers of things who have carried us up the long, rugged path toward prosperity and freedom.” -Hillary Rodham Clinton, United States Secretary of State "The human capital aspect of technology transfer is often undervalued, but it is a fact that the students our universities educate and the faculty who conduct our research are usually the most effective means through which translation and technology transfer occurs. For example, many of the most successful university-industry interactions are based on the education and training of students who have the specific skills to meet industry needs, or on relationships that top-notch faculty members have with particular companies. These interactions do not center on intellectual property (IP) at all. Therefore, as new models for commercialization are developed, an emphasis should be placed upon fostering new interactions, relationships, and linkages, both formal and informal, that help to facilitate these efforts. Education and training must also be considered to be major components of such models." -Joint Statement -- AAU, APLU, ACE, AAMC, CGR — May 2010

The following 12 categories were identified and categorized from the final data analysis: • Challenges • Collaboration • Communication • Ecosystem • Education • Entrepreneurship • Funding • Leadership • Interdisciplinary • Proof of Concept • Risk • Strategy Appendix C provides a method of gaining some perceptive on the assembly of Critical Issues from the large set of themes. In the following section, a more detailed narrative is provided for the categories and how they emerged from the data. Throughout the iterative analysis process described here, it became apparent that respon-

dents were relatively engaged in the areas of innovation, entrepreneurship, and commercialization of university research. Alternative points of view were expressed and sharp lines of argument were evident in a majority of responses. One clear message was consistent among most—few regard the status quo as desirable. Most agree that the valley of death is alive and well, but like most political issues a consensus was not reached for solutions to the problem. Some approaches lay the responsibility at the feet of the federal government with strong calls for additional funding of research programs targeted for universities and research laboratories. Other opinions focused on local communities hoping they would take greater interests in university research and develop strong innovation ecosystems. Still others argued that it is angel and VC investors who should step up to the plate and enrich university research with more early-stage funding as a way of incentivizing commercialized research. Many others lay the blame directly on universities and an archaic research culture.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Challenges From the conceptual standpoint, universities will have to show their capacity to cope with unpredictability, and, their ability to respond swiftly. In the past universities have changed, but they have done so gradually.3 Description: Challenges was one of the broadest categories and served as a useful gathering place for comments that tended toward the shortcomings in the system and culture and the pessimistic viewpoint on university research commercialization. One respondent cited a study by the Association of University Technology Managers (AUTM) that more than 20,000 new ideas for product and service innovations are generated from federallyfunded research each year, but only â&#x20AC;&#x153;25% of these ideas are licensed by companies for commercial development. 75% of new ideas perish at this stage.â&#x20AC;?4 That number drops to 10% of ideas actually being commercialized depending on who you cite.5 Respondents point to the culture and system that is in place that reinforces the valley of death. Research faculty do not perceive the inventive for them to remove their fundamental research hats and replace them with translational hats that move innovations into commercialization. Lack of incentives and reward structures are cited as barriers to changing the culture, as is the absence of a potent and visible infrastructure than stands as a tower of support as one ventures into areas undefined and risky. Implications: One issue that is inescapable is the near consensus that the valley of death looms as a substantial impediment to economic growth, especially of new start-up businesses. Three caveats should be considered when stating such claims. First,

not all university research is suitable for translational missions or commercialization. A great deal of basic research at universities does a good job supporting applied research efforts. Second, not all commercialized inventions from research are successful in the marketplace. They were weak ideas to start with and no level of entrepreneurship is going to produce a silk purse from a sowâ&#x20AC;&#x2122;s ear. Third, moving a university culture from one where basic research whose products found in refereed journal articles are considered the gold standard will resist change with strong will. New metrics for assessing research that brings into view commercialized ventures as worthy pieces of the academic portfolio is an obvious means of promoting innovation and entrepreneurship. This type of culture change will require both top-down and lateral support.

Collaboration The smart course of action is to view them (universities) as being within the sphere of new opportunities, rather than to position themselves reactively against them. An example of this is the requirement on universities to participate in regional development. Against this backdrop it is vital to create effective strategic alliances between universities, governments and industry. 6 Description: There was no shortage of opinions surrounding the need for better collaboration among the various stakeholders in the broader realm of research commercialization. Respondents suggested forums that would bring researchers and entrepreneurs together to share ideas and develop joint strategies. It was clear that many felt the need for university members to more frequently and extensively engage with private industry. In multiple instances, respondents recommended en-

3 Tello, M. J. (2011). The university in the twenty-first century: Challenges and uncertainties . In F. Tejerina (Ed.), The university: An illustrated history. New York: Overlook Duckworth.(p. 295) 4 (#48 Phyl Speser, Foresight Science & Technology) 5 (#201 WestCampInc., TimeWise Management System, and the National Center of Excellence). 6 (Soderlind, 2011, p. 306 title: Research institutes and knowledge transfer).

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

gaging with end users of the products or services that were being innovated. The idea was to get their thoughts on what the market would bear and modify upstream research accordingly. Universities should seek out faculty that are skilled at networking and relationship building and partner with them as university connections are made in local communities. In general, universities were encouraged to be much more active in local business communities. Since “place” matters, it is important to leverage local opportunities and assets that produce mutual benefits. One way of greater industry collaboration could come through advanced communications and virtual technologies. Open Collaboration Research Labs were suggested as venues for collaboration and one respondent thought that universities should pursue agreements with companies that foster “Open Innovation” programs. Virtual Incubators were suggested where universities can offer temporary office facilities, assistance with market research, strategy development, business plan development, and access to research support (such as Georgia Institute of Technology). A frequent recommendation was greater use of student engagement, especially with local business communities. Implications: There is an obvious need for boundary spanners within university ranks to connect inventors and industry. Universities have a unique opportunity to take leadership in this boundary spanning role for two reasons: (1) university members (faculty, staff and students) are generally well respected in their local communities. Community members appreciate efforts that demonstrate a connected relationship between town and gown. Leveraging this respect and transforming it into trusting relationships may be more easily facilitated by university members who reach out to the larger community; and (2) most students and many faculty members find intrinsic value in translating and applying their research in the real world. However, it is the researchers and students who

can make the research understandable and meaningful, not community members. Collaborative activities involving the community are timeexpensive and the net value is often questioned in the halls of academic buildings. Nevertheless, the investment made by university boundary spanners in these collaborative efforts can pay important dividends when innovation, entrepreneurship, and commercialization of research become priorities in a university context.

Communication What do all promising practices and successful models of technology transfer have in common? High-bandwidth feedback loops between the university and industry, promoted by fast, easy negotiations with technology transfer offices over intellectual property rights. 7 Description: While communication is also a broad category, the concerns and recommendations for more frequent and enhanced processes of communication were numerous throughout respondents’ comments. Several individuals called for better messaging that told the “innovation story” to key audiences such as policy makers, students, faculty, potential partners, and the American public. While face-to-face communication was deemed critical to partners and collaboration, similar to comments grouped in the “collaboration” category, respondents suggested technology as a means of communicating with distant but compatible audiences. Two other communication issues emerged from several respondents: Presentation skills and team science. Regardless of the context, respondents seemed to suggest a low tolerance for presentational abilities of those pitching ideas to angel investors or floating inventions in proof of concept meetings. Clear, concise, relevant, brief and audience-centered messages are expected in all contexts. The second area of team science or group communication stood out as a critical issue as well. On several

7 (#2)

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

occasions, respondents mentioned the lack of skills in team problem solving and in team management contexts. Implications: Multiple levels of communication worthy of attention were identified in the analysis. At the individual level, enhancing listening skills and more concise communication styles need to be developed among those members of the entrepreneurial team who will be interacting with the business sector. Second, innovation success seems highly dependent on emphasizing the team-building nature of entrepreneurial groups and insisting on group communication principles seems essential. Team leaders must be ever vigilant in promoting and modeling strong communication skills. Third, a communication campaign should be developed that promotes the innovation and entrepreneurship goals and plans of the university. Key audiences should be identified, messages targeted, and channels selected for carrying the messages that promote university research in all of the most appropriate contexts.

Ecosystem A university forms an ideal nexus for innovation ecosystems: with its faculty and students generating groundbreaking ideas, its teaching mission, strong brand and links with alumni, commitment to the local community, and ability to serve as a neutral convener of partnerships with industry.8 Description: One respondent commented, “Public-Private partnerships that connect universities, national laboratories, and industry are a key strategy. Those partnerships should recognize “the power of place” or location and involve regions and local government. Transformational change leading to an environment for disruptive innovations with commercial potential and leadership in the 21st

century world economy requires a connected and layered ecosystem.”9 The fact that innovation ecosystems were mentioned a number of times is likely a result of the RFI making specific reference to this idea. Nevertheless, the notion that universities have the opportunity to serve a pivotal role in nurturing and energizing ecosystems is an outstanding opportunity for academic and economic advancement. It is essential to point out however, playing a willing but passive partner in the supposed ecosystem is unlikely to instigate and sustain the type of activities and synergy necessary for making ecosystems vibrant and strong. Implications: Some regions and cities are more naturally inclined toward developing earnest partnerships with likeminded individuals and institutions such as universities. Others are not. Perceptions of territoriality, comforts of silos, and threats from unpredictable realities stand as formidable challenges to partnership development—the essential building block to ecosystem development. Most theories of system success highlight trust among members as critical to system development. Sustained and genuine communication lays a foundation for reducing the uncertainties that then serve as trust-building strategies. When members feel unencumbered from the tethers of closed networks and silos, they are able to reach out to fellow innovators with openness and collaboration that defines innovation ecosystems.

Education At a policy level, this implies strongly that if we would like to see research commercialized, we should be developing educational programs to prepare our academics and disciplinary experts to be an effective part of the innovation process. This does not mean turning them into entrepreneurs, necessarily. But it does mean teaching creativity and design thinking; business and fi-

8 (#48 Phyl Speser, Foresight Science & Technology). 9 (#37 Keith McDowell University of Texas)

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

nance; intellectual property basics; identification of opportunities and needs; and skill in communicating ideas to a general audience.10 Description: One respondent remarked “students are our secret weapon,” and in spite of the RFI’s focused inquiry on research commercialization and proof of concept a number of individuals highlighted the role of education in their activities and plans. The Kauffman Center, whose mission is to marry entrepreneurship and education, was aggressive in promoting the value of higher education in the innovation enterprise (and many respondents were complimentary of the Kauffman Center’s accomplishments). A number of ideas were expressed for new entrepreneurship courses and programs across America’s universities. Many of these ideas urged a interdisciplinary approach to entrepreneurship, expanding current program beyond business and engineering schools. Business Plan Competitions were mentioned frequently as a means for getting students and faculty engaged in entrepreneurial activity. Some programs open their competitions for universitywide participation; others have even invited other campuses to compete. A somewhat popular strategy is enlisting the support and talent of an “entrepreneur-in-resident” as part of the educational mission. A common template for this role is to recruit someone locally who has been successful as an entrepreneur, and who shares the belief that education is a critical component of entrepreneurial thinking and innovation networks. Some universities compensate EiRs either on a full- or part-time basis. In other instances, EiRs provide their services as a contribution to the university. Attention was also directed to the need for culture change among universities as an essential strategy to affect long-term involvement in entrepreneurship and research commercialization. Faculty are less likely to invest and own such programs unless the inventive structure is modified to accommodate such programs. Cul-

ture change would necessarily include revising performance metrics and reward systems. Interest was also expressed in seeing a new avenue of university-based research on entrepreneurial processes and innovative practices. Additionally, reaching out to high school students was mentioned as an important strategy. Implications: A key take away from the analysis is the importance of nurturing entrepreneurial thinking at universities. As respondents noted, universities are well positioned to serve as the nexus for innovation ecosystems in their home communities and regions. Universities have a natural proclivity for encouraging creative academic thought on their campuses; they have demonstrated less proficiency in transforming creativity into useful and practical innovations. As mentioned elsewhere in this report, universities are on the threshold of transformative change and new approaches of academic enterprise will become more evident. Building into the curriculum and research agenda innovative thinking and entrepreneurial practices is a suggested means of creating value for students, faculty and other stakeholders of the university. Entrepreneurs-in-residence seemed to be a preferred strategy for transitioning programs into a model of commercialization. One respondent suggested that instituting a Federallyfunded mechanism for Entrepreneur in Residence (EiR) programs” could be advantageous since EiRs could serve two roles for universities. First, they could proactively “scout” for innovations “that could be the basis for creating a new venture, and second, they act as educators for faculty, students, and staff on real-world issues associated with entrepreneurship.”11 As mentioned above, numerous respondents urged universities to develop programs that encourage multidisciplinary collaboration between faculty and students in different disciplines. Such programs require a fairly intensive time commitment and incentive structure are likely to vary across disci-

10 (#197 Holly) 11 (#187 Michael Alvarez Cohen, Office of Technology Licensing University of California, Berkeley)

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

plines necessitating creative approaches to joint, collaborative work. This section is summarized with a response from the Kauffman Foundation (#31) – Two principles are paramount for stimulating universities in this sphere. The first is that the faculty members are the key agents. In addition to leading research projects, they teach and influence students, chair departments and programs, and tend to be active in both university and civic affairs. . . . The other principle for stimulating entrepreneurship at universities is that there is no single model for success. What works best may depend on a university's research strengths, the nature of the related industries, the related industries, the nature of the region (big city, rural, etc.), and other variables. The only common thread is the need for a well-developed ecosystem of innovation.

Entrepreneurship The biggest obstacle to “becoming entrepreneurs” is the courage to try and possibly fail. People that gravitate towards University careers seldom have this essential quality but instead are too attached to their tenure to be risk takers.12 Description: Because the RFI requested comments on various aspects of entrepreneurship it is understandable that most respondents were forthcoming with suggestions and recommendations. Several offered guidance on the essential characteristics of entrepreneurship such as systems thinking, leadership, communication, collaboration, marketing, and learning. Still others compared and contrasted human and capital assets as essential to the process. One respondent in particular was adamant for where emphasis should be placed. “My essential message is that a constant emphasis on access to substantial pools of risk capital in order to make technologies successfully com-

mercialized is an ongoing mistake and extraordinary waste of time, intellectual capital, money and opportunity itself. The essential ingredient in successful new companies is the entrepreneur, the person with the vision, risk tolerance and ability to aggregate the variety of resources necessary for a new company and the ability to steer them into an acceptable market.”13 For the most part, respondents were laudatory about the effects that an entrepreneurship program could provide for universities including the skills that students (and faculty) can develop, the effects on the local community, and the positive implications entrepreneurship can have on the commercialization of university research. Implications: Most respondents supported the call for a more active entrepreneurial posture on American university campuses. Several examples of role models and best practices were mentioned including the more obvious ones that reside at MIT, UC-San Diego, Utah, and the dozen or so “Kauffman Campuses.” Consistent throughout this theme were the tangible and intangible benefits from the presence of entrepreneurial thinking. Universities were profiled as the logical choice for nurturing entrepreneurship and innovative practices—they inherently cultivate a culture of creativity and risk-seeking. Why not enlarge that culture to one that finds value in transforming ideas into products and services, and technologies that benefit the marketplace? In essence, entrepreneurship becomes the lynchpin for connecting disparate forces that could bridge the valley of death, while at the same time benefitting students, faculty, and local communities.

Funding The most powerful tool the federal government has to influence universities behavior is the overhead rate. The people that need to be influenced are not the presidents; it is the chief academic

12 (#11) 13 (#13)

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

officers who have titles like provost and senior vice president. You will never win a chief academic officer’s heart. The only solution is to buy their soul. And you do this by giving a 10% overhead incentive to support successful commercialization (and you only give it for demonstrated success, not promises). Buying the soul of chief academic officers is actually much cheaper than starting programs.14 Description: Funding constituted a broad, catch-all category that gathered in topics related to overhead rates, federal grant and contract programs, and economic incentives associated with licensing arrangements, disclosure procedures, and patenting processes. Respondents held contrasting opinions on many of the topics. Most viewpoints were favorable toward the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs and recommended increased funding in these areas. Not all respondents were in agreement for how the various phases were structured or funded however. The Industry/ University Cooperative Research Centers program drew praise but again not everyone expressed satisfaction with the level of funding or how awards were determined. A number of suggestions were made for how product licensure could be enhanced with sides clearly drawn between private investment and university interests. Enhanced tax credits, federal and local, were common among respondents as well. With a retrenched federal budget extending for ten years to accommodate debt ceilings, it is unlikely that the fresh, new sources of funding are going to reach universities with the same flow pattern as before. That is not to say that intense lobbying and persuasion should not be directed toward our elected officials to “invest” in innovation and entrepreneurship, especially if program can demonstrate tangible returns on the invest.

Implications: In general, support was strong for increased funding levels for federal programs that directly or indirectly support university research. Such a level of agreement should be expected given the nature of the RFI and the respondents that chose to comment. Less agreement was noted for how universities license their innovations, nor for the types of incentives provided for commercialization. In an era of reduced federal spending overall, and with state-sponsored programs experiencing rather large reductions, it is unlikely to expect much help from government-sponsored programs. Universities may find their best source of funding for entrepreneurship and commercialization programs from the private sector, and many respondents argued for this course of action. Developing partnerships with local communities and equity stakeholders seems like a promising venture that could benefit all sides of the partnership. Unfortunately, university research presents so much risk for most investors that it has been either the universities themselves that underwrite the research or outside agencies, primarily the federal government, that support research activities. Funds need to be prioritized and sequestered that supply “gap funding” to worthy projects as the valley of death is crossed. These funds add value to research by “making money available to do further research, proof of concept, or due diligence.”15 Improving the overhead rate on basic research and incentivizing the commercialization back-end as suggested in previous sections would be a productive start to accumulating these gap funds.

Leadership If universities are to spearhead change they must implement courageous and flexible strategic planning that establishes qualitative objectives in the framework of a new university culture. Basically, we are talking about a revision of the mission of universities, adapting it to the require-

14 (#125 Jack Brittain, University of Utah) 15 (#20)

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

ments of a new society that calls for the definition of a new social contract. Within this framework, the institution must plan in the short, medium and long term, based on quantitative actions. To overcome the intrinsic difficulties, this process means that each university must have a number of skilled teachers. The latter must convince all those who are reticent (generally speaking, this may be a numerous group). Furthermore, they must take risks in the less productive part of the s-curve. And it will be precisely risk, unpredictability, participation and questioning of classical paradigms that constitute the most appealing intellectual elements to encourage the most prestigious academics to come on board.16 Description: References to leadership as an essential component to university entrepreneurship were numerous and appeared often when the respondent was describing program or role attributes. References to leadership were both tangible and philosophical and were directed to university faculty, administrators and students, but also focused on the private sector. Multiple suggestions were made in reference to 21st Century leadership and what that might entail. Instilling a leadership environment was also mentioned, referring to the conditions necessary to produce adaptive and collaborative conditions for change and innovation. One respondent stressed the need for leadership in reducing challenges associated with change—“[e]go and turf protection are early barriers to establishing an effective team. Establishment of an outcomes-driven philosophy is extremely useful in overcoming these barriers, providing a common mission that is more important than individual preferences and an objective basis for evaluating capabilities and contributions by other team members.”17 Calls for leadership courses as part of entrepreneurship programs were voiced by respondents as were requests

that leadership at all levels of the socio-political strata be evidenced more strongly and visibly. Federal leaders were called out on numerous occasions. A common theme was clearly articulated—entrepreneurs are leaders, and working to develop capacity in leaders (especially students) would lead to greater creativity and entrepreneurial activity. Implications: Based on responses to the RFI, leadership is an inescapable characteristic of entrepreneurship, or is the reverse true? Perhaps a symbiotic relationship exists where one is not whole without the other? If the quote from the section opening is accurate, changes confronting universities in the near future will require healthy doses of both entrepreneurship and leadership in order to evolve to a point where they play essential roles in a new world order. In a very real sense, universities can no longer assume a privileged role in merely admitting students, accepting research funds, and assuming that they will act as good stewards of their bounty. Alternatively, universities must confront the challenge of exerting leadership on many fronts through entrepreneurial activity and they must demonstrate the role model they have only imitated for centuries. By triangulating the responses to the RFI one vivid picture is developed that characterizes leadership emanating from multiple directions and from diverse sources converging into innovative practices and entrepreneurial thinking that transforms university culture, while at the same time positioning higher education as a key element of economic development and society well being.

Interdisciplinarity Programs that encourage multidisciplinary collaboration between faculty and students of different disciplines lead to technologies with more commercial potential than programs that are not

16 (Vilela, 2011, p. 330; title: World-class universities.) 17 (#188)

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

multidisciplinary. These programs are difficult to initiate and require an ongoing commitment of resources to manage the programs.18 Description: The term interdisciplinary was chosen as a category label for two reasons. First, this was the term frequently used to argue for a broader set of collaborators in advancing entrepreneurship in universities. Second, although multidisciplinary, transdisciplinary and cross-disciplinary were also used as terms for the same description, interdisciplinary seemed to capture the notion that multiple players are necessary to create the type of innovation program necessary for influencing genuine changeâ&#x20AC;&#x201D;forming a more symbiotic whole. The commercialization of research is frequently described as a linear process involving engineering, medical, or technology disciplines becoming entwined with technology transfer offices, frequently adding law and business schools into the mix to facilitate the process. The success of this linear model is open to interpretation, according to respondents, with statistics profiling enough failures that provide credence for the valley-of-death notion. Instead of a handful of disciplines acting relatively independently of one another until time and circumstances become critical a new interdisciplinary model is proposed where universities encourage innovation practice and entrepreneurial thinking among all of its members. As one respondent put it, â&#x20AC;&#x153;Entrepreneurship centers and programs are widespread nationally, yet few have broad impact beyond the business schools. Ideally, programs would be university-wide and focus on innovation-based and high growth entrepreneurship that will drive new industries. . . . [N]ot all innovation is driven from the engineering and medical departments in universities. Although technology is often what leads to great scale, new companies and products can spring from a variety of disciplines. In

fact, usually some of the most exciting opportunities lie at the intersection of disciplines. As a result, the administration should put a premium on supporting programs that engage all corners of the university rather than being housed in any one particular school.â&#x20AC;?19 In this way, interdisciplinary efforts meld the strengths of two or more disciplines to create a new focus of inquiry. Implications: New opportunities for entrepreneurial programs at universities seem to lie at the interaction of seemingly disparate disciplines. The usual suspects in a mash up of entrepreneurial actors include schools of engineering, medicine, technology, business, pharmacy, and applied sciences. Lesser known players mentioned in responses to the RFI were communications, law, and liberal arts. It makes sense that interdisciplinarity be pursued due to its potential for catalyzing ideas from different philosophies and practices and through engaging unique individuals in common purposes that advance innovation. Universitywide programs are difficult to start and even more challenging to sustain. Beyond the allocation of scare resources, interdisciplinary programs can experience the natural but insidious forces such as territoriality, disciplines-promoting silos, and the expense of time commitment. Nevertheless, approaching entrepreneurship from a interdisciplinary perspective offers the chance to provide a meaningful educational experience for students and create spaces for faculty to engage one another across disciplinary limes.

Proof of Concept Today, more than at any time on the past, universities are the platform for innovation for America and the world. The evidence is clear and the reasons can be identified in the investment behaviors of publicly held companies. Because of this, federal investment in both fundamental discovery-

18 (#65) 19 (#202)

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oriented research as well as “translational research” or research that moves ideas into proofof-concept work so it can become attractive for private investment is essential to our national innovation ecosystem. 20 Description: The RFI asked specific questions about proof of concept centers as mechanisms for bridging the valley-of-death. A common definition of proof of concept is the following: “that point at which a nascent idea for an innovation/invention derived from a research discovery first occurs, typically in a university research laboratory.”21 Almost every respondent offered an opinion in the area, although viewpoints varied in terms of success rates and preferred methodology. Some respondents felt that proof of concept centers (POCCs) should specialize in particular technologies or processes. Other respondents felt that POCCs should be involved early in the invention process in order to take advantage of diverse thinking such as marketing. Echoing sentiments from the previous section on interdisciplinarity, one respondent suggested, “POCCs seem to thrive in ecosystems characterized by interdisciplinary academic research centers. They have ample external and philanthropic funding. They use experienced entrepreneurs.”22 One message was clear. POCCs should be intimately involved with entrepreneurs outside the university, in essence fostering interdependent knowledge networks where university researchers and entrepreneurs can benefit from market thinking and product development realities. This notion relates nicely with the campaign for ecosystem development in local communities mentioned in a previous section.

Implications: Benchmarking successful POCCs is a strategy that many universities would find benefit. While some respondents self-nominated their own programs, a fair number identified characteristics in POCCs thought to be noteworthy regardless of institution. A sampling of these include (a) using seasoned entrepreneurs, (b) involving students, (c) using market research throughout the process, (d) establishing critical milestones, (e) rapid prototyping capabilities, (f) seed funding, and (g) focusing on the “pull” of market needs. A near consensual response to the RFI in this area was the call for additional funding support from the federal government to support POCCs.

Risk The biggest obstacle to “becoming entrepreneurs” is the courage to try and possibly fail. People that gravitate towards University careers seldom have this essential quality but instead are too attached to their tenure to be risk takers.23 Description: One of the more logical and frequent explanations given for the lack of university research commercialization was the sizable risk perceived by angel investors and venture capitalists. As related by one respondent, ‘[a]n important element to driving the commercialization of University technologies and the attraction of private industry investment is risk mitigation. Over the last ten years, the venture capital industry has substantially changed showing much less tolerance for commercialization risk, while focusing primarily on opportunities that involve fewer regulatory hurdles and less research and development. Unfortunately, this bypasses many of the opportunities with the highest potential for economic and social impact.”24 A common theme described

20 (#142) 21 (#37) 22 (#178) 23 (#11) 24 (#90)

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risk as a condition of uncertainty regarding whether university discoveries can be developed and scaled to meet commercial production requirements. A concern was also expressed about the elongated timeframe to market for immature technologies. Several respondents mentioned the risk tolerance inherent in an entrepreneur and urged more entrepreneurism within university ranks in order to push out technology and invention without fear of failure. Implications: Finding methods and procedures to mitigate risk is a priority in developing successful commercialization processes at universities. Risk management can be approached by identifying risks and then converting the inherent uncertainty into a defined risk status, and then managing the various forms of risks. For example, risk types to be managed include: product risk (can this product be successfully developed?); market risk (is there a viable market for this invention?); financial risk (can reliable sources of financing be found?); IP risk (can the technology be protected and licensed?); management risk; operational risk; and regulatory risk (regulatory requirements for bringing the product to market?). 25 Risk seeking is a paradoxical enterprise for universities. On one hand students are urged to stretch themselves and assume risks in their thinking and analysis; on the other hand universities are known or being some of the most risk averse and conservative institutions in society. Risk should be embraced and as one respondent put it, “Failure can be success! Taking risks means some failures will occur, but that is success overall. It is very easy in this game to be trapped by one-dimensional thinking.”26

Strategy [I]f the university does not change under its own initiative, its transformation will be managed for it. If it is unable to reinvent its mission, a new mission will be imposed on it. The smart approach would be to abandon distance, jump over the barricade and from the other side play a central role in changing twenty-first-century society. A change in which many new factors such as complexity, diversity and sustainability emerge. These and other factors must be considered, directly or indirectly in the university’s response to the challenges of the present century. 27 Description: As the broadest of all categories, Strategy was used to encapsulated themes that suggested policies and approaches that address the challenges of research commercialization and university entrepreneurship. A few respondents echoed what many in the entrepreneurial community strongly urge about risk-taking, “failing quickly and often.” Such overtures harken back to notions that if you aren’t failing you aren’t trying. More than a few respondents advised universities to pursue market-pull strategies, rather than technology push approaches (“Technologies in search of markets rarely win”).28 In concert with comments in the Collaboration section, connecting with the market prior to full product development can save time and resources if commercialization is a goal. This is compatible with a comment regarding juxtaposition of basic and applied research—“Universities should balance the knowledge driven mission with a user-driven approach.” Other strategies suggested that university technology transfer offices (TTOs) should change their profile from a licensing-driven focus

25 (#90 & #203) 26 (#37) 27 Tello, M. J. (2011). The university in the twenty-first century: Challenges and uncertainties . In F. Tejerina (Ed.), The university: An illustrated history. New York: Overlook Duckworth. p. 297). 28 (#97)

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to a long-term business development mission, and that “Universities should be open to deferred rewards rather upfront licensing fees.”29 In terms of unlocking hidden commercialization potential in universities, the 4M analysis was suggested, where universities determine where they reside within one of four cells in a matrix that is bounded by axis’s of how large the research enterprise is against the robustness of the entrepreneurial ecosystem. The four cells or commercial pathways are described as Scrappy (robust ecosystem; small research enterprise); Niche (nascent ecosystem; small research enterprise); Under Exploited (nascent ecosystem; large research enterprise); Advanced (robust ecosystem; large research enterprise).30 By examining their strengths and weaknesses in each of the four commercialization pathways universities should be able to establish priorities and strategies for enhancing either their research enterprise or entrepreneurial ecosystems.

that we found worthy of consideration included processes that commoditize intangible assets that could find value in the marketplace. In terms of cooperating with local entrepreneurs, universities could serve as virtual incubators offering assistance with market research, strategy development, business model development, and meeting facilities. Social entrepreneurship was mentioned by several respondents and is an enterprise that seeks to address social and/or community issues through innovation. Sometimes associated with non-profit entrepreneurship, social entrepreneurship can lead to financial outcomes such as economic growth and jobs creation. Moreover, social entrepreneurship can instill idealism among students about innovation and entrepreneurship that leads to outcomes beyond financial returns. 32

Implications: This section identifies some novel approaches to innovation and entrepreneurship. One of the more unique strategies was an approach to philanthropy where business models and accountability are key elements in fund raising campaigns. In essence universities will continue asking for support from erstwhile donors but with the “recognition that philanthropy can be used to drive positive but important “disruptive” change to existing approaches.” A major premise is “attracting new individuals to philanthropy based on its business focused, outcome oriented process that is dedicated to improving local economy through new companies and new jobs.”31 Donors invest in university research based on an expectation that tangible results will ensue that benefit the living conditions and the economy of local communities. Additional recommendations

29 (#158) 30 (#187) 31 (#46) 32 (#197)

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Recommendations

Recommendations were offered to vitalize the innovation and entrepreneurship processes at universities and to suggest avenues for improved rates of research commercialization. Initiatives proposed in this section were based on two guiding assumptions. First, frequent and redundant suggestions from the respondents were privileged over the more idiosyncratic and isolated responses. Second, recommendations were favored that were innovative in nature and that seemed realistic for universities to implement. A predisposition in formulating the recommendations was for proactive strategies to be assumed by universities rather than asking for elected officials to allocate scare resources that we all know will be limited. Recommendations were prioritized into the following areas: (1) privileging transformational leadership, (2) cultivating strategic partnerships, (3) fostering entrepreneurial thinking, (4) nourishing innovation ecosystems, and (5) transforming university culture.

Privileging Transformational Leadership An ever-present theme among respondents to the RFI was the call for stronger leadership in making innovation and entrepreneurship in universities a reality. The appeal for leadership among the top executives at universities is a reminder that top-down support for academic research and engagement programs is a prerequisite for success. Leadership must also be exerted among faculty, staff, and students as they engage in creative efforts that transform ideas into action. Resources will be required to create space and place for leaders to cultivate and nurture creativity, innovation, and entrepreneurship. In turn, finding resources to support these activi-

ties depends on leadership and will most surely wane without it. Another way of viewing the influence of leadership is in developing programs in entrepreneurship studies. As mentioned in a previous section, elements of leadership and entrepreneurship overlap considerably and I contend that exerting influence in either domain would be difficult without the other as a guidepost and companion. Leadership development is an enterprise found on every university campus. Many academic disciplines count leadership as one of the staples of their applied focus. The virtues and manifestations of leadershipâ&#x20AC;&#x201D;communicating values, instilling trust, taking risks, following through, inspiring othersâ&#x20AC;&#x201D;are commonly taught in these programs. These are qualities of the entrepreneur as well. It would therefore be less arduous to develop entrepreneurship programs if established leadership development programs could be leveraged appropriately.

Cultivating Strategic Partnerships Respondents seemed clear about the need for more frequent communication with stakeholders and more opportunities for collaboration with colleagues, community members and policy makers. Two recommendations seem warranted to open avenues for interaction. First, reward systems should venture into this realm by providing incentives for faculty to engage more frequently with the actors described above. Development and philanthropy divisions make relationship development a specific metric with frequency of contacts as an evaluation item. The same standards (adjusted for circumstances) could be instituted for those involved in entrepreneurship programs.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Partnership development goes from being an intangible non-evaluated metric to one that is held in esteem, counted, and rewarded accordingly. The second recommendation for improving partnership cultivation involves staffing opportunities, where professional staffs are hired who bring considerable interpersonal and networking skills with them and structure relationship development opportunities for students, faculty and other staff. Universities hire communications professional for a variety of other posts (public relations, relations, public affairs, publicity, advertising and promotion) and it would make sense to do the same for entrepreneurship programs. Communication and collaboration can be perceived as natural processes and outcomes of doing business and therefore concerted efforts at listening, crafting messages, asking questions, honing interpersonal (and presentation) skills are expected to happen easily and naturally. Nothing could be further from the truth. It takes vision, strategy and structure to perfect systems of communication that develop meaningful collaborative partnerships. Boundary spanning activities can also improve partnership development as can pursuing and demonstrating how “weak ties” can improve inter-organizational communication. Entrepreneurship and innovation will require more than theoretical prowess and strong research methods. As one respondent urged, “most investment in technology today focuses solely on funding the technical work. A very important piece that is not adequately funded today is the business expertise and relationship building with industry that is critical to driving a technology towards a commercially viable product.”33 Numerous comments extolled the virtues of robust partnerships comprising professional networks of diverse professional. Partnership Engagement Programs is the concept that best describes how to maximally affect relationship management processes. Defined in different ways, one view of partnership engagement casts a net around a few

key contributors to positive professional relationships. These include invoking relationship management processes, strategic communication with stakeholders, developing mutual identity profiles, engaging in planned change processes, and managing the knowledge learned along the way. Strategic partnering is about giving relationship management, communication, and organizational learning the priorities they deserve. In a Government Accounting Office report entitled “High Performing Organizations”34 experts from both the private and public sectors agreed on the few basic assumptions driving organizational excellence. These assumptions include a culture that emphasizes a results-oriented, customer/client centered, and collaborative climate. These experts argued that this type of organizational culture is sustained through the strategic use of partnerships, the nurturing of common identities, an emphasis on metrics that measure success, and establishing knowledgesharing networks. Funding priorities should be placed on partnership engagement initiatives that evolve innovation ecosystems.

Fostering Entrepreneurial Thinking Entrepreneurial thinking is a way of approaching problems and opportunities from a risk-free and innovation seeking perspective. Universities are an idea forum for e-thinking and a number of them have established entrepreneurship programs and centers whose track record is the envy of other institutions. While not all universities will find a fit with existing models, several key characteristics seem common among these ecenters. First, centers should have a substantial focus on students. Second, e-centers should find mechanisms to connect seamlessly with their local communities and regions enabling a robust system or network of likeminded individuals. Third, some form of an entrepreneur-in-residence program would be an important component to develop. Fourth, e-centers should be interdisci-

33 (#109) 34 (GAO-04-343SP)

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plinary, reaching into many academic areas of the university and providing a welcoming place for students of any major. Fifth, e-centers should capture the imagination and support of upper administrators by securing independent sources of revenue to demonstrate viability and sustainability. Finally, e-centers should be risk-seeking entities. In all of their activities risk should be a companion that is not to be feared or avoided. Student and faculty alike need to understand that if risk cannot be embraced at universities, where can it be? Successful entrepreneurship centers provide universities and its members with benefits that far exceed the costs of start-up and sustainability. Students benefit from the intellectual stimulation and the practical skills that are developed in such programs. Faculty enjoy opportunities to move their research into latter stage invention and innovation that establish conditions for commercializing their work. Alumni, local community members and other stakeholders take advantage of relationships and networks created by an open flow of knowledge from faculty and students benefiting society and the marketplace. Entrepreneurship centers serve as the hub of a heightened mix of talent, ideas, and energy, creating intellectual synergies that would otherwise remain unrealized. Of course, e-centers also have great potential for generating revenue and the economies of most local communities as well as the universities themselves can easily appreciate financial support.

university e-centers would become active in making connections with the business community; educating and mentoring students; developing networks of regional businesses; providing grants or seed money; and connecting faculty and students. According to Susan Hockfield from MIT, the Deshpande Center “serves the entire MIT community, including students, researchers, faculty, staff, alumni, and members of the local business community. This ecosystem is founded on the concepts of: 1) nurturing and mentoring potential entrepreneurs; 2) pursuing patent protection for technological innovations resulting from MIT research to foster commercial investment in bringing such innovations to the marketplace to benefit the public; 3) engaging deeply with the surrounding business and VC community; 4) integrating entrepreneurship and innovation across all schools and departments; and 5) focusing on long‐term relationships, rather than short‐term gains.”35 Funding must be provided to develop academic programs of innovation and entrepreneurship. Matching internal reallocation funds with grants from the National Collegiate Inventors and Innovators Alliance36 and the Kauffman Foundation would allow universities to plan and deliver courses, certificates, and programs that attract scientists, engineers, artists, humanists, and other college students to their programs.

One strong example repeatedly championed among university entrepreneurs is MIT’s Deshpande Center. Using it as a benchmark,

35 (#162) 36 NCIIA awards up to 20 Course and Program grants each year to faculty to strengthen existing curricular programs or build new experiential courses and programs in invention, innovation, and technology entrepreneurship, with an increasing emphasis on creating positive impacts on society and the environment. Successful programs use creative pedagogical approaches that generate and deploy student innovation/invention teams (E-Teams), bringing real-life needs and problems into the classroom setting and encouraging the pursuit of innovative economically generative solutions in the form of products and businesses. Promising ideas are taken through the early prototype stage enabling further scientific and technical evaluation and the development of plan for commercialization. The best programs link these educational programs with opportunities for further commercial development in the form of intensive workshops or boot camps for start up teams as well as material support and advising.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Such programs would support “student innovation or venture projects from disciplines across campus (STEM, business, entrepreneurship, design, humanities, etc).”37

Nourishing Innovation Ecosystems A key difference between the hot spots for innovation in the Midwest and the nationally acclaimed engines for innovation at such institutions as MIT, Cal Tech, UCSD, UC Berkeley and UCSF is critical mass. Each of those institutions resides in a large metropolitan area that has evolved an ecosystem highly tailored to the needs of innovators and has demonstrated the art of marshaling the innovation resources needed to create risky but highly promising new ventures based on university research.38 Regional Innovation Ecosystems, a term often used by government officials, is touted widely as a promising strategy for economic development given its focus on partners among stakeholders from diverse but compatible organizations (universities, business, local government) and the synergies expected to be realized. Common ecosystem attributes include great science, highrisk funding, entrepreneurial culture, businesspush, technology-pull, early stage VC funding, and rich networking opportunities. Not all ecosystems must focus on similar products and in fact, they should be unique depending on the players and interests involved. As one respondent mentioned “magic bullets may score occasional hits, but ecosystems flourish with many

pathways to the commercial market.”39 In fact, some of the issues to raise regarding the function of the ecosystem for a particular region include mission, purpose, role, responsibilities, and priorities, including matters such as economic development, wealth creation, workforce development, jobs, as well as university-prioritized issues such as research, development, innovation, technology transfer, invention disclosures, patents and licenses. Each of these are elements in the ecosystem and play a role in the commercialization of university research.40 It appears that innovation ecosystems are most likely to succeed if a sizable research university serves as the hub with partners from the region finessing and leveraging not only the nascent and unexploited research but also the talents and energies from the university members. The geographic size of a ecosystem has not been well articulated—many of the more successful ones such as Silicon Valley, Boston, and Austin have been collocated in large metropolitan areas. However, several respondents did not feel that population was the critical factor of success. Rather, having an inventory of solid research with commercialization potential, willing and talented faculty and students, and an eager business community seemed to be much more essential. Even a lack of concentrated VC investors should not deter ecosystem success as one respondent noted, “all capable investors and managers will be attracted to the same basic ingredients of value creation: high quality technology with ap-

37 The NCIIA awards up to 20 E-Team grants each year to provide student innovation teams (E-Teams) with financial support they need to begin to bring an innovative product or technology from idea to prototype, and eventually to market. An ideal E-Team has strong content expertise, consisting of at least two graduate or undergraduate student innovators working with a faculty advisor in a multidisciplinary team (technical, business, entrepreneurship, humanities expertise, etc.). In addition, the team recruits industry and business development advisors and mentors. Successful E-Team proposals demonstrate an idea’s technical feasibility, social impact, and potential for scaling and commercialization over a period of 18 months. Participating E-Teams are engaged in the NCIIA’s Venture Lab and Advanced Invention to Venture workshops that provide high intensity entrepreneurship and strategy development training. 38 (#192) 39 (#31) 40 (#37)

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propriate protection, faculty with sophisticated and reasonable expectations and university decision makers who know how to get a fair deal done. If you have these ingredients, and are consistent in how you communicate available opportunities and negotiate deals, VCs and entrepreneurs will find you.â&#x20AC;?41 A key element will be finding the means of leverage existing talent, infrastructure, and organizations. A starting place is determining what characteristics of a innovation ecosystem are doing well and how well those elements are networked. Conducting asset mapping research and economic development audits are ways that can provide a profile of where the ecosystem enjoys strengths and diagnose where attention should be directed to shore up shortcomings. Engaging in network developing activities would be a primary opportunity to build the base of the ecosystem. A rich and complex research infrastructure is believed to be a key ingredient in the knowledgebased societyâ&#x20AC;&#x2122;s potential for economic growth.42

Transforming University Culture Universities are wonderful institutions that provide intellectual safe havens for the curious and imaginative minds of its students. At the same time, they are safe harbors for a level of institutionalism that resists change to its long-standing practices such as tenure, reward systems, and territoriality. Research universities that survive the great recession will do so by challenging the status quo and changing their culture so ideas can flow more easily to the greater society in less time and with more communicability. Those that support universities will expect better return on their investment whether those dividends are manifested in enriched workforce pipelines, with research that makes a difference in society and

the marketplace, or with greater networking opportunities through practical engagement. Changing university cultures to accommodate innovation and entrepreneurial thinking will come at a price. Some faculty may pursue other careers that offer a better fit if they feel the old culture was more comfortable for them. Other costs may come in the form of disquieting discourse among late adopters who believe the university took the wrong path. Drawing from economic theory, opportunity costs are always present and determining the level of investment in entrepreneurship programs could displace other viable prospects in limited budgetary times. Nevertheless, calls for change among university funding mechanisms and repeated criticism toward unproductive faculty and staff require new models of innovation and adjustment to the culture will be required. How long it will take to effect change will depend on leadership and the level of investment a university is willing to make. In spite of varying opinions about the nature of proof of concept centers, few respondents took issue with the theory itself. Moving ideas from university bookshelves and file cabinets to the marketplace was universally accepted; finding the appropriate mechanism was often the bone of contention. How proof-of-concept is implemented at particular universities is most likely to be successful when locally designed for research streams that are (a) based on strong scholarship, and (b) interested in connecting with society in meaningful ways. Not all disciplinary tastes are suited to a commercialization diet. Some will never dine at the trough of applied research. Wasted resources could be expended trying to tempt the never-adopters. For those in other parts of the S-curve proof of concept centers could prove to be a valuable resource. One respondent found POCCs â&#x20AC;&#x153;a useful transition to industrial utilization of technology developed within a University environment. It is sometimes

41 (#147) 42 Soderlind, 2011, p. 301 title: Research institutes and knowledge transfer.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

apparent that the more fundamental work undertaken at a University needs significant additional work to allow industrial adoption. This is often a barrier to industry as it is not always clear what needs to be done.” We believe that a center that is guided, in principle, by interested industrial members, would be a successful approach to proving concepts and would be welcomed by many companies.”43

Some examples of venture philanthropy foundations include Venture Philanthropy Partners, NewSchools Venture Fund, Grassroots Business Fund, Acumen Fund, and New Profit Inc.46

Universities will also have to think about their funding streams for innovation and commercialization programs. Similar to the notion of philanthropicapitalism mentioned in a previous section, venture philanthropy employs venture capital strategies as a means of attracting charitable giving. According to the National Venture Capital Association, it “focuses on leadership, bold ideas, developing strong teams, active board involvement, and long-term investment.”44 Common characteristics of venture philanthropy include: • Willingness to experiment and ‘try new approaches’. • Focus on measurable results: donors and grantees assess progress based on mutually determined benchmarks. • Readiness to shift funds between organizations and goals based on tracking those measurable results. • Giving financial, intellectual, and human capital. • Funding on a multi-year basis - typically a minimum of 3 years, on average 5-7 years. Focus on capacity building, instead of programs or general operating expenses. • High involvement by donors with their grantees. 45

43 (#62) 44 http://www.nvca.org/index.php?option=com_content&view=article&id=104&Itemid=171 45 http://en.wikipedia.org/wiki/Venture_philanthropy 46 http://en.wikipedia.org/wiki/Venture_philanthropy

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Appendix Random Listing of Coded Comments from Analysis

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

20,000 new ideas emerge from federally funded research each year. Only 25% are licensed by companies for commercial development (risk too high).

For our purposes here, we describe the valley of death as the gap between later stage, academic-based innovations and the commercial application of those innovations in the market place.

According to the Association of University Technology Managers (AUTM) U.S. Licensing Survey for FY 2006, the Federal Government funded on average ~65% of the total research expenditures U.S. universities, hospitals and research institutions from CY 1997-2006, whereas Industry during the same time period funded on average ~8% of such research.

Transformational change leading to an environment for disruptive innovations with commercial potential and leadership in the 21st century world economy requires a connected and layered ecosystem.

Over the last ten years, the venture capital industry has substantially changed showing much less tolerance for commercialization risk, while focusing primarily on opportunities that involve fewer regulatory hurdles and less research and development. Unfortunately, this bypasses

many of the opportunities with the highest potential for economic and social impact. You will never win a chief academic officer’s heart. The only solution is to buy their soul. And you do this by giving a 10% overhead incentive to support successful commercialization (and you only give it for demonstrated success, not promises). Buying the soul of chief academic officers is actually much cheaper than starting programs.

Today, more than at any time on the past, universities are the platform for innovation for America and the world. The evidence is clear and the reasons can be identified in the investment behaviors of publicly held companies. Because of this, federal investment in both fundamental discovery-oriented research as well as “translational research” or research that moves ideas into proof-of-concept work so it can become attractive for private investment is

essential to our national innovation ecosystem. An analysis by the Association of University Technology Managers (AUTM) demonstrates that there is no correlation between the size of the research budget and the income produced from technology transfer.

Value creation must be re-defined

10.

Tell the “innovation story” better. Key audiences – policymakers, students, American public. Coordinated public policy for innovation.

11.

Creation of new and/or modified entrepreneurship-related courses, programs, and other educational activities.

12.

Proof of Concept Centers (POCCs).

13. 14.

Should pursue (market) Pull strategies, not tech push. Failing quickly.

15. 16.

Develop Innovation Ecosystems. Entrepreneur-in-Residence are important.

17.

Communications Networks (Wikis of university research).

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

18. 19.

Change culture of universities. Frequent and extensive contacts with private industry.

20.

Leadership development critical for entrepreneurial environment.

21. 22.

High-bandwidth feedback loops between the university and industry. Increase SBIR & STTR I/UCRC (Industry/University Cooperative Research Centers).

23. 24.

Change faculty performance metrics. Conduct new research on commercialization and Entrepreneurship.

25.

Regional Investment Funds.

26. 27.

Develop license auctions. Forums bring researchers and entrepreneurship together.

28. 29.

Training for faculty to learn entrepreneurship. Engaging end users.

30.

Increase seed-stage and early-stage VC funding.

31. 32.

Serial entrepreneurs most successful. Categorizing risk (tech, market, IP, Mgt, Financial, regulatory).

33.

As angel investors, venture capitalists, and established companies increasingly shift their investments to later-stage initiatives, QED fills a critical gap in the innovation pipeline.

34.

Commoditizing intangible assets.

35. 36.

Greater industry contact through communications technologies. Greater use of student engagement (esp w/ local business communities).

37. 38.

Improve presentation skills. Virtual technologies to increase commercialization processes.

39.

More frequent business plan competitions.

40. 41.

Change TTOs from a licensing-driven focus to a long-term business development mission. Students involved in all aspects of commercialization.

42. 43.

“Place” matters (leveraging local opportunities & assets). E mentoring programs.

44.

Universities should be open to deferred rewards rather upfront licensing fees.

45. 46.

Universities should pursue agreements / companies who foster “Open Innovation” programs. Multidisciplinary collaboration is essential to entrepreneurship models.

47. 48.

Team science critical. POCCs reduce risk in critical early stages.

49.

POCCs should provide business aspects (marketing, sales, finance, legal, project mgt,

50.

operations). Entrepreneurship curriculum should be multidisciplinary emphasizing systems approach

51. 52.

Should market knowledge. POCCs should benefit from market feedback about products.

53.

Improve science/technology communication (STORY TELLING).

54. 55.

Management team is critical to commercialization. Outcome focused, milestone driven, best practice approach.

56.

Philanthrocapitalist approach.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

57. 58.

Improve two-communication (business and university). Should integrate market pull with technology push.

59.

Universities should balance knowledge driven mission with user-driven approach.

60. 61.

POCCs should specialize in areas. Universities have to be more flexible w/ IP policy.

62. 63.

Active in local business community. Small companies may benefit most from university research (esp. IUCRCs).

64.

Most valuable part of research is the trained student who goes on to great things.

65. 66.

Fed should provide matching funds for univ-based POCCS. Entrepreneurial organizations are proactive, accepting of risk and uncertainty, and innovative.

67. 68.

Open Collaboration Research Labs. Students as secret weapons.

69.

Should involve high school students in the process.

70. 71.

Modify & streamline CRADA. Increase PFU and IGERT funding.

72. 73.

Innovation and entrepreneurship boot camps. Support NSF Innovation Ecosystem program.

74.

Proactive searching for inventions (Georgia’s Startup Catalysts).

75. 76.

Incubation (Suite) Services. Entrepreneurs learn best from peers.

77. 78.

Bootstrapping important ICCs seem to be working.

79.

For university research to successfully transition to the commercial marketplace, a great emphasis on entrepreneurship research is needed. Are entrepreneurs born or made? What are the event sequences that lead to successful new venture creation? What are characteristics of the venture team, strategy, resources, and organization structure that contribute to success? How are venture opportunities identified and how can opportunities with high potential be distinguished from opportunities that lack such potential? How can outsiders contribute to the

80. 81.

new venture creation process? What models of technology commercialization are successful? Technologies in search of markets rarely win. Small companies, academic research institutes, and government laboratories require extensive market, business, and IP support. All too often their technologies fall into “The Valley of Death” due to a variety of factors including: Immaturity of technology development, Lack of investment capital, Lack of business acumen and experience, Poor understanding of the market, Insufficient business planning, Inadequate intellectual property protection.

82.

Technology commercialization not an organizational priority (government laboratories and academic research institutions).

83.

Entrepreneurship essential characteristics – systems thinking, collaboration, communication

84.

learning. Virtual Incubator (offers temporary office facilities, assistance with market research, strategy development, business plan development, and access to Stevens research support).

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

85.

Systems-by-Design approach (rely on the creation and use of simulation and modeling to accelerate the insertion of new materials and technologies into products).

86.

K-12 community involvement.

87. 88.

Use of new media to spread the word about university research. The entrepreneur is the essential role. Inadequate human capital will thwart commercialization

89.

of university research more surely than lack of financial capital. When research universities squander value by failing to commercialize or “giving away” technologies with poor management, federal investment dollars in the country’s research

90.

infrastructure are lost. One set of “value generation measures” are effectiveness in translating research funding into commercialization outcomes like (1) spinoffs per research dollar; (2) licensing income per research dollar; and (3) patents generated per research dollar.

91.

Marketing and communication services essential to developing ecosystem.

92. 93.

Students should become involved in venture creation. According to the SCORE website (http://www.score.org/small_biz_stats.html) , small businesses generate the majority of innovations that come from U.S. companies. Innovations from universities are often the foundation of such companies.

94.

Screen select innovations for commercial potential and apply a combined structured interdisciplinary technology enrichment/development approach and proven entrepreneurial and business planning process, to provide a set of deliverables (i.e., spin-off companies,

95.

technology licenses, entrepreneurs and innovation leaders of tomorrow) to the private sector. Creating technology leaders of the future.

96.

Develop Model Innovation Centers (similar to MIT’s Deshplande).

97.

“NSF Innovation Ecosystem” program proposed in the President’s 2011 budget request which aims to: increase the engagement of faculty and students across all disciplines in the innovation and entrepreneurship process; increase the impact of the most promising university innovations through commercialization, industry alliances, and start-up formulation; and develop a regional community that supports the “innovation ecosystem” around the university. The division will provide research grants to universities in partnership with other institutions to increase the economic and social impacts of university research. The goals of the grants would be to (1) increase the engagement of faculty and students across all disciplines in the innovation and entrepreneurship process; (2) increase the impact of the most promising university innovations through commercialization, industry alliances, and start-up formulation; and (3) develop a regional community that supports the “innovation ecosystem” around the university.

98. 99.

Federal policies to encourage angels. Need better metrics for outcomes from activities.

100. The three critical skills that first-time entrepreneurs often lack: financial expertise, the ability to generate accurate economic impact analyses, and good grantsmanship.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

101. POCCs seem to thrive in ecosystems characterized by interdisciplinary academic research centers. They have ample external and philanthropic funding. They use experienced entrepreneurs. 102. Seeking out faculty skilled at the networking and relationship building is an important step in finding industrial collaborators. 103. Placing value on effective communication is essential for any URC interacting with industry. Clear and concise communication that can be processed in a minimal amount of time is highly respected by industrial representatives. At the individual faculty level, effective listening and an eagerness to learn are also key skills. An acknowledgement that interpersonal relationships and rapport are very important is an important first step. 104. Need boundary spanner in universities to connect inventors and industry. 105. Entrepreneur-in-Residents help scout for inventions. 106. 4M analysis. 107. Entrepreneurship centers and programs are widespread nationally, yet few have broad impact beyond the business schools. Ideally, programs would be university-wide and focus on innovation-based and high growth entrepreneurship that will drive new industries. 108. Not all innovation is driven from the engineering and medical departments in universities. Although technology is often what leads to great scale, new companies and products can spring from a variety of disciplines. In fact, usually some of the most exciting opportunities lie at the intersection of disciplines. As a result, the administration should put a premium on supporting programs that engage all corners of the university rather than being housed in any one particular school. 109. Further, social innovation and the non-profit entrepreneurship can lead to job creation and the development of social capital. Programs that harness that idealism among students can teach innovation and entrepreneurship skills and lead to impact beyond financial returns. 110. As we drive towards greater support for the university innovation process, there are common themes that emerge and we should heed: • A university forms an ideal nexus for innovation ecosystems: with its faculty and students generating groundbreaking ideas, its teaching mission, strong brand and links with alumni, commitment to the local community, and ability to serve as a neutral convener of partnerships with industry. • Innovation is driven by people and relationships. Focusing only on the ideas themselves will limit the benefit of programs and policies. • Technology transfer operations are critical for seamless and efficient commercialization. Technology transfer operations should be engaged and supported rather than marginalized when new federal funding programs are created. Further, success metrics that emphasize service, impact, and education rather than patents and revenues should be used to evaluate universities that are competing for commercialization-related funding. • Technology transfer operations should have an educational mission. They can integrate the already important work with what they are doing with long-term education.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

â&#x20AC;˘ Basic research is the foundation for pioneering new technologies and industries. Research funding should not shift towards the applied at the expense of basic research. 111. With the right approach, we will create lifelong innovators and entrepreneurial ecosystems that will create new industries and new jobs, and sustain economic development in the long term. 112. Face to face communication is critical to partners and collaboration.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Appendix Categories and Associated Exemplars

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Alphabetical

Themes Challenges

Collaboration

Communication

Exemplars • The culture and system in place reinforce the valley of death. • Value creation must be re-defined. • Research universities squander value by failing to commercialize or “giving away” technologies with poor management. • No infrastructure in place to exploit economic opportunities from research. • Frequent and extensive contacts with private industry. • Develop commercialization teams. • Forums bring researchers and entrepreneurs together. • • • •

Engaging End Users. Promote Innovation and Commercialization Centers. Tell the “innovation story” better. High-bandwidth feedback loops between the university and industry.

• Greater industry contact through communications technologies. • Improve presentation skills • Team science critical

Ecosystem

• Clear and concise communication is highly respected by industrial representatives. • Transformational change leading to an environment for disruptive innovations requires a connected and layered ecosystem. • Develop and enrich Innovation Ecosystems. • “Place” matters (leveraging local opportunities & assets). • Marketing and communication services essential to developing ecosystem.

Education

• “NSF Innovation Ecosystem” program proposed in the President’s 2011 budget request should develop around the university. • Students as secret weapons. • Creation of new and/or modified entrepreneurship-related courses and programs. • Training for faculty to learn entrepreneurship. • Change culture; change faculty performance metrics. • Greater use of student engagement (esp w/ local business communities). • Business Plan Competitions. • Entrepreneurs-in-Residence are great mentors for students and provide valuable links between innovation community and the university. • Students involved in all aspects of commercialization. • E-mentoring programs. • Most valuable part of research is the trained student who goes on to great things. • Should involve high school students in the process.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Entrepreneurship

• Entrepreneurship essential characteristics – systems thinking, collaboration, communication, learning. • Entrepreneur is the essential role. Inadequate human capital will thwart commercialization of university research more surely than lack of financial capital. • Social innovation and non-profit entrepreneurship can lead to job creation and the development of social capital. Programs that harness that idealism among students can teach innovation and entrepreneurship skills and lead to impact

Funding

beyond financial returns. • Should market university knowledge. • Increase SBIR & STTR. • Increase I/UCRC (Industry/University Cooperative Research Centers) funding. • Expand Regional Investment Funds. • Increase seed-stage and early-stage VC funding. • Universities should be open to deferred rewards rather than upfront licensing fees. • Modify & streamline CRADA.

Leadership

Multi-disciplinarily

• Increase PFI and IGERT finding. • Expand leadership development programs. • Management team is critical to commercialization. • Entrepreneurs are leaders. • • • •

Entrepreneurship and leadership are kindred spirits. University leadership critical to success. Multidisciplinary collaboration is essential to entrepreneurship models. Ideally, programs would be university-wide and focus on innovation-based, high growth entrepreneurship that will drive new industries.

• Not all innovation is driven from the engineering and medical departments in universities. New companies and products can spring from variety of

Proof of Concept

disciplines. • Intersection of disciplines provide most promising ideas. • POCCs reduce risk in critical early stages. • POCCs should benefit from market feedback about products. • POCCs should specialize in areas. • POCCs seem to thrive in ecosystems characterized by interdisciplinary academic research centers. They have ample external and philanthropic funding. They use experienced entrepreneurs.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Risk

• 20,000 new ideas emerge from federally funded research each year. Only 25% are licensed by companies for commercial development (risk too high). • Over the last ten years, the venture capital industry has substantially changed showing much less tolerance for commercialization risk, while focusing primarily on opportunities that involve fewer regulatory hurdles and less research and development. Unfortunately, this bypasses many of the opportunities with the highest potential for economic and social impact.

Strategy

• Entrepreneurial organizations are proactive, accepting of risk and uncertainty, and innovative. • Should pursue market-pull strategies, not tech push. • Failing quickly and often. • Develop License Auctions. • Commoditizing intangible assets. • Bootstrapping entrepreneurship systems. • Technologies in search of markets rarely win. • Increase virtual technologies to increase commercialization processes. • Philanthrocapitalist approach. • Universities should balance knowledge driven mission with user-driven approach. • Provide virtual incubator (offers temporary office facilities, assistance with market research, strategy development, business plan development, and access to Stevens research support).

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Appendix Data Matrix

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Alliances OSTP # 67

104

Respondents Council on Competitiveness (Deborah Wince-Smith & Chad Evans) National Collegiate Inventors & Innovators Alliance (Phil Weilerstein)

Key Points Developed – report, Innovate America; Regional Innovation Cluster Initiative; Technology Leadership and Strategy Initiative (TSLI). Seeks new Collaboratory with key players. Tell the “innovation story” better. Key audiences – policymakers, students, American public. Coordinated public policy for innovation. (http://www.nciia.org) is a non-profit membership organization of nearly 200 universities and colleges, provided grants, training, advice and other resources to faculty and students to stimulate and support their work to create programs, courses and projects focused on technological innovation, invention, and entrepreneurship. This work has been undertaken with the support of Lemelson Foundation, Kauffman Foundation, the National Science Foundation and other philanthropic and corporate funders. NCIIA has enabled the creation of hundreds of new and/or modified STEM entrepreneurship-related courses, programs, and other educational activities. Idea 1: Provide funding to catalyze the development of experiential courses and programs in science and technology innovation and commercialization. Idea 2: Stimulate multi-disciplinary collaboration between students and faculty, to move product or technology ideas towards commercialization. Encourage support of student innovation or venture projects from disciplines across campus (STEM, business, entrepreneurship, design, humanities, etc). Invention to Venture (I2V) : I2V is a one-day workshop on the basics of technology entrepreneurship, with presentations by successful entrepreneurs. Since 2003, over 100 I2V workshops have been held with University partners around the country. I2V teaches technology entrepreneurship basics, helps build networks and provides a framework for moving ideas forward. VentureLab: VentureLab is a multi-day, highly experiential workshop that gives teams space to think and explore within a dynamic environment to help evolve their business strategy, sales channels and marketing, and better understand the financial mechanics of a venture.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Advanced Invention to Venture (AI2V). AI2V is for company founders who have committed to start a company around their technology. The workshop enables early stage startups to conduct critical and strategic thinking about their venture with assigned mentors and coaches who are accomplished entrepreneurs in their industry. Lens of the Market. Lens of the Market is a one-day workshop designed to help scientists and engineers define potential innovations from their research, determine which markets need these innovations and how to capture the innovationâ&#x20AC;&#x2122;s value.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Associations OSTP # 45

129

148

Respondents Association of University Research Parks (Eileen Walker)

AAU, APLU, ACE, AAMC and COGR Tobin Smith

Biotechnology Industry Organization (James Greenwood)

Key Points America has a broken innovation ecosystem that does not efficiently create the right incentives or allocate enough resources to generate new ideas, develop those ideas with focused research, and turn them into businesses that can create good jobs. . . . America simply does not have an efficient system to take new ideas from government, academic, and private sector research labs and translate them into commercially viable products and businesses. – Gary Locke, Secretary, Department of Commerce “The Power of Innovation” (Ten Steps for Progress) – published by AURP. A few of the steps are increase research park infrastructure, improve tax credits, increase POC centers, embed entrep into STEM education. Reconsider the current cap and other restrictions on the reimbursement of university administrative costs. Provide for supplemental grants to support the translation of research with a high potential for commercialization. Modify the R&D tax credit. Create additional tax incentives to promote commercialization. Our associations believe that POCCs can be an important, but not the only, ingredient in helping universities commercialize technologies. In fact, we have been active in helping to shape and advocate proposals (e.g., the IMPACT proposal developed by Krisztina Holly at the University of Southern California) that would help to develop and support such centers. Pushed incentive for biotechnology.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Consortium OSTP # 194

Respondents Brookings Economic Development CorporationSouth Dakota innovation Partners, LLCTechnology Transfer Office at South Dakota State University (Consortium)

Key Points According to the 2008 survey of Association of University Technology Managers (AUTM), 430 of 595 (72%) of start-up companies formed based on university research were headquartered in the same state as the university. The appropriate metrics for evaluating the success of initiatives depends on the intended outcome of the initiative. However, many people approach metrics based on volume (number of invention disclosures, number of patents, number of license agreements, number of start-up companies, or number of jobs) as opposed to value. Value can be defined based on the return of an investment. In the example of a university, value is attained when the investment in a patent application is returned by the industry through a corresponding commercialization event. In the example of a start-up company or venture capital firm, value is attained when the investment in a university-derived technology is returned by the market that purchases a product or service. As opposed to the number of start-up companies formed, more reasonable value-based metrics would include the time required for a company to achieve positive cash flow, the growth and sustainability of the company, and the amount of follow-on capital investment. This is an important discussion as many universities will publish data based on volume as opposed to value creation. Value for a community is realized in every facet of the process, including the employment of additional university researchers, the expansion of existing companies or the creation of new companies, diversified local economies, and the creation of new local wealth. One of the objectives of the POCC would be to test a concept or invention for its potential success or failure in the market in an efficient manner. Important aspects of “failing quickly” include a specific definition of each “killer experiment”, which should be narrow in scope with a short timeline, minimal resources, and an expected outcome that responds to specific questions raised by seed-stage investors in their due diligence process. A seed-stage investment fund would have a much greater incentive to provide further investment in opportunities that have successfully passed the “killer experiment” as it lowers the immediate risk of failure in the investment portfolio and places a higher burden on business execution as opposed to whether the technology works or not. “Failing quickly” also preserves TTO resources in terms of protecting intellectual property of unknown or limited value.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

POCC Success Metrics Successful candidates selected through the POCC selection process must demonstrate the following characteristics: 1. The research discovery must solve a current market problem or create a new market; 2. The inventor must have an interest in actively participating in the “killer experiment”; 3. The research discovery must be unique, defensible, and provide an order of magnitude improvement over the current state of the art; 4. The POCC application must specifically identify the critical milestones and the resource requirements of the “killer experiment” to achieve the proof of concept; and 5. The POCC application must specifically identify the commercialization strategy assuming success is achieved with the POCC investment. 196

201

Consortium (Dan Gerglund)

WestCamp Inc., TimeWise Management Systems, and the National Center of Excellence (Consortium)

Another way entrepreneurs can gain access to university-based resources to help them take their research from the laboratory to the marketplace is by participating in a business incubation program. Approximately20 percent of the business incubators in North America are directly affiliated with colleges and universities; others have informal ties with local higher education institutions. An excellent example of another country’s approach would be Canada’s funding of the Innovation Systems Research Network (ISRN), which is a network of researchers examining innovation in various cities and regions across Canada. (See http://www.utoronto.ca/isrn/ for more information). Among the measures that programs are using is the number of products that are created, resulting sales of those products, products/processes licensed, outside funding attracted including investments in spin-off companies, number of spin-off companies, jobs created (and the average salaries of those jobs), and number of students hired by companies commercializing university research. Less than 10% of intellectual properties developed at federal labs and universities are ever licensed, and a sizeable number of those licensed, are never developed into commercially marketable products. R&D is a ―push system today. What if we actually ask manufacturers what new technologies or innovations they need to introduce new or improved products? This is what the GAMBIT Center surveys do and this will begin to convert R&D technologies from a ―push to a ―pull system.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Foundations OSTP #

Respondents

Wallace H. Coulter Foundation (Elias Caro)

Kauffman Foundation (Lesa Mitchell)

Key Points After an extensive application and selection process during the summer of 2005, the Foundation announced in October, the names of the nine Universities selected to receive the Coulter Translational Partnership Award in Biomedical Engineering in addition to the already existing program at Georgia Tech and Emory University. [T]wo principles are paramount for stimulating universities in this sphere. The first is that the faculty members are the key agents. In addition to leading research projects, they teach and influence students, chair departments and programs, and tend to be active in both university and civic affairs. They cannot be viewed as mere "performers" of research that might be worth something. They are the people who can shape the entrepreneurial culture of a university, of an entire regionâ&#x20AC;&#x201D;or not. In high-growth regions with highly entrepreneurial universities, the following tend to be true of the faculty. They have frequent and extensive contacts with private industry, which attunes them to thinking in terms of practical value creation while enabling them to share their own expertise. And they operate under university policies that encourage such activities, rather than laboring against policies that draw barriers separating the academic from the commercial. The other principle for stimulating entrepreneurship at universities is that there is no single model for success What works best may depend on a university's research strengths, the nature of the related industries, the nature of the region (big city, rural, etc.), and other variables. The only common thread is the need for a well-developed ecosystem of innovation. Magic bullets may score occasional hits, but ecosystems flourish with many pathways to the commercial market. Several articles attached on tech transfer, POCC, knowledge spillover, etc.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Government OSTP # 119

Respondents New York State Governorâ&#x20AC;&#x2122;s Office (Daniel Doktori)

Key Points [D]rawn from the recent report of the Task Force on Diversifying the New York State Economy through Industry-Higher Education Partnerships (the â&#x20AC;&#x153;Task Forceâ&#x20AC;?). That report can be accessed at http://www.ny.gov/governor/reports/pdf/IHETF_Report_FINAL.pdf). Commercialization and transfer of university-based technologies occurs primarily along two separate but equally important tracks: transfer of technology to existing companies and the creation of new companies based upon university-developed technologies. The hallmarks of those universities who are successful in both include: 1. Top-level commitment: 2. On-campus, empowered champion: 3. Enabling Platform: A rallying point such as a center. Best practices associated with universities that have the above characteristics include: market relevant and entrepreneur-oriented course curricula; targeted faculty recruitment, retention and reward; research showcases; entrepreneur-in-residence programs; and university-based incubators and venture funds. Market-relevant and entrepreneur-oriented course curricula: Open-source curriculum development with input from a variety of stakeholders managed by the National Academy of Sciences could provide a platform for sharing of best practices in curricula around the country. Targeted faculty recruitment, retention and rewards: Ultimately, the success of a given campus in promoting industryuniversity collaboration is a function of a campus culture that promotes and rewards such activity. Research Showcases: An online informational commons sponsored and hosted by the National Academy of Sciences could provide a platform for researchers with innovations ready to be commercialized. Entrepreneur-in-Residence Programs: Entrepreneur-in-residence programs can serve to both raise awareness and guide commercialization. Such programs can often provide small or no salaries to the entrepreneur, but instead compensate the individual with access to university-generated opportunities for investment. University-based incubators and venture funds: Metrics for success are generally straight forward, and include patent disclosures, securing of outside venture capital funding and jobs created (see metrics section below for fuller discussion).

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

“Flipping the model” Traditionally, university researchers develop new technologies and processes inside the laboratory and then look to industry to gauge commercial interest. An alternative approach includes industry organizing to communicate pre-competitive research targets to academia. The Task Force articulated a concept of “structured dialogues” in which a series of meetings are held between company technology officers and principal investigator faculty and research deans to discuss short- to medium-term research targets in a given industry. STEM Services Sciences: New York companies including IBM and Xerox have made highprofile shifts toward services as primary revenue drivers. However, few universities have developed curricula to train students prepared to work in STEM-oriented service jobs. The Task Force recommended a “hub-and-spoke” model whereby a lead campus would work with consortia of campuses and industry representatives to develop a base STEM Services Sciences curriculum which would then be supplemented with regional specializations (e.g. financial services in New York City). Communications Networks: Should set up an open-source, Wikipedia-style network for interaction between researchers, investors and entrepreneurs. The Wiki could be organized along the lines of the German communication network described above. Information on emerging technology investment opportunities could be made available on a selective basis. Strategic Infrastructure Investments: One of the driving forces behind industry-university collaboration to date has been the high cost associated with research and development. As costs rise, companies increasingly adopt open innovation models and seek university-based partners. The Task Force recognized as a best practice the Index of the Massachusetts Innovation Economy (available at http://www.masstech.org/institute2009/understand.html). The Task Force broke down its metrics into three categories: innovation capacity, innovation activity and innovation outcomes. Innovation Capacity refers to the presence of the basic inputs to the innovation economy Innovation Activity refers to those activities which evidence participation in the innovation economy whether that participation is successful or not. Innovation Impact refers to the results of the above-mentioned innovation activities (see repot for specific metrics) Strategic Infrastructure Investments: One of the driving forces behind industry-university collaboration to date has been the high cost associated with research and development. As costs rise, companies increasingly adopt open innovation models and seek university-based partners.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

159

Pennsylvania Department of Community and Economic Development (Debbie Nifong)

The three programs described above, the University Research Grant Program, the Innovation grant program, and the Keystone Innovation Starter Kit program, have been used as a means to provide funding to a wide variety of university commercialization projects across the state, each created regionally by the applicants to maximize the resources found in each university community and the business community in which it exists. Some universities participate in regional innovation "ecosystems'' with dense concentrations of venture and angel investors, experienced entrepreneurs and managers, and a mix of large and small firms.

175

181

Maryland Technology Development Corporation (N/A) Manufacturing Extension Partnership, UTAH (David Sorensen)

â&#x20AC;&#x153;AlphaLabâ&#x20AC;? provides the essential elements for startup companies to get off the ground successfully: funding, business assistance, advisors, space, and a supportive entrepreneurial community. By combining these ingredients in an intensive program, Alpha Lab provides companies a unique opportunity to accelerate their growth and development. Leadership is key, external funding important, cooperation at multiple levels a must. Many obstacles it in universities that prevent entrepreneurship and commercialization. The new effort, on behalf of meeting the small manufacturers, under a pilot project (GAMBIT) funded by EDA is taking advantage of this pull methodology, by first going out and identifying with the small manufacturing enterprises, what new innovation or technology they need to improve existing products or to introduce new products into the market place. The information is compiled into a database of technology needs and an attempt is made to match them to existing technology so that much more of the matured inventory of technologies can be moved out to U.S. industry. Furthermore, the identification of these needs to research institutions will encourage research projects focused in directions where these SMEs have already identified needs in the market place.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

186

199

NSF Engineering Research Center for Collaborative Adaptive Sensing of the Atmosphere (CASA) (David McLaughlin)

NSF Industry/ University Cooperative Research Center for Particulate and Surfactant Systems (P. Somasundaran)

CASA thus funds itself at the point where we are about to unlock the value in the investment made by the NSF ERC program, but we are stuck because we cannot get across the valley of death. We need to find the resources that would enable us to continue to operate our collaboration platform, which spans a cluster of universities, private sector partners ranging from small businesses to multinational companies, and government agencies & labs. Summary: The NSF ERC program has provided the funding to get CASA to the point of being able to perform as a successfully operating multi-institutional, multi-sector, interdisciplinary team. The team is producing strong end-to-end systems engineering and demonstrating its proof-of-concept and value compared to the state of the art. The next step for the center is to secure additional support, beyond the mission scope of the ERC program, to support these activities through the valley of death that would address cost reduction, additional value demonstration, and allow for the long funding and decision cycles of government agencies. N/A.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Private Individuals OSTP # 2

Respondents (Private Individual)

(Private Individual)

Key Points Given that fact, one might ask the following: What is the biggest obstacle to increasing communication between universities and industry? Although there are many practical answers to this question, on my view the ultimate answer is cultural. An obsolete cultural norm is at the core of our difficulty in promoting technology transfer. What do all promising practices and successful models of technology transfer have in common? High-bandwidth feedback loops between the university and industry, promoted by fast, easy negotiations with technology transfer offices over intellectual property rights. To be more specific, the most successful models seem to be subscription-based, nonexclusive licenses of intellectual property, sometimes sweetened for the university with backended payments, such as warrants or reach-through royalties. More recently, the MIT Media Lab has given birth to a host of digital technologies, including the electronic ink in display technology used in the Amazon Kindle, and predictive analytics drawn from massive amounts of real-time location-specific data. What these successes have taught us is that when universities are easy to deal with, investors will risk money, and entrepreneurâ&#x20AC;&#x2122;s time, to complete the customer discovery work necessary to identify commercial opportunities. There is no onesize-fits-all answer to the question of how research can be commercialized. Rather, commercializing research is an iterative process of asking and answering that question over and over again. Nobody bothers to ask when itâ&#x20AC;&#x2122;s none of their business. Who are the key players in the Innovation Sector? The gatekeepers for the Innovation Sector are the technology transfer offices for universities, federal labs and, not-for-profit research institute. These technology transfer offices typically out-license their technologies developed with federal research grants to small start-up, development stage companies. These companies are the small privately-held or publicly traded companies that are pre-commercialization (ie they are not revenue generating, profitable businesses that can afford R&D investments) or development stage in the following areas: _ Biotechnology _ Nanotechnology _ Information Technology _ Clean Technology, and _ Alternative Energy industries What is it that we need to get full value from our federally-funded research? We need a program that has two main objectives: 1. Strengthen technology (innovation) transfer offices and 2. Encourages the financing of the complete development of these federally-funded technologies and their introduction into the marketplace, regardless of general economic conditions. To do this, we propose to mobilize the capital required to achieve both objectives by establishing a US Innovation Bond offered by the US Treasury Dept.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

(Private Individual)

Business plan competitions? Sound good but ineffective when run by most Universities. The biggest obstacle to “becoming entrepreneurs” is the courage to try and possibly fail. People that gravitate towards University careers seldom have this essential quality but instead are too attached to their tenure to be risk takers. Programs that encourage multidisciplinary collaboration between faculty and students in different disciplines, such as science, engineering, business, and medicine? Sounds good and the successful universities do it, the unsuccessful universities try to foster shot gun weddings between Faculty and that generally results in ineffective outcomes. Universities want up‐front licenses, want us to pay the patent office action costs and want often unrealistic royalties. In addition, most of the university IP advertised often does not work as well as advertised so we end up spending a lot of money for useless IP. The academic sector needs to be incentivized to have companies evaluate their technology with a low up‐front cost. The STTR program should be increase to foster this sort of thing. There needs to be a mechanism in place prior to any exploratory research to sever prior entanglements if this “serial partnership” idea is to work. No company wants to get into a situation where an early participant can block their ability to exploit a technology using a patent they have acquired rights to. Government initiated regional economic development initiatives are a joke. Boston is not a hot bed for biotechnology because the Governor made it so. Supportive university policies such as ``industrial leave'' that allows faculty members to work for a new or existing company to commercialize their research Answer: that could be useful, however I expect University politics will ruin this mechanism. Bootstrapping Innovation Ecosystems ? Yes, the “ecosystem” is the key to success and creating the right environment is a very difficult thing for short sighted University administrators to do. Rome was not built in a day. Boston started down the path to biotechnology in the 1970s. You are looking for a decade or two to create such an environment. This type of sustained focus is beyond government and the public sector. Metrics for Success? Tax revenue from small business, small businesses started in a region being acquired by larger companies. Sort term metrics won’t provide significant feed‐back.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Changes in Public Policy and Funding? Renew SBIR at 2X the level Reagan put it in and increase the size of the STTR program by 10X. This will put small businesses where the innovation takes place in the driver’s seat and University faculty will “follow the money”. POCC has little chance of making a difference in creating the “ecosys tem” you want to establish. A grass roots approach sustained over the long term is how you set up the “ecosystem”. I would drop the POCC idea completely. POCC are going to be as effective in creating ecosystems as large stadiums are to rejuvenating rust belt cities. No positive comment to offer. NSF is an agency prone to gimmicks and I am not sure I would want to see more agencies adopt their approach. We are not part of any NSF big center for industry University cooperation and don’t want to. More SBIR STTR funding will put in place the grass roots for the formation of an ecosystem. That is where I would recommend increased funding. Don’t get non profits and community organizers in this POCC idea, that is a sure recipe for disaster. 13

16 21

(Private Individual)

(Private Individual) (Private Individual)

My essential message is that a constant emphasis on access to substantial pools of risk capital in order to make technologies successfully commercialized is an ongoing mistake and extraordinary waste of time, intellectual capital, money and opportunity itself. The essential ingredient in successful new companies is the entrepreneur, the person with the vision, risk tolerance and ability to aggregate the variety of resources necessary for a new company and the ability to steer them into an acceptable market. Not particularly favorable about POCCs. The University of Utah has taken it a step further and has a distancelearning program: Launch Your Own VC: Create Your Own Funding Vehicle for University Technologies. The idea behind Utah’s initiative is to build an internal funding mechanism that doesn’t rely on outside investors. Brian Cummings and Gavin Christensen are the people to talk to at www.tco.utah.edu. N/A A 2008 paper on biomedical research. N/A.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

50 57

(Private Individual)

(Private Individual) (Private Individual)

Bayh-Dole Act works. See “IMPACT: Innovation Program for Accelerating the Commercialization of Technologies.” Available online at http://stevens.usc.edu/docs/IMPACT%20Initiative%20Whitepaper.pdf (accessed 4/11/10). As severe as they are, these problems do not represent flaws in the legal structure or operational deployment of the Bayh-Dole regime on intellectual property management and disposition. Rather, the problems flow from the inadequate and unstable availability of funding for the purposes of post-discovery/pre-launch activities. Almost without exception, the “pre-commercialization” work necessary to advance such cases is ineligible for support through projects funded by the federal sciences agencies, as either direct or indirect costs. Nor are there federal grant programs in the economic-development function that reliably cover the needed expenditures. Finally, very few university technology transfer offices are staffed, empowered, or budgeted from internal sources (including royalty returns) to perform these pre-commercialization functions. N/A. The concept: Networking the many databases of university intellectual property forms the supply side. Companies seeking new product and business opportunities provide the demand side. Advanced information search capability would be used to screen and match university technologies with market needs and product development targets stated by companies. Technology solution intermediaries that link experts to problems will provide experienced independent new business development professionals to take the next step and create solutions and business concepts using the matched technologies. Let the assigned team investigate the technology matches and advance the initial concept to develop a proposed solution and value proposition. They would also prepare the business model, identifying potential partners, competitive products, complimentary technology, and critical issues. The organization seeking the solution or new business opportunity grants the reward and implements the solution. Design drivers • Participant partner organizations continue to operate their business models. • This does not displace university-industry alliances or sponsored research. It adds another channel for collaboration. • The innovation is assembling the widest network of available university technologies, sorting through warehouses of IP, making the initial connections between commercial needs and technology, and having experienced new business development professionals think through and build the concept. Organizational model This concept would best be organized under the leadership of a noncommercial, mission-driven organization, for example, the Association of University Technology Managers, The Kauffman Foundation, or the University-Industry Development Partnership. Alternatively or concurrently, a government-sponsored program could serve the same role.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

(Private Individual)

Policy Recommendations 1. Federal grant applicants must provide information to review panels concerning: patents licensed, received and pending. Additional economic activities should also be listed. This should be explicitly calculated into the ranking of applications. 2. Separate review and funding mechanisms should be set-up for basic, translational, and drug development (not drug discovery) research to promote commercialization. 3. The NIH should make research to reduce the cost of health care a priority for funding (e.g., early disease detection). This would align the commercialization initiative with other agenda items of the Obama Administration.

87 (Private Individual)

Angel and venture investments are severely limited. Moreover, venture investment groups are primarily found on the East and West Coasts. POCCs should be set-up in the Mid-West to attract venture capital to this region of the United States. The NSF I/UCRC (Industry/University Cooperative Research Center) program is a good example of this paradigm. It provides support for an environment where faculty and students can work closely with industrial collaborators on industry sponsored and funded projects. It would also be good to expand the scope of SBIR/STTR programs to encompass a broader range of joint academic/industrial research collaborations. For example, this can be expanded to include collaborative funding of teams from academia and specific divisions of larger companies involved in research aimed at rapidly realizing and marketing the commercial potential of university research. The process for selecting projects should be preceded by exploratory discussions involving academic and industrial partners. The geographic location and scope of participants may be less critical since telepresence technologies can be used for weekly meetings followed by inperson meetings on a quarterly basis.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

(Private Individual)

102

(Private Individual)

106

(Private Individual)

Many universities have created research parks and/or incubators to help students, faculty members, and in the case of our university, citizens of Missouri in commercializing ideas, developing companies, and developing new products. This infrastructure can be helpful but in specific terms of faculty involvement I believe the infrastructure must be combined with a new set of metrics for evaluating faculty performance (and setting faculty compensation). In addition to the traditional measures of research, teaching, and service, entrepreneurship should be considered as an equally valuable contribution to the university’s mission. This may be a relatively small change for institutions focused on engineering and science, but could be a very substantial change, and perhaps even an unacceptable change, for those institutions focused on the liberal arts. I believe another avenue towards creating innovative ecosystems might be the use of engineering design centers operated by well established companies and located on university campuses. It appears that General Electric, particularly in the aviation division, has been one of the leaders in this concept. I believe these design centers were originally created to provide students (prospective employees) with real hands-on exposure to practical engineering design problems and to provide the company with a means of screening prospective employees, providing training, and also accomplishing part of the engineering workload. The next logical step in this type of center might be to allow the center to operate in both directions—providing work experience for the students (as it does now) and also providing an access to an organization that could conceivably provide significant help in commercialization of research. We propose a commercialization effort driven by multi-disciplinary teams of people, including people who understand the commercialization process. Such commercialization teams could: • Evaluate projects from all relevant perspectives (basic science, regulatory, intellectual property law, business, marketing, end-user, product development), • Select projects for Federal funding that have the greatest potential to fulfill the most pressing needs in the timeliest manner, • Launch selected projects towards efficient commercialization, and • Continue to advise, manage, and be accountable for the projects throughout the commercialization process. I strongly recommend that the E-RIC pilot model be adopted at a much larger scale; in effect, I endorse the well argued views of Krisztina Holly at USC, who proposed a multi-pilot program in her white paper “IMPACT: Innovation Model Program for Accelerating the Commercialization of Technologies.” Holly’s paper outlines a strategy that is straightforward, and creates ten local demonstration sites that are selected on wellestablished metrics. The model is likely to deliver results that would be “measurable, reproducible and scaleable.” However, I think that the funding level suggested by Holly may be too low to produce major economic impact.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

111

(Private Individual)

114

(Melba Kurman)

[A]s a training exercise I propose that science departments also ask their Ph.D. candidate students to prepare a "mock" patent application, where descriptions and claims are put to paper, just as for an actual patent application. This mock patent application need not be filed with the PTO, or even disclosed to the local technology transfer office, but would serve as a training exercise only. The mock patent application could be based upon tests, assays, or other technology/discoveries that the students are currently working on in their thesis advisor’s laboratory. Challenges 1. Though “fostering an innovation economy” is the stated goal of most university technology transfer efforts, innovation is a broad concept that does not provide a concrete sense of what successful commercialization would look like, nor how it would be measured. 2. Stakeholders harbor conflicting perceptions and agendas of the value and effectiveness of current university technology processes. This lack of framework for discourse clouds meaningful inquiry and discussion about what would constitute “good technology transfer”. 3. Factors that impede or accelerate the technology transfer are poorly understood. 4. Our current “one size fits all” model that spans all disciplines and all industries may not be the best strategy for commercializing federally funded research; perhaps multiple models tailored to specific industries or types of technologies would be more effective. Recommended actions 1. Perform a quantitative study to identify conflicting goals and differing perceptions of all stakeholders involved in the end-to-end university technology transfer process. Follow up with a series of interviews to collect expert recommendations for new models. 2. Perform comprehensive case analyses of the top 20 game-changing university-originated inventions that were successfully transferred from research lab to the marketplace. 3. Synthesize the learnings from points 1 and 2 to shape and inform brainstorming around the drawbacks and benefits of proposed new models for technology transfer. 4. Create appropriate metrics once a clear mission is established and new models are clearly outlined.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

122

(Private Individual)

The U.S. constitution provides ownership of intellectual property to the creator, and assignment to an employer must be through consent for consideration. There is neither constitutional basis nor public incentive for the Bayh-Dole Act to be used as an instrument of automatic federal eminent domain to seize personal property from the creator and tender it directly to the institutional employer. The AUTM organization is representing its own desire to assert unbridled authority above the public’s interest and innovators’ discretion to promote their own inventions in the manner that they, as subject matter experts, believe to be most appropriate. If AUTM is successful in their appeal of Stanford v. Roche, they will have further crippled the university research enterprise and turned it into a vast bait and switch on public needs. AUTM’s actions to assert undisputable ownership over faculty inventions is emblematic of their overarching prioritization of self-interests over inventors’ best judgment and prerogative as well as public service in support of innovation translation. To address these issues and grant innovative scientists the freedom to translate their best work into publicly utile innovations, I recommend the Office of Science and Technology enlist a qualified committee of experts to draft and recommend best practice guidelines that:

124

(NY State Legislator)

•Restore faculty independence in determination of agent and method of innovation translation, while preserving the incentives of all stakeholders and protecting against self-dealing. •Mandate faculty governance or federal governance of dispute resolution for IP ownership issues. •Rectify the inherent conflicts of interest in university ownership and control of federally-funded research. •Provide support funding specifically for translational expenses under the authority of the PI. I would urge that the federal government take two important steps to encourage and booster investment at the “seed” stage: Federal Assistance in Capitalizing Seed Investment Funds Investment at the “seed’ stage can be very risky for investors. Investors may also be deterred by considerable resources needed to build up a new company. My colleagues and I in New York are supporting an effort by the State to provide matching funds to regional investment funds that provide seed funding and are part of the local ecosystem of entrepreneurs and universities. Federal dollars directed towards further capitalizing these seed funds, also on a matching basis, would be of great assistance in helping bring more products to market.

127

(Private Individual)

Tax Credits to Boost Commercialization Tax credits can also be very helpful in boosting investment in companies and providing important assistance for companies at the “seed’ stage. I am advancing legislation (A.10115) in New York that would provide a refundable tax credit for early stage technology companies for commercialization expenses, such as the cost of developing a prototype. I am also supporting changes in our state tax code that would further encourage angel investors and venture funds to companies in the “seed” stage. N/A.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

136

(Private Individual)

Proposal: To change the paradigm of how industry engages with universities regarding licensing of university-owned inventions by moving from the current system, in which each invention is individually marketed and licensed through a negotiation, to a system in which all federally-funded university inventions are available for licensing through a centralized, continuous, web-based auction process designed to make it simple for companies to learn about available inventions and bid on licenses, and to obtain licenses at a fair market value rather than a negotiated price. Advantages of the license auction system: It would totally change the dynamic of how universities move inventions to companies for commercialization from a push to a pull. In the current system universities have to push information about inventions to companies to try to interest them in negotiating a license. The university and potential licensee often disagree about the value of the invention or even how to determine a fair market value. The prospect of a contentious negotiation or having to pay more than the invention is worth causes many companies to opt out from licensing university inventions. In the auction system companies would be motivated to look at and bid on inventions relevant to their business because failure to do so would allow a competitor to obtain a license at a relatively low cost. The auction would determine the fair market value based on the risks and costs of developing the invention as assessed by bidders, who are the potential commercializers of the invention.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

144

(Private Individual)

While industry and universities have been cooperation on many research projects in the past and continue to do so today The Industry/University Cooperative Research Centers (IUCRC) bring something more and special to the plate. The IUCRC allow manufacturers from different parts of the globe – even competitors – to work together and decide and guide research projects that would normally not be undertaken for following reasons: 1. Leveraging of research funds. 2. Projects single manufacturers could not look at due to lack of expertise which would make the research project prohibitively expensive. University-industry collaboration that increase investment in precompetitive research and development that is beyond the time horizon of any single firm. 3. Pooling of knowledge for the common good of those who are supporting the IUCRC. 4. Taking advantage of the research capacity of the universities. 5. Added benefits regarding research capabilities from multi –university IUCRC’s. 6. Programs that encourage multidisciplinary collaboration among faculties and students in different disciplines, such as science, engineering, business, and medicine. 7. Coursework, training programs, and experimental learning that give faculty and students the skills they need to become entrepreneurs. 8. Technology transfer and sponsored project offices that can negotiate agreements with companies in a timely fashion, and that have a mandate to maximize the impact of their university’s research as opposed to maximizing licensing income. 9. “Templates” for agreements on issues such as intellectual property, sponsored research, material transfer agreements, and visiting industry fellows that can reduce the time and cost required to commercialize university research and form industry-university partnerships. 10. University participation in regional economic development initiatives. 11. Supportive university policies such as “industrial leave” that allows

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Institutions OSTP # 130

Respondents

Key Points

Institute of Food Technology (Marianne Gillette)

Bridging the gap between innovators and entrepreneurs is a key practice for successful transition of research innovations into commerce. This can be achieved through provision of interactive forums in which researchers showcase their cutting edge research and innovations while entrepreneurs identify potential solutions to their challenges. The forums also enable researchers to learn current trends in their field and gain a better understanding of industry needs. Intellectual property (IP) acquisition and management are also important in commercialization of research innovations. Great technologies can only be realized when their IP is well managed and exposed. Universities and other research institutions need to promote their mechanisms for managing IP. This has been achieved in some institutions through establishment of technology licensing offices that handle legal and business issues related to IP. The offices handle information such as type of IP to pursue, invention disclosure, identification of IP that is worthy of protection, and licensing and/or sale of IP.

110

155

Nanotechnology Characterization Lab (N/A) Childrenâ&#x20AC;&#x2122;s Hospital of Philadelphia Research Institute (Flaura Winston)

Additional efforts are needed to enable IP exchange between inventors and potential users to enhance commercialization. Many institutions have IP rights that could be sold and/or licensed to other stakeholders while commercial businesses are seeking new and innovative solutions for their challenges. Cognizant of such a need in the food industry, IFT introduced last year an IP exchange forum (IPEx) at our Annual Meeting and Food Expo. N/A.

Successful models for fostering commercialization and diffusion of university research can be more widely adopted by establishing: University-industry collaborations that increase investment in pre competitive research and development that is beyond the time horizon of any single firm programs that encourage multidisciplinary collaboration between faculty and students in different disciplines, such as science, engineering, business, and medicine technology transfer and sponsored project offices that can negotiate agreements with companies in a timely fashion, and that have a mandate to maximize the impact of their university's research as opposed to maximizing licensing income â&#x20AC;&#x153;templatesâ&#x20AC;? for agreements on issues such as intellectual property, sponsored research, material transfer agreements, and visiting industry fellows that can reduce the time and cost required to commercialize university research and form university-industry partnerships coursework, training programs, and experiential learning that give faculty and students the skills they need to become entrepreneurs.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Non-profits OSTP # 6

Respondents Massachusetts Technology Transfer Center (Abigail Barrow)

Key Points Purpose of Proof of Concept Funds • Facilitate commercialization of promising technologies • Excite interest of potential licensees or investors • Encourage researchers to take technology closer to market Typical Uses of Funds Proof of Concept • Hiring of additional staff/grad students for specific experiments • Buying of specific testing equipment • Pivotal translational proof of concept experiments Prototype development • Testing in an industrial setting or by 3rd Parties • Clinical Development Marketing and Customer Development • Developing user friendly interfaces • Engaging end users to evaluate the technology Support for Awardees Business Skills • Marketing and business development support • Project/Sub-contractor management • Competitive analysis Mentoring • “Personal Commercialization Coach” • Managing consultants • Maintaining momentum • Networking Support for Awardees Who does this? • TTO staff • Specialist employees • Students • Consultants • Volunteers • All of the above! Support for Non-Awardees • Even if you don’t fund them • You still have to live with them

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

• • • • • • • •

The review process is not perfect Proactive Management Provide one-on-one debriefing sessions Help find other resources Support with re-application Be honest about ideas that are never going to get funded Minimize number of “rejects” by using a pre-proposal Harvard, MIT and BU invite whitepapers (pre-proposals) and then ask a smaller group to formally apply • Less effort to prepare proposals and less disenfranchisement

Georgia Research Alliance (Kathleen Robichaud)

Kauffman Study -Proof of Concept Centers: Accelerating the Commercialization of University Innovation. GRA VentureLab is a distinctive, multi-university private proof of concept center of the Georgia Research Alliance. Its goal is to generate companies from university R&D that contribute to the Georgia economy through growing as a business or through a positive exit that creates wealth that is returned into the community in the form of angel investment in new ventures. GRA VentureLab addresses this goal by continuously scanning the university research landscape for technology commercialization opportunities and systematically moving these through the pre-incubator stages and beyond. Problem -- many research discoveries with commercial potential were not finding their way to the marketplace, in part because research faculty did not recognize that their discoveries might have commercial potential or did not know how to bring their discoveries forward toward commercialization. GRA VentureLab Launched What was needed was a systematic process to move discoveries from the laboratory into the commercialization process. To address that need, in 2002, GRA joined with its partner universities (Georgia Institute of Technology, the University of Georgia, Emory University, Georgia State University, Medical College of Georgia and Clark Atlanta University) to launch 2 VentureLab. VentureLab professionals, who are experienced at bringing technologies forward into platforms and products around which companies can be formed, are based at a host university. They seek out university-based discoveries, assess their commercial potential, and provide resources to suitably address the management, market and technology risks associated with new venture formation. Each of the universities where the VentureLab process is in place has an active technology company incubator offering office and laboratory space with which VentureLab can partner. VentureLab Funding. GRA VentureLab seed funding, which is awarded competitively in three phases, supports the process. Progression from one phase to the next requires achieving relevant milestones of increasing rigor. Milestones are intended to mitigate prioritized critical risk factors.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Phase I – A grant of up to $50,000 is made to the host university for initial evaluation of the market/technical risks of a discovery. A preliminary intellectual property assessment is also conducted. The primary goal of the Phase I grant is to answer the question: “Is it commercially feasible to build a company around this technology?” Phase II – A follow-on grant of up to $100,000 is available to the university to further mitigate technology and market risk, continue prototype development and achieve company formation. GRA requires Phase II projects to have 1-to-1 matching funds to demonstrate external market validation. Common sources include federal SBIR grants, angel investors, industrial contracts or other forms of early revenue. Phase III – In contrast to Phase I and II, Phase III is a loan that provides up to $250,000 directly to eligible VentureLab companies. The loan is non-collateralized and has favorable repayment terms and conditions. To be eligible, the company must have Georgia-based qualified management in place, as well as a fully executed license from the university. As a loan to the company, there is wide discretion in how funds may be used. Typically, use varies depending on the company and market in which it operates. In all cases, use of Phase III funds requires GRA approval. For example, the company may use loan funds to pay relocation expenses for a key hire, or to cover payroll expenses while negotiating a key customer contract or a term sheet with an investor. VentureLab Fellows. Among VentureLab’s most valuable resources are business experts recruited to the projects. GRA brings “serial entrepreneurs” and other business people with relevant domain experience to work with faculty as business coaches or launch CEOs. These experienced managers, called VentureLab Fellows, usually begin by exploring a menu of labs and technologies before deciding on an opportunity that meshes with their interests and experience. 3 VentureLab External Advisory Committees. Progression through the Venturelab program is guided, in part, by external advisors. At intervals throughout the process, GRA brings a group of operational managers and investors together to consider the progress and commercial potential of VentureLab investments. In recognition of the varied nature of the projects funded by VentureLab, two external advisory committees are in place – a technology committee (focused on companies and projects built around university discoveries in the communications, computing, content, energy, and advanced materials space) and a bioscience committee (focused on companies built around university discoveries in the life sciences and medical device space). Every VentureLab investment is scrutinized by the appropriate external advisory committee at the transition from Phase I to Phase II, and Phase II to Phase III. The advisory team makes recommendations to the companies and to the GRA on continued funding, changes in project direction, and termination of some project funding. Approval by the external advisors is required for all investment decisions associated with Phase III loans.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

VentureLab Results. Through December 31, 2009, GRA has invested $15.9 million in state funds in Phase I, II, and III VentureLab projects. Through June 30, 2009, VentureLab results include more than 100 active companies with nearly 500 employees in Georgia. Collectively, these companies have attracted more than $350 million in equity investment and paid some $2.5 million in payroll employment taxes to the State of Georgia. The success of GRA VentureLab in creating a rich pipeline of earlystage companies from university R&D has led to an important new source of venture funding. In 2008, the GRA Venture Fund LLC was created. The Fund is a private investment fund established to provide investment capital to companies that have participated in the GRA VentureLab program. The Fund’s resources come from a mix of private and state investment. The state’s commitment includes $7.5 million in capital investment and two types of income tax credits for investors: • The first $30 million of private investment in the Fund will qualify for a 25% Georgia income tax credit. • The first $75 million of private investment invited to co-invest with the Fund in its portfolio companies will qualify for a 10% Georgia income tax credit. Private investors include individuals, corporations and foundations. To date, the Fund has raised a total of $19.2 million in investment capital and has made investments in two companies that grew out of the GRA VentureLab program. Success factors For the GRA VentureLab process to be effective, key variables that must be addressed include: ecosystem attributes, risk management and a milestone-driven process. Ecosystem Attributes. Great science: GRA VentureLab projects/companies are developed solely from university research, validating and leveraging investments in scientific talent and research infrastructure as the foundation for generating high-wage jobs and high-value companies. Entrepreneurial culture: GRA VentureLab creates guided interactions between experienced entrepreneurs and university research faculty, allowing faculty to become more entrepreneurial in their work and allowing entrepreneurs access to university R&D that they can help to commercialize. It is important, however, to set reasonable expectations among all parties. The working relationship of the VentureLab Fellow and the research faculty member is one-on-one and intense and requires careful attention to ensuring that there is “good chemistry” between the two. High-risk funding: University R&D, much of which has been developed through federally-funded research, needs specific funding to validate its commercial potential. Frequently, only small amounts of funding are necessary.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Risk Management. The VentureLab process is designed to convert uncertainty to defined risk and then manage the various forms of risk: Technology risk: Can this technology be successfully developed? Market risk: Is there a viable market for this technology? IP risk: Can the technology be protected and licensed? Management risk: Can the right company management be put in place at the right time? Financial risk: Can sustainable sources of financing be found? Regulatory risk: What are the regulatory requirements for bringing the technology to market? Milestone-driven process. For each VentureLab company/project, milestones at the various phases of development are set and agreed to by all parties. Milestones are focused on the key determinants of success at any particular phase. For example, in the initial phase, early indication that the technology works as expected is needed and prototype development may occur. In the next phase, testing of the technology occurs in an accepted, more rigorous model; market dimensions and dynamics and intellectual property strengths and weaknesses are defined; a financial strategy is developed and experienced management identified. To be eligible for the final phase of VentureLab (a loan,) the company must have a secured intellectual property position and experienced, Georgia-based management must be in place. Lessons Learned Grants to universities are not enough. Initially, VentureLab grant funding goes to the host university to foster further laboratory-based development of the platform technology; however as the technology advances and companies are formed, the companies need some funds that they can directly manage in order to grow to an incubator stage. The third phase of VentureLab funding in the form of noncollateralized loans was created to meet this need. External advisors are key. External advisors who are experienced managers and/or investors can distinguish business opportunities from science projects. Out-of-state management and investment can be a challenge. If the company attracts out-of-state investment tied to out-of-state management, it is likely to go to where the management is â&#x20AC;&#x201C; a poor economic development outcome for Georgia. Seasoned entrepreneurs have staying power. If a seasoned, Georgia-based entrepreneur is managing the company, the entrepreneur can generally convince even out-of-state investors that the company can thrive in Georgia. VentureLab staff at each university is essential. Mining for laboratory discoveries with commercial potential needs to be continuous and managed by those with deep knowledge of the focus of a universityâ&#x20AC;&#x2122;s laboratories.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Proof of Concept Institute Inc. (Jack Savige)

Avoid equity complications. To avoid complicating the prospect of attracting outside investment, GRA does not take an equity stake in any VentureLab company. The functional elements of a successful POCC are all transferable to other regions and universities. The elements are: 1) methods to create a flow of new ideas from faculty and researchers; 2) processes to solicit and evaluate ideas; 3) techniques to enhance an idea through the researcher that may cause a realistic innovation; 4) guidance for POC managers to increase working relationships with Technology Transfer offices; 5) guidelines to select competent faculty/researcher advisors; 6) protocols and methods to select projects for POC funding; 7) tools, forms and project milestone budgeting methods to carry out POC work by faculty/researchers; 8) techniques for advisors to shape POC outcomes; 9) methods to build local investment infrastructure involvement. In general, local businesses offer little to POCC efforts at the earliest stages of prosecuting an idea towards a commercially feasible innovation. The exception is to draw from them people with marketing or manufacturing expertise to assist POC validations. Conventional public relations tools as news releases of activities, invitation for facilities tours and awareness talks of the POCC mission and goals, and selection of relevant business managers to act as reviewers of faculty/researcher innovation presentations. The critical element for POCC success is a quality flow of new ideas for assessment, advisor shaping, screening, funding and work to feasibility. The more ideas result in more innovations that become new enterprises. Under the assumption that Federal agencies, etc. will not directly perform POCC tasks, a new Federal government initiative should allow its idea asset base to flow to outside POCCs within universities. What are the key ingredients responsible for this success? Key ingredients include: 1) location near or within a research based university and technological business infrastructure; 2) establishment of campus management and faculty trust with the POCC; 3) a steady, high quality flow of ideas; 4) a cadre of business and technology experienced advisors; 5) sufficient unfettered funds to inaugurate idea to innovation work; 6) realistic, business friendly technology transfer policies; and, 7) working dialogs with possible “valley of death” investors. The von Liebig Center education courses are markedly different than traditional entrepreneurship curricula. Entrepreneurship is the teaching of “how to” become an entrepreneur; von Liebig’s perspective is entrepreneurism that teaches students what, where, when, who and why entrepreneurial environments behave and grow. The author designed these courses in 1999. The von Liebig educational initiative graduates to become employees in chaotic technology businesses are acculturated at faster rates and more confidently make contributions.

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Nevada Institute for Renewable Energy Commencement (Li Han Chan)

In the absence of vibrant innovation ecosystems that ensure the necessary engagement and transformation, technologies from Universities and National Laboratories often fail to overcome the valley of death for the following reasons: • Researchers are not incentivized to commercialize their technologies. While researchers do share in the financial upside of successful commercialization, a key requirement for career advancement (and thus their primary focus) is on publishing papers and solving interesting technical challenges. • There is a common misconception amongst researchers that technology development and commercialization are sequential activities when in fact, fundamental research can benefit from having an “end” in mind. Pre-commercialization milestones such as defining potential customers and developing commercialization roadmaps are best performed in the early stages of technology development (e.g. when developing lab prototypes). • By and large, Universities and National Laboratories have a preference for licensing their technologies to well capitalized companies in an effort to promote commercialization. There is less comfort with the risks associated with starting spin-out companies or licensing to start-up companies that have yet to secure funding. • A significant gap exists between securing a patent, and having a viable business. A patent is but just one piece of a much larger puzzle that has to be put together in forming a viable business. With these unique challenges in mind, NIREC has observed 6 models practiced today that attempt to facilitate a robust industrial collaboration between Universities/National Laboratories and the larger innovation ecosystem: i. Early-stage venture capital (VC) model: VCs (such as X/Seed and Firelake Capital Management) are sometimes willing to invest in very early-stage companies as part of their portfolio strategy. This model is successful to the extent that technologies and entrepreneurs, with limited VC guidance, are able to come together naturally to form fundable businesses. In order achieve expected VC returns, this model does only targets high-growth/”venturable” businesses that have a liquidity event (such as an acquisition or IPO exit) in the horizon, and does not facilitate pure licensing “deals”.

ii. Business Push Model: This is the DOE EiR Program model, and starts with the identification of an entrepreneur or VC firm tasked with searching for “venturable” technology and building a business case and company suitable for private investment. This model is successful to the extent that the technologies in the lab are mature enough for private investment, that the researchers involved are willing to participate in the commercialization process, and that the combination of the two is able to secure additional funding. As in the VC Model, in order achieve expected financial returns, this model often does not facilitate pure licensing “deals” and focuses on high-growth/”venturable” businesses. iii. Researcher-turned-Entrepreneur Model: This model broadly describes educational and policy efforts that facilitate the transiCollective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research 67 tion from research to entrepreneur, such as the Entrepreneurial Separation to Technology Transfer Program at Sandia National Laboratories. This model is successful to the extent that re-

“deals” and focuses on high-growth/”venturable” businesses. iii. Researcher-turned-Entrepreneur Model: This model broadly describes educational and policy efforts that facilitate the transition from research to entrepreneur, such as the Entrepreneurial Separation to Technology Transfer Program at Sandia National Laboratories. This model is successful to the extent that researchers desire to spend a greater portion of their effort on commercialization activities (versus performing research), and that with additional training and resources, that they are able to easily and effectively execute the entrepreneur role. iv. Market Transparency Model: Universities, National Laboratories and Commercialization Facilitation entities such as the Kauffman Foundation provide visibility into available technologies for commercialization through information portals on their websites (e.g. Technology Transfer Websites, iBridge, Energy Innovation Network). This effort provides market transparent and great leverage for less vibrant ecosystems to reach beyond their immediate sphere of influence, however, is successful to the extent that key stakeholders naturally converge as a result of this availability of information to form viable businesses. v. Ecosystem-Enhancing Model: These initiatives provide incentives, resources and structure for interactions between technologists and entrepreneurs (e.g. Clean Tech Open Business Plan Competition, SARTA Clean Start’s mentoring programs and networking events). These interactions are critical to strengthening an innovation ecosystem and are typically characterized by “lighttouch” mentorship programs (mentors are volunteers, and engagements are typically occasional meetings over a three to six month period). vi. Technology Pull Model. This facilitation model starts with an understanding of the technology and the researcher’s aspirations, and then brings the appropriate “heavy-touch” business expertise and capital to further validate the technology, market and business model. This flexible methodology supports multiple business models and exit strategies (ranging from licensing to acquisitions or revenue share), and is successful to the extent that the engagements effectively deliver the technology and commercialization milestones required for success. Given the challenges apparent in commercializing technologies from Universities and National Laboratories, the technology pull model offers the most appropriate solution as: • It enables and empowers inventors to assist in the commercialization process, while staying aligned with their aspirations • The ownership of the commercialization process is clear, and in the hands of well-incentivized and experienced entrepreneurs (given the “heavy-touch” engagement)

• Funding supports the appropriate technology and business validation activities to ensure technology transfer • Private sector/industrial relationships are sought early on, and often, and guide the technology development and commercializaCollective Genius: Innovation,tion Entrepreneurship, and the Commercialization of University Research process

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Ben Franklin Technology Partners of Southeastern Pennsylvania (RoseAnn Rosenthal)

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Oklahoma Center for the Advancement of Science and Technology (Michael Carolina)

• Private sector/industrial relationships are sought early on, and often, and guide the technology development and commercialization process Federal funding to support research and development can build in an incentive for universities and research institutions to fund and partner with external organizations to develop and implement commercialization strategies and structures that become part of the deliverables of the award. Our partners and we have found that unbiased, external input from an entity that is focused on the commercialization potential and prospects of discoveries is valuable and adds credibility to the process. Small Business Research Assistance (SBRA) The federal Small Business Innovation Research (SBIR) program provides financial support for technology feasibility studies and prototype development that is lacking in the private investment community. The federal Small Business Technology Transfer (STTR) program accomplishes this purpose while forging research collaborations between small firms and universities or other nonprofit research institutions. OCAST’s SBRA program provides assistance to improve the quality of proposals submitted to the federal programs defrays a portion of a qualifying firm’s federal SBIR or STTR proposal preparation costs, bridges funding between federal SBIR grants and assists in locating research resources necessary to successfully compete in the SBIR and STTR programs. Oklahoma Technology Commercialization Center (OTTC) OCAST contracts with a private, nonprofit organization to operate the program, which assists entrepreneurs, early-stage technology companies and companies seeking to commercialize new technologies. OTCC assesses needs, guides clients through the commercialization process and links them to a comprehensive network of technology sources (including Oklahoma universities) and commercialization assistance services. It also provides specialized business development services, access to early-stage risk financing, access to specialized incubator space and help in transferring technology. OCAST’s enabling legislation authorized the creation of Centers of Excellence. Two types of Centers of Excellence at institutions of higher education are authorized: Centers of Excellence for basic research and Centers of Excellence for applied research, development and technology transfer.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

The legislation requires OCAST to fund centers that build on institutional strengths and conduct research in areas in which the participating institutions of higher education have achieved or have true promise of attaining a standard of excellence as recognized by national and international peers. By statute the Centers of Excellence for basic research primarily undertake ongoing basic research that has potential for long-range value to the state’s economic development. This basic research program requires not less than twentypercent of the center’s total funding be provided by sources other than the Center and other than state-appropriated money. The Centers of Excellence for applied research, development and technology transfer primarily undertake applied research, development and technology transfer that have a long-run potential for commercial development. This program for applied research, development and technology transfer program requires not less than fifty-percent of the center’s total funding be provided by sources other than the Center and other than state-appropriated money. Each Center has a governing board: At least one-half of this board is comprised of non-academic, private sector industry members. The Center’s governing board approves all projects undertaken by the center within the R&D area approved by the OCAST Board of Directors. The Center’s governing board is responsible for the overall operation of the Center, for all reporting requirements and for ensuring compliance with milestone dates and Center goals and objectives. OCAST attends meetings of the governing board to ensure compliance with the centers rules and to serve as a liaison with the OCAST Board of Directors. Center operation: The research focus of a Center is determined through an open solicitation and external peer review process. Center participants are responsible for providing at least a dollar-for-dollar match for each state appropriated dollar invested in the Center; federal dollars may be used. Industry participants within the Center submit technology needs to the center’s governing board for consideration as R&D projects to be undertaken by that Center. Research participants working in conjunction with industry participants in the Center will develop an R&D plan to address the technology need. With approval of the governing board the Center will undertake the R&D project. The outcome of R&D projects will be commercialized in accordance with the IP policy for the Center. Assistance for this commercialization will be provided through the OCAST commercialization support programs.

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Mid-America Earthquake Center (Timothy A. Gress)

Although the HAZUS software is used broadly throughout the U.S. by government, as well as the private risk management industry, its functionality is limited due to its lack of support for the addition of new algorithms, inability to use distributed computing resources to scale computations, and it minimal decision support capabilities. Furthermore the software has no network analysis capabilities. This is a significant gap as there is a tremendous need to model how earthquakes can impact lifeline networksâ&#x20AC;&#x2122; (gas, power, electric, and transportation) functionality and to consider the interdependencies of these networks when modeling their performance. MAEviz: The Next Generation Loss Assessment Software Program To address these gaps the MAE Center and the National Center for Supercomputing Applications (NCSA) developed MAEviz, an impact assessment, visualization, and decision support system software package. MAEviz is an open-source project that helps reduce the time from discovery gap that exists between researchers, practitioners, and decision makers by integrating the latest research findings, most accurate data, and new methodologies into a single software product. It represents a significant step forward both in terms of architecture and use of open source components. Additionally its decision support system, network analysis, and interdependent network analysis functionality provide for additional impact assessment capabilities beyond what is offered in HAZUS. All totaled the software provides for over 50 different types of analyses ranging from direct physical impacts to socioeconomic impacts to network analyses to determining temporary housing requirements. New Technology Development and Commercialization Opportunity The MAEviz software platform is a new technology developed by a graduated engineering research center (ERC) that has reached and surpassed the proof of concept stage and is ready for commercialization by industry. To date the MAE Center has conducted sponsored research projects using MAEviz for the Federal Emergency Management Agency, Laclede Gas (natural gas provider for St. Louis, MO), Memphis Light Gas and Water, CenterPoint Energy (natural gas interstate pipeline company), and the Municipality for Istanbul, Turkey. There are two potential commercial opportunities for private industry involving MAEviz. The first opportunity would be most suitable for the risk management/emergency management industry that is looking to add an additional service for its potential markets. Under this scenario a company would leverage the MAE Center by working with its team of MAEviz researchers and programmers to conduct some initial earthquake impact assessments to give the company some exposure and experience with the software.

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Nanotechnology Institute (Anthony Green)

The second commercialization opportunity for private industry would be for those risk management/emergency management companies interested in developing new impact assessment software. Under this scenario the companies would utilize the open source MAEviz product as a base line product that they could enhance with additional functionality for their specific markets. If they so choose the companies could contract with the MAE Center to provide programming support for these enhanced or customized MAEviz software products. While the issues surrounding the transfer of intellectual property to the market are well recognized, it is only recently that regional clusters have been a focus of policy studies [see The Geography of Innovation, The Federal Government and the Growth of Regional Innovation Clusters, Center for American Progress, Sept 2009; The Power of Place: A National Strategy for Building America’s communities of Innovation, Association of University Research Parks, October 2008]. These studies have confirmed the observation that “place matters”. However, few studies and even fewer existing programs address the integration of both these issues into one entity. Many existing programs fall short because they are not organized systemically to leverage the advantages of an innovation cluster. Barriers to success also include: • Lack of commercialization expertise at many research institutions where innovative technology is born; • Lack of access to enough seed-stage and early-stage venturecapital, including insufficient funding to support applied research aimed at enhancing the commercial potential of IP as opposed to basic reaserch which, by definition, avoids going that far toward application; • Insufficient or inconsistent recognition and support at universities for research with commercial aims; • Lack of management talent, workforce talent and industryspecific talent to create local companies; • Lack of a systematic innovation partnership between the federal government and state and local governments; • Lack of a “critical mass” of supportive individuals and business in these tech areas. The NTI mission is to create a systematic approach to: • Develop, promote, and commercialize new nanotechnologies, leading to new IP, investments, job creation, and new commercial products, treatments, and methods. • Leverage and coordinate the outstanding, well-established infrastructure and resources of its partner institutions to establish new, synergistic collaborations. • Provide a comprehensive and successful model of innovation and research commercialization for promotion and emulation elsewhere.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

The NTI fulfills this mision by uniquely combining the following key elements:

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Select Greater Philadelphia (Thomas Morr) Ben Franklin Technology Partners (Terence Singer)

1. a core public investment of funds carefully managed by a leadership team that integrates faculty, economic development experts, and university tech transfer officials 2. multi-university participation through a novel, comprehensive IPpooling and revenue-sharing strategy 3. strategically targeted funding to universities and small businesses that incentivizes faculty-industry collaboration, prioritizes university IP with commercial potential, and supports collaboration with government research facilities such as NIST 4. strong emphasis on interdisciplinarity, regional strengths, and high quality research 5. integration of commercialization experts in oversight and program review 6. extensive outreach, networking, information sharing, and marketing efforts. Increase collaboration. Increase loan guarantees. IPartâ&#x20AC;&#x2122;s mission is to eliminate duplicative Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR)assistance services provided by the Commonwealthâ&#x20AC;&#x2122;s various economic development organizations and to create a single umbrella initiative to assist Pennsylvaniaâ&#x20AC;&#x2122;s early-stage technology companies to secure a greater share of federal grant dollars to support innovation and commercialization. On behalf of the Innovation Partnership partners, the Ben Franklin Technology Partners serve as the grant recipient and administrative entity for the program. Services The core of the IPart initiative is the Pre-Proposal Preparation Assistance Program or PPAP. The PPAP is an online review system that offers high quality reviews of a proposed federal SBIR/STTR project and its commercialization potential. Comprehensive written feedback is provided by three independent professional technical grant reviewers selected from an extensive reviewer pool. The PPAP reviewer pool includes 250+ experts with diverse scientific and industry qualifications, as well as extensive experience with the federal agencies that participate in the SBIR/STTR program. Within five to seven business days of the application submission, the opinions and recommendations from these reviewers are compiled into an evaluation report that is shared with the applicant as constructive feedback. This is all accomplished online and each applicant has an IPart partner advisor/advocate to assist them throughout the application and review process.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

1 Source: TechNet and the National Institutes for Health 2 “Between 1980 and 2005, virtually all net new jobs created in the U.S. were created by firms that were 5 years old or less,” Robert Litan, the Kauffman Foundation (which specializes in promoting innovation in America). To remain competitive the United States must invest in innovation at a rate equal to or in excess of its increasing number of global competitors, and it must assure that the investment it makes in innovation is targeted at companies that are 5 years old or less which research demonstrates create 100% of the net new jobs in America2. This is precisely the cohort that the SBIR/STTR programs are intended to serve, but to generate the ROI that this investment warrants will require a more focused and intense effort to help small technology companies to 1) learn about the SBIR/STTR programs, 2) determine if the SBIR/STTR program is an appropriate fit for the company, 3) successfully compete for SBIR/STTR funding and 4) commercialize the technologies that are developed as a result of the SBIR/STTR funding. SBIR/STTR assistance programs like the Innovation Partnership can undertake the following types of activities to address the four challenges above. 1. SBIR/STTR Outreach and Education – Expand outreach and education efforts to ensure that every eligible SBIR/STTR applicant in their service territory is aware of the programs and has enough information to make a self-determination as to whether the programs might be an appropriate fit for their company. 2. Evaluation of SBIR/STTR opportunities – The SBIR/STTR program is not suitable for every company and, as such, SBIR/STTR assistance organizations should increase their consultations with prospective SBIR/STTR applicants to assure that the grant opportunity is consistent with their business plan and that the temptation to compete for the funds does not distract from the company’s focus on its core business. 3. Supply expert SBIR/STTR proposal development assistance – For the average small business with little or no experience in applying for federal R&D funds, the SBIR/STTR application process can be overwhelming. SBIR/STTR assistance organizations should provide their array of services/resources to a greater number of eligible SBIR/STTR applicants and, in so doing, increase their win rate. 4. Technology commercialization – SBIR/STTR assistance organizations should initiate a business calling program targeted at SBIR/ STTR award winners within their service territories since 2005 to determine the status of the technologies that have been developed through the programs and compile a census report that measures SBIR/STTR-related commercialization activity. The census information will include a ranking of commercialization potential and those closest to commercialization should receive offers of business/technical assistance to help bring the technology into the marketplace.

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Association of University Technology Managers (Ashley Stevens)

AUTM is recognized as the leader in collecting metrics for academic technology commercialization. Licensing metrics, collected since 1991, can be found in our annual publication the AUTM Licensing Activity Survey, and in STATT, our online statistical database. AUTM routinely evaluates and adds new metrics in an effort to further understand the impact of technology commercialization on innovation and the U.S. economy. More than 95 percent of federal funding is for basic research. There has been substantial, successful federal funding of translational (i.e., applied) research through the SBIR and STTR programs, but these require a company already to have been created, something that is difficult to justify prior to proof of concept work having been successfully carried out.

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University City Science Center, PA (Stephen Tang)

This results in a catch 22 situation – to obtain proof of concept funding from the SBIR and STTR programs a company must already have been started, while a company cannot be justified without proof of concept funding. This dichotomy is the source of the federal funding “Gap.” In early 2009, the Science Center launched the nation’s first multiinstitutional proof-of-concept program, to fund early-stage academic research projects in the life sciences and to promote the commercialization of the technologies resulting from those projects. Our program – named “QED”, after the Latin phrase “quod erat demonstrandum” or “proven as demonstrated” – provides funding and business advice for academic researchers throughout the Greater Philadelphia region who are developing early-stage life science technologies with high commercial potential. QED helps promising researchers translate their publicly-funded basic research into privately-funded technology commercialization and product development opportunities. As angel investors, venture capitalists, and established companies increasingly shift their investments to laterstage initiatives, QED fills a critical gap in the innovation pipeline. The fundamental goal of the QED program is to help convert more academic research into clinical and market products, through four basic operating characteristics: • Identification of life science technologies (for the pilot phase of the program) that address significant unmet clinical needs • Matching of scientific expertise with relevant business guidance, to ensure that proposed research projects answer questions relevant to commercial development • Utilization of “market pull” (rather than “technology push”) in the selection of projects that receive funding

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

â&#x20AC;˘ Provision of individual project funding through a 50/50 match between the Science Centerâ&#x20AC;&#x2122;s core QED fund and the university or other research institution owning the selected technology (this model of joint support enables research organizations to be participants in the program, rather than simply recipients of funding; ownership of all IP is retained by the research organization and transitioned into new venture or licensing opportunities according to its own institutional policies) The programâ&#x20AC;&#x2122;s desired outcome, over time, is a portfolio of technologies that are well-positioned to attract private investment, technology licensing, and/or sponsored research.

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Athena Alliance (Kenan Jarboe)

[I]ntangible assets are largely hidden, and therefore unavailable for financing purposes. Investment in the creation of intangible assets in the U.S. is more than $1 trillion annually and the total value of intangibles in the U.S. when measured in 2005 dollars was estimated at $9.2 trillion. A huge opportunity cost is imposed on the U.S. economy when such a large source of potential financing is locked up. Because intangible assets are not generally available as a source of investment and risk capital, innovative companies may face higher capital costs—or even a dearth of capital—to fund new ideas. Unable to use their intangible assets as a financial tool, prospective borrowers face a system that does not understand their true revenue potential and is unable to judge operational risks appropriately. New ideas never gain traction or remain unexplored or undeveloped. Economic potential goes untapped—and therefore wasted. However, in recently years, a niche market of firms specializing in intangibles-based financing is springing up. Intangible assets—specifically, traditional intellectual property (IP) consisting of patents, trademarks, and copyrights—have been used in sale, leasing, equity, equity–debt, debt, and sale–leaseback transactions to finance the next round of innovation. Unlike some of the exotic financial vehicles, these new firms are using traditional financial techniques in new ways to help innovative companies. Promote better understanding of intangibles by commissioning a National Academies’ study. Intellectual capital and intangible assets cover a much broader range of categories, including worker skills and knowledge, business methods, organizational structure, and customer relations. There is a need to broaden the understanding of policymakers, business leaders, and the general public on the full scope of intellectual capital and intangible assets and how they function in the marketplace. As proposed at a June 2008 conference sponsored by the Bureau of Economic Analysis and the National Academies, a broad study of intangibles could include the following components: • A survey of efforts in other countries to advance the understanding of intangibles and their role in corporate performance and economic growth, promote financial investments in intangible assets, and foster the utilization of intangibles • An inventory of federally owned intangible assets and an exploration of how to exploit them for economic growth • A list of policy recommendations to accelerate private investment in and management of the types of intangible assets most likely to contribute to growth.

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UniversityIndustry Demonstration Partnership (Anthony Boccanfuso)

Convened by the National Academies, the University‐Industry Demonstration Partnership (UIDP – www.uidp.org ) is an organization of universities and companies dedicated to advancing university‐industry partnerships and promoting US competitiveness. As such, the UIDP Board is well‐positioned to offer strategic input on this topic. The UIDP pursues it mission via a coalition of universities and companies who engage in voluntary collaborative experiments on new approaches to sponsored research, licensing arrangements, and the broader strategic elements of a healthy, long‐term university‐industry relationship. A few points regarding this response. As UIDP Executive Director, I am submitting this response on the Board’s behalf. Part I: With Respect to University Research, Promising Practices and Successful Models ‐ Responses UIDP Board Recommendation ‐ Complete Development and Deployment of Sponsored Research Negotiation Tool ‐ TurboNegotiator (TN) TurboNegotiator (TN) is a software tool that facilitates the negotiation of industry‐sponsored research agreements with universities. TN can be used to reach consensus regarding critical business elements in these agreements, such as intellectual property, indemnification and publication rights. The insights into sponsored research agreement negotiations and agreement terms gained by TurboNegotiator have the potential to improve the quality of the agreements while reducing negotiation time. This tool will benefit U.S. competitiveness by helping to improve the negotiating and contracting process that is a vital part of all sponsored research agreements (SRA) in the innovation communities. The impact will not be limited to initial insight but will persist as new insights into how to improve SRA’s are discovered through the ongoing usage of this analysis tool. Goals of TurboNegotiator: • Decrease negotiation time. TN facilitates the exchange of information and the joint understanding of needs, constraints and objectives of universities and industry. TN quickly identifies underlying mismatched expectations before the start of legal negotiations preventing wasted time. • Train new staff members. TN provides a systematic, interactive training experience by which new or less‐experienced staffers can work their way through issues that more experienced negotiators handle routinely. • Preserve learnings and creative solutions. TN can be used as a repository of information. By providing links to auxiliary material, including consensus statements, case studies, publications, and even citations to legal statutes and regulations, TN can become a growing resource for the first two goals. As the use of TN increases, the collection of information will document new, emerging or unusual circumstances and possible resources for resolutions.

Upon completion, TN will allow users to significantly reduce the time needed to negotiate agreements, increase the number of deals that Collective Genius: Innovation, the Commercialization University Research canEntrepreneurship, be initiated, and and ultimately generate IP fromofagreements that have addressed IP matters. Please note that this tool has proven to

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Wayne Brown Institute (Bradley Bertoch)

Upon completion, TN will allow users to significantly reduce the time needed to negotiate agreements, increase the number of deals that can be initiated, and ultimately generate IP from agreements that have addressed IP matters. Please note that this tool has proven to be especially useful for small businesses, many of which are dependent upon universities to formally or informally develop their business plans. Additional information about TurboNegotiator can be found at: http://sites.nationalacademies.org/PGA/uidp/PGA_056462. WBI has three major programs: Investors Choice® started in 1984 which is comprehensive education and training, screening (evaluating), mentoring, and network development (contacts) program. Over the years, it has introduces several “first’s”: rigorous third party screening, directed mentoring, comprehensive feedback, and one on one introductions to investors. The Entrepreneur in Residence program is designed for accelerating/increasing serial entrepreneur deal flow; and Venture Ready® program for identifying and developing serial entrepreneurs. For WBI, Investors Choice® has always been about venture quality deal flow creation. The Entrepreneur in Residence and Venture Ready® programs are about deal flow maturation and harvesting for the entrepreneur, the community, the Institute and its partners. Best Practices – Early lessons learned First, not all deals are created equal or need the same help. There are four primary types (categories) of deals that get presented to the venture community: 1. “The Crown Jewels” - Companies started by serial entrepreneurs or capable executives from the private sector who are adept and capable of moving a deal forward without the need of government or academic support and have access to capital. 2. “Diamonds in the Rough” – essentially entrepreneurs without a known or proven track record in building businesses, but with substantial domain expertise. They may have good ideas, but require specialized guidance, mentoring and preparation in venturing in order to successfully move their company forward. 3. Potential “Diamonds in the Rough” – these are companies created by R&D programs such as the Centers of Excellence that have potentially great technology, but lack, in many cases, the formal structure in productization, organization and management to be attractive to the professional investment (angel/venture) community. Typical of Universities and Federal labs. 4. The Butcher, the Baker, the Candlestick Maker - Companies that are not suitable for the venture community due to type, technology, scope, management, etc. Basically, quintessential small businesses.

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Leonard Wood Institute (Joe Driskill)

LWI has been successful in identifying and advancing promising technology in support of critical operational requirements. This is done through an annual program that first works with MSCoE and ARL to identify critical requirements that need to be addressed. It then solicits white papers from universities, companies, non-profits and federal agencies proposing technology projects that address one or more of the requirements. Those entities with successful white papers are then asked to submit full proposals. Those submitting successful full proposals are given one year research grants to advance their technology. Universities compete against each other and against other public and private organizations so that the best technology available can be developed. Often universities and companies will partner. Some universities participate in regional innovation „„ecosystems‟‟ with dense concentrations of venture and angel investors, experienced entrepreneurs and managers, and a mix of large and small firms. These universities also have faculty who have been involved in commercialization of research and entrepreneurship, and can serve as mentors and role models to faculty or students. How can universities and their external partners expand their ability to commercialize research in the absence of these favorable conditions? • Piggyback collaborations with other universities and with Federal labs • Intense interactions with industry and Federal labs/agencies via use of digital media • Stay at cutting edge in use of communication technologies • Focus on local physical, intellectual and commercial resources. This may sound a bit simple-minded, but an un-connected university in Florida could focus on water, old people and sunshine; New Mexico on sunshine and rocks. Bloom where you are planted. • Symbiotically grow with local economic development organizations, using them as intermediaries. Many of the smaller economic development organizations don‟t know their potential and need their eyes opened. Universities need to more productively engage their own resources in support of technology transfer efforts. Technical presentations present technical values that are not well understood by business and marketing people who are the ones who need to become champions before anything is transferred from the lab. The need is for the technology values to be translated into business values. Universities can do this by engaging their business and engineering students to collaboratively do market assessments and build business plans. Other departments, including design, art, English and media-related can help package these business values. Great learning experiences for the students while helping to accelerate the transfer of technology. Currently, only a fraction of universities engage their students in this way.

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Utah Science Technology & Research (Michael O’Malley)

USTAR runs outreach centers based at regional higher education institutions. The Technology Outreach Innovation Program (TOIP) aims to expand the benefit of USTAR beyond the major research universities to the entire state. In 2009, Technology Outreach worked with 163 companies in 18 counties to help them connect with university research and expand their businesses. Technology Outreach is spearheading with the U of U an effort to build a Virtual Innovation Network to facilitate the assessment of a business idea, and the connection to stakeholders in the ecosystem to create positive outcomes. Currently called Redspan, the system under development is a web-based approach to automate and organize the technology commercialization process. As envisioned, Redspan provides a comprehensive solution to evaluate intellectual property assets, create connections between stakeholders, and facilitate the entire deal fl ow process through start-up creation. See Figure 2 On a more general front, Utah technology economic development stakeholders recognize the need for general support infrastructure for new companies and entrepreneurs, regardless if they are incubated or “home-grown.” Accordingly USTAR is developing- in conjunction with the Utah Fund of Funds, Salt Lake Community College, and the Governor’s Office of Economic Development – Centers of Excellence, a series of seminars for client companies and entrepreneurs. The six-session program covers the following topics: I Are you building a VC or Investor Ready Company? II Designing the Perfect Investor III Raising Money: Non-Venture sources of Capital IV Start-up therapy (team building and other issues) V Legal Clinic: Deal Docs: what to expect when you close a round of funding VI Networking: knowing how to find, get, capture and retain contacts.

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Salt Lake Chamber (Lane Beattie)

This effort is precisely in recognition of the fact that innovators rarely have all the skills necessary to take their ideas from inception to revenue generation without interdisciplinary support services and the knowledge to leverage those services most effectively. N/a.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

192

Midwest Research University Network (Allen Dines)

The benefits of university research cannot be captured merely by quantifying licenses and royalties. Rather they are reflected in new treatments and cures for disease, improved patient outcomes, better agricultural production techniques, a more wholesome and safer food supply and a better environment. Across all industries, many advances of the last several decades that have improved society can be traced to university research. Arguably the emergence of the biotechnology industry in the late 1970â&#x20AC;&#x2122;s, has its technology foundation in the life science discoveries at the nationâ&#x20AC;&#x2122;s universities. Ecosystems in Fly-Over Zones A key difference between the hot spots for innovation in the Midwest and the nationally acclaimed engines for innovation at such institutions as MIT, Cal Tech, UCSD, UC Berkeley and UCSF is critical mass. Each of those institutions resides in a large metropolitan area that has evolved an ecosystem highly tailored to the needs of innovators and has demonstrated the art of marshalling the innovation resources needed to create risky but highly promising new ventures based on university research. The Midwestâ&#x20AC;&#x2122;s hotspots like Ann Arbor, Madison, Cleveland, Minneapolis and St Louis may each have many strengths of their own but the innovation community in all these centers is substantially smaller in scale and earlier in their evolutionary development than their East and West Coast counterparts. Thus, bringing university researchers, entrepreneurs, management talent, and early-stage investors together at the right time and with the right chemistry remains a critical challenge to places like the Midwest. Our organization, the MRUN, does exactly that. By operating as a Midwest-wide network focused at the intersection of university research and startup venture creation, MRUN fosters regional cooperation to facilitate local startup development in the ecosystem. MRUN was established in 2002 as an informal working committee of university technology transfer managers from across the region. All faced common problems in commercializing university research through startup formation.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

204

Center for Innovation, Arlington Chamber of Commerce (Cathy DeRizzo)

WBT Showcase –Since 2004 the Center for Innovation has hosted the World’s Best Technologies Showcase. It has become the world’s largest forum of pre-screened, pre-prepped, undiscovered companies and emergent technologies emanating from top universities, federal labs, research institutions and private companies from across the country and around the globe –Participating companies represent a wide array of technologies and funding sources –The event is produced each March in association with the National Nanotechnology Initiative, the National Association of Seed and Venture Funds, and the Federal Lab Consortium for Technology Transfer –Results • One in three WBT presenters (over 50 companies since 2004) goes on to secure venture funding, license their technology, or sell their IP outright, representing over $450 Million raised to date • Elevator Pitch Competition • Licensing Executives Society (LES) training course • University Commercialization Plan Competition • Emerging Technology Fund Top 20 • Multi-Track Concurrent Panel Sessions • Strategic Patent Management for Entrepreneurs

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

National Science Foundation Engineering Research Centers OSTP # 15 19 193

Respondents Montana State University (Paul Sturman) University of New Hampshire (Tom Laue) University of Washington Engineered Biomaterials (Buddy Ratner)

Key Points N/A. N/A. Coursework, training programs, and experiential learning that give faculty and students the skills they need to become entrepreneurs. There is a great need for programs that encourage multidisciplinary collaboration between faculty and students in different disciplines, such as science, engineering, business, and medicine. For example, our University of Washington Program in Technology Commercialization (PTC), a four academic quarter program to generally introduce technology commercialization to a large student group, and them identify and nurture students who will pursue these ideas in detail and that them to actual companies. Business Plan Competitions: These excellent programs are widespread and form an essential part of the commercialization training for students. Awards and other incentives are, in general, an attractive mechanism, and often a relatively low cost approach, to stimulate innovation (consider the X prizes, for example). Technology transfer and sponsored project offices that can negotiate agreements with companies in a timely fashion, and that have a mandate to maximize the impact of their university's research as opposed to maximizing licensing income. Universities have, in the past, often done poorly in this arena. However, with time, academic technology transfer organizations have been more sophisticated and realistic about the nature of business. For example at the University of Washington, the Office of Technology Transfer just renamed itself Center for Commercialization (C4C) to highlight its focus in getting technology from the University to product. Also, C4C has brought to the campus “Entrepreneurs in Residence” to bring experienced entrepreneurs into the academic commercialization process. University-industry Consortium Models. An excellent example of this is the Industry consortia formed within all NSF-funded Engineering Research Centers (ERCs). Many of these industrial consortia persist even after the ERCs “graduate” from the NSF funding. They foster University-Industry communication, and avenues for spinning technology from academic labs to companies. University participation in regional economic development initiatives and efforts to strengthen ``clusters. '' Examples include the Washington State Life Science Development Fund (LSDF) and the Pennsylvania Ben Franklin fund.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Supportive university policies such as ``industrial leave'' that allows faculty members to work for a new or company to commercialize their research Such policies are essential and should be encouraged at all technically oriented universities. This includes flexibility in sabbatical as well as allowances for consulting. What underlying conditions are necessary to enhance the success of a POCC? The most critical assumption for the POCC concept is that there will be available capital to “pull” on the technologies once the proof of concept (prototype) stage is reached. Thus, much like the ERC model, the funding will need to be more long term and require fresh approaches, new targets and addressing unmet needs. What are examples of successful practices? What are the key ingredients responsible for this success? Gap funding is generally effective in advancing university-based technology in terms of licensing, especially for startups. Bootstrapping models have been able to supplant the paucity of VC funding for startups and SBIR/STTR funding has stepped up to aid the stepwise growth of small company commercialization efforts. Of note is the leveraging in some SBIR programs (e.g. Dept. Homeland Security) that will supplement the Phase II SBIR money substantially if matching funds are raised. Many university tech transfer offices have seed funding available through endowments, foundations, state governments and other sources that is invaluable. What lessons can be learned from other successful models such as technology-based economic development organizations that support POCCs? Most state economic development agencies focus (for good reasons) on job creation. However, focusing limited resources solely on this metric will impede much high tech development since it takes several years for significant jobs growth the appear. Yet a 3-year old start-up with sufficient resources to have 5 technical employees including 1-2 PhD’s is doing very well and worthy of investment with development funds. Another highly visible change starting to take hold nationally is the paradigm shift of university tech transfer offices away from a licensing-driven focus and more toward a longterm business development mission. At the forefront of this trend are programs that are collaborating directly with industry associations, entrepreneurs, VC’s, angels and others in their communities to establish gap funding and other workable ways to advance POCCtype endeavors. In many areas, integration with state agencies is probably the most difficult piece of the puzzle, especially with today’s eviscerated budgets. There may be a role for the federal government to instill investment in these activities. Describe educational programs associated with POCCs that better prepare students to work in entrepreneurial environments? There needs to be more integration of students into the actual technology transfer activities. The best way to do this is to provide hands-on opportunities for students to work on the commercialization directly.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

141

NSF Engineering Research Center for Biorenewable Chemicals (CBiRC) (Peter Keeling)

Universities that host NSF-ERCs offer a unique and valuable foundation of intellectual and physical assets on which to consider developing POCCs. The NSF-ERCs are already mandated to grow ideas through their R&D programs to develop early stage proof of concepts termed testbeds (Fig. 1). Realizing the potential of new ideas can be enhanced by combining ERC testbeds with the supporting prepilot and pilot infrastructure that will be housed in POCCs. Because some additional infrastructure and significant capital investments may already be available in or associated with the lead university, some ERCs will be better poised than others to align with POCCs. In general terms, these additional factors for consideration include: Availability of a team of key savvy individuals who will be accountable for directing the evolution of an entrepreneurial flagship into the commercial world. • Availability of an appropriately skilled work-force emerging in the region as well as industry leaders and professionals who will steer the technical development opportunities. • Close proximity of supporting industry and infrastructure that can support and help develop the emerging value chain. • A local state and university culture that understands the value of nurturing technology translation. • Early stages of market pull emerging around the new commercial opportunity. • Relevance and economic importance of new commercial opportunity to the region. • A soundly based techno-commercial analysis showing significant commercial opportunity. • An intellectual property portfolio based around a sound patent collection. • An array of techno-commercial opportunities based on the above portfolio. • Multi-stage scale-up capabilities including bench-top, pre-pilot and pilot infrastructure. • A conspicuous lack of negative factors that might otherwise accumulate into significant barriers for product advancement or commercial development.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

191

Center for Compact and Efficient Fluid Power (CCEFP) Engineering Research Center, NSF ERC (CCEFP ERC)

In a typical academic scenario significant effort has been rightly focused on the research aspects of the innovation while other areas such as marketing and financial analysis, necessary to ensure an innovation’s commercial success, are often neglected. A holistic business plan is rarely pursued. This unbalanced approach is not to be unexpected as technical know-how is typically in abundant supply while marketing and financial skill sets are difficult to access. It is also hard to find regular access to mentors who have real world entrepreneurial experience. Another shortfall is that at this early stage of development a bench prototype may sometimes exist but a real world version almost never does. The CCEFP strongly endorses the creation of Proof of Concept Centers (POCCs) as an excellent means to address the above shortcomings. Some characteristics of an effective POCC would include: • A fulltime staff with the appropriate skills and experience to not only administer the POCC but develop and implement robust business plans. • Access to cost effective legal support, most likely from the host university’s Technology Transfer Office for IP and business related issues., • A robust mentoring program championed by local entrepreneurs who can offer advice and serve as role models. • Is 100% focused in a particular technology area or field such as medical, energy, etc., and not trying to be everything to everybody. • Easy access to necessary infrastructure and facilities, e.g. medical clean room, high bay and test dyno for energy, etc.) • Cost effective, efficient and rapid prototyping capabilities. • Regular communication with venture capitalists and/or angel investors. • A cooperative host university that allows faculty to temporarily get off the academic track in lieu of the business track without any long term career disadvantages. • A reward system that provides substantial financial upside individuals who lead successful start ups. • A successful POCC would utilize an extensive proposal selection process that sets a very “high bar” to get in. However, once in a program would receive adequate support ($150,000 - $250,000) for the project to either reach commercial success or be deemed not viable. • Projects that make the grade would be subjected to regular phase-gate reviews by an experienced Review Committee to ensure that progress is being made in the right areas at the right time

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

National Science Foundation Industry/University Cooperative Research Centers OSTP # 64

158

Respondents Fu Foundation School of Engineering and Applied Sciences (Andrew Shield)

Iowa State University (Bruce Thompson)

Key Points Related industries need to coalesce around sponsorship of precompetitive research in areas of common interest, for example, environmental stewardship, energy conservation, development of concepts that may change the business fundamentally that all partners can benefit from. The IUCRC is a good model. Universities can employ entrepreneurs, perhaps in the later years of their career who will work with researchers to identify early adapters for their inventions. Our organization has approached this in a number of ways. First, our investigators are a mix of faculty and individuals holding full time research appointments, somewhat analogous to the positions of employees of national laboratories. The latter employees are free from normal teaching and committee responsibilities and hence are in a position to interact more closely with industry, very much in line with the well-accepted axiom that â&#x20AC;&#x153;Technology transfer is a contact sport.â&#x20AC;? This creates a cadre of employees whose job responsibilities are aligned with the needs of technology commercialization and diffusion. An organization whose staff is a combination of pure academics and full time research and development professionals could be considered as a model intermediate between academia and industry and hence is in an ideal position to bridge the gap between those two types of organizations. If we want to maximize the success of commercialization of university research, the first step is to maximize the amount of industrially relevant research that is funded by industry, and this requires a look at IP policy. Universities should be more open to deferred rewards such as equity positions rather than large, up-front licensing fees for start ups and universities should have more flexible positions with respect to ownership of IP for research supported by large companies. In the latter regard, the essential issue is that the university wants to own the IP of industrially supported research and the company worries that, if it does not own the IP, it might not be able to control the results to its advantage in the market place. This is in part a consequence of federal policy that vests IP generated in federally funded research with the university. The policy does not explicitly control industrially funded research, but universities tend to extend that model to all of their operations, and hence expect to own the IP of industrially supported work. At the time of writing of this response, I do not have a specific suggestion for federal action that could solve this problem, but those more skilled in these policies matters should seek a solution. A metric would be the amount of contract research supported by industry in academia. Effective IP policies will increase the amount of research that industry is willing to support in academia.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Proof of Concept Centers OSTP # 24

Respondents Pennsylvania NanoMaterials Commercialization Center (Alan Brown)

Key Points There are a number of stages which are critical to the success of a Proof of Concept Center (POCC). All of the projects supported by a POCC need to pass through each stage, with rigorous screening at each step, to minimize risk and maximize commercialization success. These stages are: 1. Facilitating the innovation process by matching emerging technologies with high impact commercialization ideas, based on real market need. The POCC can create this innovative culture through workshops, tech brief web portals, ideation sessions and general networking. 2. Choosing the best ideas for investment and support by the POCC. The Center needs to create a judging panel and review criteria which combines a truly cross‐functional team of technical and business experts which can judge both the uniqueness of the technology, the real market need, and the reality of the planned commercialization strategy. 3. For those projects deemed worthy of support, the POCC must actively work with the researcher/entrepreneur to structure the project so as to maximize outcomes from limited resources. The project should not solely focus on technology, but balance progress on both technology development and commercialization tasks. 4. The POCC should assist and require that researchers/ entrepreneurs define the longer term commercialization strategy, whether this is licensing, contract manufacturing, partnering or some other strategy which makes sense for the industry, market and competitive landscape. This longer term strategy puts the POCC project in perspective and defines clear next steps which can be tested with Angel and VC investors. Bayh‐Doyle provides an incentive for universities and labs to commercialize that research. But this is not sufficient. University or Lab‐ based POCC’s are a good first step. However, these models need to be supplemented with other TBED models and organizations to cover the entire “valley of death” before private investment plays a significant role.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

At the other side of the “valley” Angel and VC investor groups provide the resources to rapidly grow a company with a market‐beating idea/technology. However, this investment is usually after the company is well established. Moreover, VC’s are requiring exits in 8‐10 years. So, there is a huge chasm between the outputs from a POCC and private investors. There needs to be additional incentives and support for the follow‐on support after the POCC projects. Follow‐on support should include outside the university models like the PA Nano Center (described below) and existing SBIR/STTR programs. Proof of Concept Centers within Engineering Research Centers should focus on the “pull” of market need and be test beds to develop prototypes of new products and processes which meet those needs. In addition, university‐based POCC’s need to market their prototype projects more effectively to industry, with an eye to creating joint development agreement partnerships with large companies who have active “Open Innovation” programs. 30

Oregon Nanoscience and Microtechnologies Institute (Robert Rung)

There is little or no disagreement about the importance of sciencebased innovation for national prosperity and high-wage job creation, or the crucial role that entrepreneurial startup companies and early stage investors play in advancing this innovation. Nevertheless, there remains a serious “valley of death” problem – between research findings and “investable” companies, and between “technology push” and “market pull” orientation on the part of development teams. SBIR and STTR, while vitally important to small companies, do not solve this problem, because they do not mimic business investment processes, in particular the importance of identifying large, profitable markets and recruiting management teams capable of leading growth companies. This problem can be solved with locally and professionally managed and investor-advised “gap” funds (e.g. the successful ONAMI Commercialization Gap Fund) for teams commercializing federally funded research, using a combination of state/regional funds and 1:1 federal matching. The benefits of this solution will be 2-4 years improvement in time-to-market and better results in terms of economic returns and job creation from the large federal R&D investment. We believe that a conscious POCC strategy in addition to these is important, and that in most cases (i.e. at all but the largest research universities and the most venture-capital-intensive regions) the best approach will unite multiple institutions and the business/investor community in a logical economic region around an internally competitive process that emphasizes “business merit” (enable highgrowth companies) just as highly, or even more highly, than “intellectual merit”.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Innovation Transfer Network (Jill Edwards)

The Innovation Transfer Network was created in 2006, as a membership organization of 12 colleges and universities in South Central Pennsylvania. ITN has generated deliverables including forging new relationships between faculty and business, increasing opportunities for project collaboration, providing seed grants for commercialization projects, and offering Intellectual Property support and services. These accomplishments have raised the visibility of this region’s talent and intellectual property resources.

34 88

Scottish Enterprise (Kate Macinnes) Select University Technologies, Inc. (Fred Rogers) Pennsylvania Center for Drug Discovery (Allen Reitz)

Two lessons to be taken from this example are: (1) include entrepreneurial faculty researchers in the mix and (2) make sure for-profit companies work closely with the researchers. These factors will ensure that research that is useful in the marketplace occurs. N/A N/A

Business plan competitions. We do not believe these in and of themselves help to promote technological innovation, as opposed to promote general awareness of the factors involved in business development. They are however a venue to provide relatively free advice on business matters to nascent entrepreneurs. Coursework. Of course this is valuable. One of us has an MBA (K.C.), and one of us obtained an Executive Masters (M.S. Management of Technology) while employed full‐time in the pharmaceutical industry. Programs that encourage multidisciplinary collaboration. These are essential to success, as the Team is as important as the Plan for any technology to succeed. However, we would also add that it is important that applied research expertise with real‐life industrial experience be heavily represented in such Teams, and not merely an adequate representation of the different academic disciplines involved. Our POCC (the PCDD) emphasizes applied research capabilities extensively when new companies are being created or technologies evaluated. University involvement in regional economic development initiatives. These are to be encouraged, as exemplified by our POCC (the PCDD). The key is that such initiatives actively seek to provide value‐added guidance and support such as matching the university technologies with researchers and companies that offer suitable applied research capabilities and expertise. In general, regional economic development initiatives need to do more than shopping technology around to the highest bidder, but also include strategic flowchart advice and even active project management if appropriate.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

113

Fraunhofer Center for Sustainable Energy Systems (Jeff McAulay)

Our Approach to Proof-of-Concept Centers (POCCs) is to bring together the following elements: • Technical expertise and laboratory resources to streamline technology development • Established commercial firms as strategic partners to understand market needs • Investment partners to fund early stage development • Networks of experienced business professionals to help build early stage companies • Service providers to address needs for legal counsel, physical lab space, and other needs The Fraunhofer TechBridge model addresses the POCCas an element that exists as a sequential step for technologies leaving university labs. The pace is functional element in an economic development strategy that relies on multiple parties. The TechBridge model includes a private not for profit laboratory system, a related venture support model, strategic partners to develop market pull, due diligence systems for qualifying technologies and a network of community based incubation facilities to support commercialization. The model combines existing commercialization programs on the state and federal levels with the technical expertise or an R&D lab to support lean commercialization of energy startup companies. In this case the POCCexists to help reduce risk in critical early stages of a company.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

109

113 Industries (Anupam Singh)

Proof of Concept centers have done a great job at providing space and guidance for the technologies they are working with. The next generation of POCCs have to move further down the value chain â&#x20AC;&#x201C; They must provide not only space and advice, but take ownership of the technologies, and be responsible for success or failure of the technologies they are working with. This requires a shift to a forprofit model for POCCs, where the POCCs are actively involved in making product decisions, sales and marketing activities, forming industry relationships, making Legal decisions such as filing for additional IP protection, and securing VC funding. All of these are tied to cash flow for the startup companies, so POCCs must be actively involved in managing cash flows for the companies they are incubating. Most investment in technology today focuses solely on funding the technical work. A very important piece that is not adequately funded today is the business expertise and relationship building with industry that is critical to driving a technology towards a commercially viable product. To what extent do interdisciplinary services (legal, accounting, business plan training) contribute to POCCs successes? These factors are the differentiators between a passive POCC, and an active, involved POCC. The next-generation POCCs must provide these interdisciplinary services to ensure successful commercialization of the technologies they are working with. Most technology incubators focus on providing services such as office space, electricity, networking etc. One of the key ingredients that many startups, especially spin-offs from Universities struggle with is the non-technical, business aspects of running a company. These include Sales, Marketing, Business Development, Finance, Legal, Project Management and Operations. 113 Industries believes that incubators must expand their services to include these critical business functions.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

NSF Engineering Research Center for Extreme Ultraviolet Science (Jennifer Smith)

Q: Is there any evidence that indicates POCCs are an effective mechanism to foster local or regional economic development and job creation (e.g. research related to the needs of particular clusters, participating in regional networks, making shared facilities available to local firms, addressing the need for skilled labor in particular sectors)? A: In northern Colorado, schools have developed curriculums that not only meet the needs of local startups and new businesses in hybrid vehicles and alternative energy but also provide research and facilities for assisting in the new technology development. This is most possible, however, where technologies are reaching the point of practical application. More needs to be done to accelerate technologies that are still several years away from commercialization. It may make sense to focus ERCs on the latter and POCCs on the former opportunities. Q: Describe educational programs associated with POCCs that better prepare students to work in entrepreneurial environments? A: Curriculums that contain a systems level education provide a more capable, experienced flow of students into industry. This has been demonstrated in the NSF ERC program both through surveys with industry and through anecdotal information provided through individual industry members and Industrial Advisory Boards. The curriculums might include multidisciplinary educations across engineering disciplines but also contain instruction and practice in project management, business law, procurement, marketing and communications.

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Pennsylvania Life Sciences Greenhouse (Jennifer Smith)

Q: Would the appropriate success metrics for a POCC affiliated with a university be different than one affiliated with a Federal research lab? A: It is possible that there would be separate metrics. The university afficiated POCC may well be a more natural environment supporting transfer to industry. Often, early-stage technologies are not fully developed, have illdefined market potentials, and require input from experts in the area in order to decide if the technology has sufficient potential to serve as the base for a new company. Pre-seed funding may be needed to run a market assessment, prove the principle, run several basic experiments or get expert business opinions. Thus, it becomes problematic to form a new company around unproven technology with unknown market potential and no real management. The Board of LSGPA has recognized this problem and has approved this proposal, recognizing that this may provide a novel solution for a wellrecognized issue facing innovation economies.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Private Companies OSTP # 1

Respondents NANO INK (Nanoscale Devices) (James Hussey)

Key Points The U.S. has most successful academic research system in the world supported by sophisticated and rigorous grant programs that are designed to generate the best research from the most qualified researchers. Unfortunately, there is no comparable infrastructure or expertise in place to maximize the economic exploitation of the research generated by our leading academic researchers.This explains why we as a nation have had such a difficult time in successfully commercializing our research findings. One of the biggest problems from the lack of rigor in commercializing research: we are allowing too many inexperienced and unproven entrepreneurs to try and exploit the research when statistically it is overwhelmingly clear that experienced entrepreneurs with previous track records of success are far and away more likely to succeed in exploiting new research.

Coherix (Semiconductor Process Performance) (Ron Swonger)

The author proposes creation of a new system for exploiting research with comparable structure and rigor as the current research grant system that would be heavily based on the decisions from proven entrepreneurs. Small, high-tech businesses are the primary source of transfer of university research into the marketplace. Also, for decades has been the primary source of American economic growth and job growth nationwide. Recommendation: Expand availability of funds directly available to small business without new regulations, restrictions or layers of government review, approval or control. Participation fees imposed by regulation favor the richest and most powerful (but slow moving) multi-national corporations. Funds channeled to quasi-government agencies or government sanctioned monopolies work to the detriment of Small Business Innovative Research programs.

The Impact Group (Ron Freedman)

“Proof of Concept Centers” would be an impediment should government take control of technology, depriving original researchers of the ability to sell it and to stimulate the economy. New paradigm in Canada: From “Alliance for Commercialization of Canadian Technology” to “Alliance for the Commercialization of Research and Knowledge”. There is recognition that “know-how” is as important as new patents, software, and copyrights. Universities need to create a single point of contact for industry and others to market knowledge as well as new technologies.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Shadow Labs (Steve Edelson)

Able Link Technologies (Private R&D) (Steven Stock)

Pendulum Services LLC (Sid Saunders)

Finding practical, marketable uses for university research remains a missing link in commercialization. The Internet can be a two-way communications platform (i.e. Wikipedia) to encourage dialogue about ways research could be used, and to act as a gathering site for groups interested in forming start-ups and funding to take early stage technologies to market. The Internet can expand and automate ways to answer: “What is this research for?” and “Who wants to fund and sell it?” Universities need to partner with existing established businesses to maximize the benefit of their research in using existing distribution channels, expertise, networks etc. instead of trying to replicate those resources from scratch. POCC processes need to be replaced by market feedback in terms of product efficacies and refinement. Much of Academia still clings to old school aloofness toward industry. A rule of thumb is that 85% of faculty practice aloofness and 15% are industry friendly. This ratio needs to be reversed if we as a Nation are to compete internationally. It’s a cultural change that can be guided by each university’s administration. The universities might take lessons from the University of Central Florida (www.ucf.edu) to see how they promote themselves with partnering as a primary, institution‐wide mission. One of their policies is to promote side‐by‐ side university/industry research in dedicated “partnership buildings.” Another policy is to require all of their research proposals to include industry players. Still another policy is to hold periodic, topic‐focused partner’s meetings & expos. These policies all contribute to dynamic, continuous and productive university/industry interactions and should be replicated all across the country. As an added thought, universities and the Federal Labs might engage professional story tellers to help translate the scientific/ engineering advances. Example players might include Discover magazine, the New York Times Science Department, the editorial departments of selected scientific & trade organizations and the Open Innovation community. One new approach to fill this void could be to organize an “Open Commercialization” system. Playing off the concepts of “Open Sourcing” and “Open Innovation,” this concept would use organized, ubiquitous communications platforms to engage a community of collaborators who could each supply a portion of the commercialization process in return for equity and long‐term contracts in the enterprise. In this manner, a company could get more done, faster, and for less up‐front cash outlay. So, for example, there would be less need for so much venture financing and less need to give up so much equity to the venture community, whose interest in the company always wanes over time. On the other hand, commercialization collaborators who would have a vested interest in the success of the project would continue to earn their equity and/or contract revenues over protracted time.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Reports estimate that new product demonstration takes 7X funding over the earlier stage research. After demonstration, it takes another 7X funding to reach the marketplace. Or, roughly, it takes 50X research funding to get a product to market. Consequently, on the macro scale, the Federal government’s investment in research will not result in expectations without massive after‐research funding. The competition for limited development funding is intense, with most projects cancelled. Only the very “best” survive. Usually, it is the venture capitalist who decides what new innovations move forward and which ones do not. Unfortunately for most potential new products and services, the venture capitalist has no interest, no matter how much society needs them and no matter how sound they are. This is because the VC has a very narrow window of criteria. The VC looks for the one‐in‐a‐thousand that has the most financial promise in the shortest period of time. There is nothing evil in this approach, but it results in an abundance of disappointment by the 999 “losers.” The problem is that so many depend so heavily on such a barren source of financing. All the potentials are poured into the wide end of the funnel, and only a couple can squeeze through the bottom. The two POCCs (reported in Kauffman 2008) and the variants are doing praiseworthy work but are too small, too under‐capitalized, too under‐staffed, too focused on business building instead of technology acceleration, too narrowly focused, and too focused on VC criteria. Like VC’s, they select the technologies and companies having the highest apparent potential profit in the shortest period of time, leaving the majority of the other opportunities without support. Most focus just on the early stages of commercialization, leaving the heavier lift later stages to find their own way.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Cross Hill Partners (Christopher Shea)

In our experience, the single most important factor in the success of any venture is the quality of the management team. We’re not alone in this opinion. Venture capital firms always state that the quality of the management team is central to their investment decision. Yet, very little investment is made to identify and nurture the management expertise required to commercialize technologies. Most university entrepreneur in residence (EIR) programs rely on some combination of alumni, volunteers or part timers whose domain expertise may or may not be relevant to the technologies being developed. The problem with relying on volunteers and part‐timers is that as with everything else in life, you get what you pay for. Disruptive technologies often need very specific sector expertise to help conceive of an appropriate commercialization strategy. Decisions made at this stage of the process are critical to getting the technology on the right path early. Proof of concept centers (POCC) can be very effective in helping to define a commercialization strategy and in packaging a technology for commercialization. The problem is that the inventor/researcher is generally not the best candidate to execute the plan for a variety of reasons and investors generally want to know who the management team is before they commit to funding. At the same time, senior executives are reluctant to join a startup that isn’t adequately funded. The most promising, “sure thing” technologies attract investors who are willing to underwrite a management team and fund further development because they are confident in the potential success. The commercialization center would be a not‐for‐profit “utility” that mentors and develops early stage technologies preparing them for launch. When ready to launch, the center would introduce investors and tap a pipeline of management talent to lead the enterprise. The center would assist fledgling companies in obtaining phase I and phase II grants, serve as interim managers of record for these grants and provide other advisory and counseling services for the researchers to help guide their translational research efforts. The Center would recruit EIRs (at market rates) whose domain expertise is closely aligned with an area of research focus within the institution and they would be the relationship manager for this sector overseeing a portfolio of promising technologies and serve as the liaison to the researchers and faculty within this sector. In addition to maintaining relationships with the university research staff, the EIR(s) would direct the development of a pipeline of managerial talent who are potentially interested in joining a start‐up or as a successor if the EIR decides to join one of the technologies in the portfolio. Cross Hill Partners would welcome the opportunity to discuss our ideas in more detail with any interested party.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Fuentek LLC (Nancy Pekar)

Fuentek’s experience has repeatedly shown that proactive technology management that proceeds in phases is highly successful and cost-effective. As summarized in Ms. Schoppe’s numerous presentations and publications (see the suggested reading list in Section 7.0), this practice involves: 1. Performing a rapid analysis—or screening—of all invention disclosures (i.e., innovators’ internal reports of the technologies they have developed) before patenting, distinguishing those that deserve further consideration from those whose potential commercial or other (e.g., humanitarian)impact is insufficient to warrant the investment of further resources into commercialization 2. Conducting more in-depth analysis—or assessment—of technologies that “pass” the low-cost, rapid screening to make an informed decision about whether to pursue patenting and commercialization 3. Implementing marketing efforts to identify potential licensees—be they an established company, a start-up, or other organization (e.g., venture capital, incubator)—interested in the technologies that “pass” the assessment 4. Negotiating a licensing agreement—or undertaking some other deal-making effort—whose terms are beneficial for both the original owner of the technology and the licensee/partner 4.2 Internship Programs University TTOs have the unique advantage of having a readily accessible workforce whose educational growth is that university’s responsibility: their students. Student interns can make a valuable contribution to the commercialization of federally funded university research—provided they are integrated into the practice correctly. Fuentek’s experience with launching an effective internship program at UIUC in 2001—a program that is still ongoing today—established the following best practices: • Start early: Having the hiring process begin as early as possible—with training beginning by • May—ensures the best possible pool of applicants. • Choose the right students: MBA students with technical backgrounds who are just ending their first year are ideal candidates because they (1) have the appropriate knowledge base and (2) are available full-time through the summer as well as part-time during their second year. • Focus on screening: Interns are best suited to work on screenings (not other aspects of technology transfer like marketing) and are most effective when screening inventions on an as received basis to avoid a backlog of technologies. • Train thoroughly: Providing step-by-step guidance on the entire screening process is essential. • In addition, interns who understand that their role is part of the bigger picture are better positioned to perform the finer details of their assignments effectively.tions and schedules.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

• Expect a learning curve: Experience has shown that even well-trained interns take longer than professional staff to complete a screening—usually 8 to 15 hours for an intern versus 1 to 4 hours for a professional. Therefore, TTOs should account for this additional time in their expectations and schedules. • Evaluate and improve: Interns’ work must be evaluated by professionals on an ongoing basis to check for thoroughness of information and to validate their recommendations to see if any modifications to the training are needed. Technology transfer internship programs offer many benefits to both the students and the university. However, it should be noted that cost-cutting advantages (if any) are low on that list. Nevertheless, the tremendous experience such a program can offer students—training the future leaders of the business and technology transfer fields—provides reason enough to commit to an internship program. 46

BioAccel (MaryAnn Guerra)

The Flinn Foundation’s 2008 Roadmap Progress Report , like the Office of Science and Technology Policy/National Economic Council, confirms that the United States has reached a turning point where new investments are required to translate research discoveries into new products and services that will provide health benefits to Arizona, the Nation and beyond. While it is possible for each research organization across the US to build the necessary infrastructure to fully translate research results, it is likely more efficient for these institutions to focus on their core competencies (education/ research) and allow other organizations that specialize in commercialization to help them transform their research discoveries into commercial products, especially since these efforts require additional sources of capital and entirely different sets of expertise. Ideally Universities, other Research Performing Institutions (RPIs), and Regional Economic Development Organizations should be working together to leverage, accelerate and transform research outcomes into new products and companies that provide value back to the consumer and to the community. BioAccEl was formed in April 2009, as an independent non‐profit organization the aforementioned objectives. • To create a non‐traditional model positioned to leverage the extensive resources t hat have been invested in the biosciences by the federal, state, and local governments as well as local businesses and philanthropy. • To create a non‐profit organization that could provide arms‐length distance to better manage commercial decision making and potential conflicts of interest. • To streamline and accelerate the commercialization process through integrated programs and cooperation. • To combine philanthropy with capitalism to create novel resolutions to this complex problem.

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The BioAccel’s Best Pr Model includes: actice Process Improvements: • Each project undergoes a rigorous external review that confirms the scientific approach is valid but more importantly includes a serious assessment of the business opportunity that can be achieved. The as outcome is an increase in projects that will be both scientificallywell as commercially successful. • Outcome focused, milestone driven best practice approach that includes ongoing project management: BioAccel has created a process to insure that every project under consideration has a clearly defined outcome identified along with achievable milestones that are project managed by BioAccel staff. The result is a model that provides external project management that assures that funds are spent appropriately, hurdles are overcome and projects are completed on‐time thereby accelerating progress and success. BioAccel will reallocate funding to new projects from projects that appear to be failing in their attempt to validate the commercial potential of the technology. • By supporting late‐stage discovery research through philanthropy, BioAccel is able to increase the value of the technology for the owners of the Intellectual Property (IP), which in our model, is typically owned by non‐profit research performing institutes (e.g. Universities, , research hospitals etc). The outcome of this change in paradigm is a willingness for these research universities and other organizations to work with BioAccel in a collaborative manner that builds their success and provides increased value to their technology, while also providing social good by driving economic development through the creation of new companies, jobs, and a healthier community. Novel Philanthropic Approach: • BioAccel is driving the new venture philanthropy, and more recently, the Philanthrocapitalists model. Matthew Bishop/Michael Green wrote: “For philanthropists of the past, charity was often a matter of simply giving money away. For the philanthrocapitalists – the new generation of billionaires who are reshaping the way they give – it’s like business. Largely trained in the corporate world, these “social investors: are using big‐business strategies and expecting results and accountability to match.” This approach confronts two important principles: the recognition that philanthropy can be used to drive positive but important “disruptive” change to existing approaches and the goal of attracting new individuals to philanthropy based on its to business focused, outcome oriented process that is dedicated improving local economy through new companies and new jobs. • This model recognizes that while philanthropy is good, in the biosciences it takes private investment to fully capitalize new ideas that will benefit the community through earlier access to the latest research outcomes, improved health and proactive economic development. The outcome of BioAccel’s model is a leveraging of existing investments, combined with philanthropy to fill important gaps necessary to accelerate commercial development that creates new sustainable business to improve Arizona’s overall economy. And of course improve the quality of life for the citizens who live here. • Through the abovementioned innovative process change, compounded with philanthropic funding of late‐stage research outcomes, the technical risks are reduced and business Collective Genius: Innovation, Entrepreneurship, and the Commercialization University Research potential increased thus making eachofproject outcome a more 101 palatable investment for the private sector. As the business community has embraced this concept, another new model is emerg-

Foresight Science & Technology (Phyl Speser)

• Through the above mentioned innovative process change, compounded with philanthropic funding of late‐stage research outcomes, the technical risks are reduced and business potential increased thus making each project outcome a more palatable investment for the private sector. As the business community has embraced this concept, another new model is emerging in Venture Capital (VC) support. A number of VCs are now working with BioAccel to create a funding vehicle that will provide a portion of its investment back to BioAccel programs (as a donation to increase the number of validated technologies) while at the same time providing the back end capital necessary to further develop the technology into new products. The outcome is a new model that provides the necessary capital to the new companies that are spun out and to increase BioAccel’s development pipeline and future sustainability. Research on the percent of inventions described in university disclosures that end up embodied in products suggests most universities technologies are not licensed or otherwise acquired by industry. This is not a bad thing. We want universities to discover new knowledge. Under the Bayh-Dole Act, universities have an incentive to capture inventions stemming from new knowledge. This kind of knowledge to technology progression should produce more “seed corn” than industry needs, because we can never fully define what technologies might be needed for the future. The fact not all technologies go to market is not a sign of failure, but of the creative fertility of US academic institutions. What this fertility suggests is a key piece missing from the RFI is mechanisms for determining which inventions should be protected and then aggressively marketed to industry, which should be protected and less aggressive marketed, and which should be disseminated into the public domain and free for use. Under the system that evolved with the aid of Bayh-Dole, the entity responsible for this determination is the Technology Transfer Office (TTO) – either individually or in cooperation with a Sponsored Project Office (SPO). This role of TTOs and SPOs is missing in the RFI. There also is a substantial body of literature that suggests if we want more university research commercialized, we have to think about how to improve two-way communication between universities and industry. This communication needs to move upstream in the American innovation system. Rather than occurring at or after proofof-concept, it needs to occur during the formulation of research agendas to exploit breakthroughs in fundamental research. There are two takeaways here. The first is that technology commercialization occurs through an interactive, non-linear process with lots of feedback loops. Thus overreliance on proof-of-concept centers would downplay the significance this vital interaction. The second is we need to focus on how to improve this non-linear process i we want to cut times to market from decades to five to seven years.

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We use five to seven years to highlight the need to leapfrog ahead of global competition. Again, over-reliance of proof-of-concept centers would not address the need to stimulate wider and more diversified interactions between university researchers and US industry, especially smaller firms focused on emerging market opportunities. There is ample literature that establishes where market pull is integrated with technology push, technology moves to market faster. Further, there are foundations supporting such programs, such as the Kauffman and Lemelson Foundations. There also are several non-profit associations that provide for knowledge sharing and best practices dissemination among the programs, such as the National Collegiate Inventors and Innovators Association. In addition, a wide range of supplemental entrepreneurial education programs are also conducted by federally funded organizations such as Small Business Development Centers and state funded high-tech economic development programs. All TTOs and SPOs seek to provide service to faculty to encourage retention. Especially in land grant institutions, they have the mission of supporting local, regional, and national economic development. In a normal deal for Bayh-Dole technology, the university seeks three things: a royalty rate, upfront fees and/or minimum payments, and reimbursement of patent costs. The university has flexibility to negotiate on the first two, as they represent future free cash flow.1 Patent reimbursements, however, pay back the university for money it has already had to lay out. (After all, an invention that cannot be patented or otherwise protected is very hard, if not impossible, to license.) Thus, if it does not recoup this money, the act of licensing a technology means the university will, at least in the short term, lose money. Washington Technology Center (WTC), a state agency which funds the university side of university-industry collaborations. The WTC focused on the intersection of fundamental and advanced applied work, one of the areas of greatest need: more university/industry collaborations on potentially high priority but immature or low Technology Readiness Level (TRL) technologies. The problem with low TRL technologies is risk. Regardless of what estimate you make of the downstream free cash flow from sales of goods and services based on federally funded inventions, a low TRL drives up the discount rate because low TRL means more R&D is needed to mature the technology. Discount rates are higher because: the risk creates uncertainty as to whether the technology can be developed and scaled to meet commercial production requirements; and the time to market is longer than for more mature technologies so it demands elasticities that can be more accurately estimated. Because risk is high, discounted cash flow analysis usually suggests it does not make economic sense for industry to invest in or acquire rights in early stage technologies. A university forms an ideal nexus for innovation ecosystems: with its faculty and students A university forms an ideal nexus for innovation ecosystems: with its faculty and students Collective Genius: Innovation, Entrepreneurship, and theand Commercialization Research To ensure flexibility responsivenessoftoUniversity knowledge breakthrough103 and industry needs, one path is to use the model of defense IR&D funding. Here the contractor proposes work that is funded through

We use five tofor innovation ecosystems: with its faculty and students A university forms an ideal nexus for innovation ecosystems: with its faculty and students to ensure flexibility and responsiveness to knowledge breakthrough and industry needs, one path is to use the model of defense IR&D funding. Here the contractor proposes work that is funded through an overhead allowance that is approved by the funding agency. An equivalent opportunity for universities government wide would allow university research teams to access IR&D funds provided by research agencies so long as the researcher can come forth with small business partners. Following the Washington Technology Center model, we would allow $4 of IR&D money to match each $1 of corporate money. The primary problem is to make universities more “user driven” without damaging their fundamental “knowledge driven” character. One way to do this is for local economic development agencies to catalogue: the capabilities and absorptive capacity (ability to take in and use new knowledge and technologies) of regional firms; the markets they currently serve; the product families they sell; and, their views on other markets of interest to them and the next generation and generation after next products they need to compete in current and new markets. Market analysis should next be conducted to validate perceptions as to market opportunities and technologies needed for sustainable competitive advantage. The next step is to align these opportunities and technology needs with capabilities in the regional university and research hospital research community. Where good fits exist, economic development agencies should be advocates facilitating partnerships that leverage university and hospital IR&D funding and exploit STTR, SBIR, and other funding opportunities. In other words, the best fit is where a university’s strengths and strategic thrusts can be teamed with regional company strengths and strategic thrusts. POCCs work best where relevant industry technology roadmaps or other clear definitions of industry need exist, allowing the POCC to focus its efforts in areas with higher industrial saliency. It enables the POCC to recruit industrial funders and collaborators and, with the aid of their input on Advisory Boards or Boards of Directors, determine what equipment and labor capabilities and resources they acquire. Obviously it also helps if there is a national or international reputation in a field of the proposed POCC, as that will be perceived to reduce the risk of success of the R&D and validation activities conducted. This analysis indicates it makes sense to focus POCCs on specific scientific/engineering/technological fields of endeavor. This approach is a “centers of excellence” model and the emphasis is on serving a national clientele rather than a local or regional one. Local or regional benefits come from spin-outs and synergies with firms in the area.

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Gas, Oil, Chemicals, Gasification Business Line Black & Veatch Corp. (Jon Erickson)

SRI International (Curtis Carlson)

Some universities are geared up to doing Basic Research which is strictly encouraged by NSF. They can come up with some interesting concepts and try them out on a bench scale basis. (NSF is not friendly to applied research.) However, many universities are not setup to optimize an invention. Further they are reluctant to go to pilot scale project. Piloting the process is critical to go through the valley death. Universities are aggressive in grabbing all the IP. Some universities do a good job in getting industrial partners on board. However, Industrial Partners are reluctant to do research with the universities because their IP position is too rigid and aggressive. The Federal government might see more commercialization if they awarded the projects to private companies that are mandated to subcontract to universities. Universities would then be in a work for hire mode which would force them to be more efficient. Commercialization would be the responsibility of the private company. Private companies could reward the university with a portion of the IP revenues but this would be performance based and negotiated deals. For heavy energy intensive industries, its difficult for the universities to commercialize inventions. They often lack market knowledge, invention development understanding, and an entrepreneur mentality. Benchmark Singapore â&#x20AC;&#x201C; They are Benchmarking Us!: The best answer to all these questions is to see what Singapore is going. They continuously benchmark themselves against the best in the world, and then modify those practices to fit in Singapore, and then systematically implement them. I am co-chair of their Science Advisory Board and I get to see their program up close every year because we evaluate all their innovation initiatives (Our SAB includes a group of some of the best folks in the world on R&D, innovation, and competitiveness). Some universities are now working hard to educate their faculty and to embed innovation into their curriculum. Attached is a program we have been giving to help professors more clearly understand the process of innovation and how they can apply innovation concepts in their curricula. Examples include Worcester Polytechnic Institute, Rutgers, Kettering University, Suffolk University, and numerous universities outside America. The Kerns Family Foundation funds dozens of universities developing similar programs.

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Medical Discovery Partners, LLC (Steven Bogen)

Academia generally views its missions as the discovery of knowledge and teaching. Technology development (past the initial discovery and publication) is generally not within the academic focus, at least in the life sciences. (The same may not be true for engineering disciplines.) This is reflected in the lack of meaningful funding opportunities for life sciences technology development. Traditional academic grants, such as the NIH R01, are rarely suitable for developing a technology. Moreover, academic promotion criteria emphasize publications, research discoveries, and NIH funding, all of which are more difficult in technology development. The challenges to technology development in an academic setting are well known to those in the field. The answer, on behalf of university medical centers, is that technology development is generally not an academic pursuit. Universities believe that once an initial discovery is made, it is best to transfer the intellectual property (IP) rights to an outside company. According to the present model of technology transfer, that outside company can be a start-up, dedicated solely to developing the IP into a commercial product. Alternatively, the IP can be licensed to an established company with a product portfolio into which the university IP fits. The task is to develop selected early-stage technologies to more advanced project milestones, while - - at the same time - - controlling the risk profile that is inherently associated with early stage R&D. I believe that the best way to accomplish these twin requirements is within a new type of POCC. The POCC might have the following characteristics: A private, for-profit company affiliated (in an “arms length” relationship) with one or more university medical centers. The POCC is an operating company with full-time staff, capable of raising private risk-capital funds and executing R&D. I believe that such an enterprise will more effectively address the needs as compared to a virtual POCC. The POCC serves as more than a “virtual” connector for funding, expertise, and resources. The POCC’s mission, according to this model, is to directly drive the project through the “technology transfer gap”. The POCC directly takes on this responsibility. By undertaking the R&D internally, the POCC both controls expenses and develops a first-hand understanding of the technology’s nuances. The business relationships characteristic of a POCC, according to this model, are illustrated in Figure 3. The reason for creating a free-standing POCC is that the mission does not fit well anywhere else. Conflict-of-interest concerns, discordance with the university mission, and a different skill set and culture, create significant hurdles to placing it directly under a university corporate umbrella. Moreover, technology development projects are best staffed by a team, which is common for corporate project development. The team, rather than a single student or postdoctoral fellow, is responsible for driving the project forward.

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Molecular Express, Inc. (Richard Tamaki)

This working relationship is less common in academia. The need for credit and senior authorship sometimes makes this difficult. The main underlying conditions that are necessary to enhance the success of a proof of concept center (POCC) are availability of cash and resources, and a strong market pull for the technology. Regions with a lack of angel investment or venture capital can utilize government funding via grants or loans.

Innovation Associates Inc. (Diane Palmintera)

Yes, current POCC success can transfer to any region or university with the right combination of public and private support. Active participation in the local community is important for any business regardless if it is a POCC or not. But being a POCC, it becomes more important to be active in the local business community to build a network and the trust to gain access to new developing technologies. This report is the first to provide a detailed description of academic institutions that are emerging; these institutions have been successful in technology transfer and commercialization even though they lack the substantial R&D funding and other factors normally associated with high-performing institutions. The research builds on previous findings on technology transfer in major research universities described by Innovation Associates in Accelerating Economic Development through University Technology Transfer. (Diane Palmintera, Accelerating Economic Development through University Technology Transfer, Innovation Associates, 2005. (To download go to www.InnovationAssociates.us). The most pervasive issue that impedes commercialization of academic-based innovations commonly is referred to as the â&#x20AC;&#x153;valley-of-death.â&#x20AC;? There are many factors that contribute to the valley and these factors differ somewhat depending upon whether an academic institution transfers an innovation by licensing it to an established corporation or by launching a startup. If an innovation is launched through a startup, investment capital particularly seed and early-stage capital is often a key factor in the ability of the startup to commercialize the university-based innovation. Other factors involve building sufficient business and management capacity. If institutions that launch startups are located in areas with few entrepreneurs and venture capitalists, these obstacles to commercialization become even greater. Whether a university-based innovation is licensed to an existing corporation or transferred by launching a startup, major commercialization impediments also often revolve around the innovationâ&#x20AC;&#x2122;s early developmental stage and lack of direct and immediate applicability for commercial use. For our purposes here, we describe the valley of death as the gap between later stage, academic-based innovations and the commercial application of those innovations in the market place.

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Vencon Management, Inc. (Irvin Barash)

Orphagen Pharmaceuticals (Scott Thatcher)

POCCs are useful in the early development stage of a possible new venture. University business plan competitions are helpful. Investingandcollaboratingwithentrepreneurialcompaniesrequiresspe cialmethodologies.Venconrecognizespersonalitiesandpoliciesandstr ucturestheprogramwithinthisinfrastructure.In developing the collaboration program, the key factors are the evaluating and selection of the right entrepreneur or team and the establishment of proper stock, control aspects and Directors. 1. POCCs are not necessarily an efficient route to commercialization of pharmaceutical products that have their roots in academic research. There is a trade-off between the greater capabilities of any large organization and the resulting loss of creativity. 2. There is an alternative in the form of the biotechnology entrepreneur—who takes a personal stake in the project he or she chooses—and who has access to resources and incentives that did not exist 15 years ago. They include: 3. Much improved partnering opportunities for the small firm as the major pharmaceutical companies reduce their commitment to early stage research. 3.1.An expanded labor pool of trained individuals due to industry layoffs and turnover of VC backed firms. Job turnover is almost a way of life in the biotechnology industry. 3.2.Instantaneous access to published research from public sources and the ability to make connections not obvious or not necessarily of great interest to the academic scientist. 3.3.Better access to technology (low-priced IT or screening technology, for example), and to contract research organizations (CROs), making a small (less than 10 person) company very competitive in terms of its capabilities. A big capital budget is not necessary. 3.4.Drug discovery is NOT usually a linear process. A change of direction can be painful in a large organization. 3.4.1.An academic model for the POCC, with laboratories that have relatively immutable interests, lacks flexibility. 3.4.2.Large pharmaceutical companies have tried management innovations that generate an “entrepreneurial culture” within their ranks, and it is not at all clear that this has succeeded. A POCC, unless carefully managed, will run into the same problems as the larger pharmaceutical companies have. 3.4.3.For the biotechnology entrepreneur creativity comes naturally because fixed costs are lower and personnel are trained to be flexible.

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Syntrix Biosystems, Inc (John Zebala)

4.A policy deserving serious consideration, complementary to creation of POCCs, is to encourage entrepreneurs through increased grant funding (for example, through the SBIR program) and tax incentives. 4.4.Such a policy harnesses the passion of the individual drug discovery scientist as company founder, co-founder, or stakeholder. 4.5.By contrast, the academic scientist has fewer real incentivesâ&#x20AC;&#x201D;beyond obtaining greater access to resourcesâ&#x20AC;&#x201D;to focus on commercialization. Heavy investment in POCCs as academic institutes or run by academic consortia is not likely to be productive. 4.6.The entrepreneur is usually highly capable of integrating and re-assorting novel concepts in ways unlikely to occur in an academic setting, based on an interest in drug commercialization. 4.7.Often, it is the entrepreneur that is most successful in creating the critical (and defensible) intellectual property for a new therapeutic approach. The key invention need not be an academic one although it may be inspired by and derived from academic findings. The proposed Translational Accelerated Research Consortia (TRANS-ARCS) is a novel and boldtransformative strategy aimed at exactly addressing the bottleneck accumulation of VOD opportunities at the wall between non-profits and innovator companies by achieving a dramatic migration of these opportunities through the VOD. Briefly, a TRANS-ARC is a consortium between an innovator company that has been competitively awarded an ARC grant and another party having a VOD asset developed with NIH funds.10 The TRANS-ARC mechanism contractually provides for certain prespecified terms between the two parties and the ARC grant provides $25 million in capital to the innovator company to move the VOD asset to a point of finality defined by success or failure in humans (see Table 3 for details).

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PowerWorld Corporation (Mark Laufenberg)

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Intel Corporation (Doug Comer)

PowerWorld believes that the commercialization of university research is a critically important topic for the nation's economy and general well being. As an example of a company that has commercialized university technology, we have seen how important it is for a young company to have opportunities to interact with university researchers and other businesses. PSERC has provided that opportunity. In some ways, it is much more important for small, entrepreneurial, job‐creating companies to have these opportunities that it is for larger companies. We would like to make a special note on behalf of small companies that their membership in IUCRCs be encouraged through reduced membership fees and that commercialization of university research be encouraged through these member companies. Small companies based on university research are a tremendous asset to IUCRCs and the university researchers who are involved with them. PowerWorld is currently the only “small” business involved with PSERC, even though many others could benefit. Such a program within existing IUCRCs could provide a good means for bringing together faculty with small businesses (either existing or ones they form) along with the larger businesses already in the IUCRC, which could be initial customers for the technology. According to the Association of University Technology Managers (AUTM) U.S. Licensing Survey for FY 2006, the Federal Government funded on average ~65% of the total research expenditures U.S. universities, hospitals and research institutions from CY 1997-2006, whereas Industry during the same time period funded on average ~8% of such research. Government sponsored research has led to many information technology breakthroughs benefiting the U.S. consumer and adding to U.S. economic growth. Examples of the results of such research include technologies commonly in use in our society today, such as the internet, microwave communications, laser devices for industrial, medical and consumer applications, MRI scanners and advanced weapons systems Understanding the complex development path for interconnected technologies: In our industry, a single idea alone is seldom sufficient to make a compelling product and so it is necessary to find ways to combine ideas across multiple sources. Unfortunately, as noted, universities often approach the licensing of IP as though one component of IP (the university patent) is the key to the whole instead of one brick in the overall structure. Often the most valuable part of any research project is the trained student that can then go on to do great things over the course of their career. Encouraging knowledge about these “resource connects” can help address this fundamental problem. Learning from successful models: The best example in the semiconductor industry has been the work sponsored by SRC. SRC was created in 1982 to boost the contributions of university research for the semiconductor industry. The SRC mission statement is attached (Att. A). In 2007, about 1800 students were engaged in SRC research at 200 or so universities. Since formation of SRC, about $1.2B of research dollars have been managed or influenced through that organization (100M+ each yr).

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Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

The four main pieces of the SRC structure are: i. SRC Global Research Collaboration (GRC), which manages midto long-term research, ensuring vitality of current industry. This is driven by member dues and local matching funds (ex. NY, TX); ii. SRC Focus Center Research Program (FCRP), which manages longer term research focused on breaking down technological barriers for the industry. This is driven by member dues and matching money from DARPA; iii. SRC Nanoelectronics Research Initiative (NRI), which has a singular mission of developing an alternative information element to extend the use of CMOS and associated peripheral technology. This is driven by member dues, contributions from NIST and NSF, and local matching funds (NY, CA, TX, IN); iv. SRC Educational Alliance, which is a private foundation concentrating on support for specialized educational programs that leverage the research efforts of the other entities. As noted above, a single idea is seldom enough and Intel and other IT companies increasingly need solutions that combine work across disciplines. In the FCRP and NRI activities, work is structured as virtual centers and principal investigators are encouraged to work together to solve some of the very difficult long range problems. That also includes encouraging students to interact with industry reps. Open Collaboration Research (OCR) Laboratories located on or near university campuses where researchers from industry and the university work together on jointly approved research projects. The OCR Labs conduct the jointly approved research projects in an open environment, with the intention that the parties widely disseminate the research results in a timely manner. Intel has OCRs with several Universities (University of Washington, University of California at Berkeley, Georgia Tech and Carnegie Mellon University). Companies such as Intel are eager to work with universities to commercialize research breakthroughs and, in appropriate cases, are willing to pay reasonable returns to have the benefit of doing so. However, the best results occur where there is a constructive framework in place that fosters a collaborative relationship not driven by a primary approach that is confrontational and focused upon extracting maximum financial gain out of all possible claims that may be lodged against a potential research/commercialization partner. Mission The SRCâ&#x20AC;&#x2122;s Mission is to manage a range of consortial, university research programs some of which are worldwide, each matching the needs of their sponsoring entities. SRC maximizes synergy between programs to optimally address membersâ&#x20AC;&#x2122; research needs and minimizes redundancy to maximize value to common members. Charter SRC provides low-overhead research and related programs that meet the needs of the semiconductor industry for technology and Collective Genius: Innovation, Entrepreneurship, and the talent. Commercialization of University Research 111 relevantly educated SRC addresses its mission by creating the following outputs (products):

Charter SRC provides low-overhead research and related programs that meet the needs of the semiconductor industry for technology and relevantly educated talent. SRC addresses its mission by creating the following outputs (products): Research Talent (Relevantly educated students to meet member company needs worldwide) Global, integrated university research capability Networking opportunities for members SRC maintains and hones the following core competencies that enable the above products: Early recognition and appropriate funding of paradigm shifts Appropriate leadership and technical knowledge to guide the ITRS and beyond Integration of individual members research needs and interactive preparation of detailed research plans Contracting for research at universities consistent with the subsidiaries' mission terms and conditions which assure members' ability to use results with minimal risk of future encumbrances Management of research programs as appropriate to the subsidiary's management philosophy Intellectual property protection of significant research results, including software, of broad interest to facilitate use of research by members. Timely transfer of research results using (a) Web based tools, (b) appropriate programs (e.g. Industrial Liaison and Industrial Assignee program) (c) third parties for commercialization of research Student programs throughout various regions of the world, as appropriate, to maximize the flow of talent to the member companies Coordination of identification, analysis, and reporting of key semiconductor R&D issues such as shortfall in funding for research

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Modular Genetics, Inc. (Kevin Jarrell)

There are many strategies for wider adoption of these practices. My philosophy is that life is a series of opportunities and choices. If we make good choices, then we will create new “good opportunities” for ourselves and our programs will move in a positive direction. Thus, my focus would be on establishing systems that increase the probability that individuals will create and pursue opportunities that create benefit for Americans. Two elements are very important: 1. Culture and 2. Infrastructure. It is my view that those associated with a POCC in a particular area need to participate in establishing one or more pools of capital that are aimed at investing in the downstream manufacturing of products developed at the POCC. If this is not done, the local economic impact of the POCC will be minimal, and the POCC will effectively serve the function of optimizing processes that will be commercialized in other states, or in other countries. If so, the POCC will contribute to the “heavy lifting” required to bring a new product to market, but the local economy in the vicinity of the POCC will see little benefit. I believe that a POCC needs to be well integrated into the local economy. In the best case, the POCC is a key component of a competitive cluster of companies that are collaborating and competing in a particular geographic location, as described by Michael Porter in works such as On Competition. At POCCs, what lessons have been learned regarding: Leadership and team composition, project selection, optimum scale of effort, importance

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ANGLE Technology LLC (Robert Rea)

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Raytheon Company (Dave Struble)

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Federal policy needs to provide incentives for corporate funding of university research. Private companies understand commercial markets. University researchers and their federal sponsors do not. If university researchers would apply their talents to commercial markets directly, the valley of death would disappear. Research projects would be designed to solve problems in commercial markets from their inception, and the path to commercialization would be in place. There would no longer be a need to look for funding that does not exist to force-fit research results designed to solve federal agency problems into commercial markets where they were never intended to be applied. University researchers may not take the initiative to contact private companies because they are not aware of the research needs of commercial markets. It is much simpler to write proposals to respond to requests from government agencies where research requirements have been defined, advertised widely, and money has been allocated for the work. Private sector companies rarely publish their research needs for competitive reasons. University researchers interested in commercial markets must take the time to dig out market needs one company at a time from people who require non-disclosure agreements just to talk about them. In such a situation, it seems more of a coincidence when the right connections get made. Success in commercial markets cannot be expected to be achieved with products developed for federal research markets. However, private companies could take advantage of the research capabilities rather than the products developed in federal research projects if these capabilities could be directed toward commercial markets. Higher-level sponsorship can be a motivator for new collaboration centers as it was for the NCSS. The Office of the Under-Secretary of Defense sought to create an I/UCRC for the purpose of accelerating research on improving security, reliability, and interoperability of netcentric systems through service oriented architectures. Broader recognition of the I/UCRC concept by industry, perhaps through awareness training sponsored by the NSF and focused on Fortune 100 companies, would increase visibility of the I/UCRC model and foster new collaborative relationships between industry and another opportunity is campus competitions to develop applications of interest to industry. Alternatively, students could focus their work on applications that are specific to the university environment â&#x20AC;&#x201C; academic-specific. Students could analyze and attack specific vertical markets such as academics, etc. and pique the interest of those industry partners. Ultimately it comes down to focused demonstration of the technologies and a receptive industry that can develop or commercialize the technology further.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

With respect to commercializing research in the absence of external investments, university developers can make their applications open source or license the applications to generate funding for equipment or additional research funds. Corporations often work closely with third-party developers to solve specific business needs, but universities would be excellent sources as well depending on the need. Companies can work directly with universities executing funding and IP agreements as required to research specific interest areas and provide research results as opposed to executing university grants. But for this to work effectively, universities and industry must be aware of on-going product research, product-line developments, and on-going technology development to seek out expertise in the relevant areas of interest and then be able to establish the relationships and foster research activities. There must always be a demonstrated answer to the question: “are we getting our monies worth from the relationship and effort expended?”

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Britax Child Safety, Inc. (Ken Wittenauer)

Businesses invest heavily in recruiting and training new talent, although their preference is to hire employees already familiar with their unique technology requirements. This minimizes learning curves and allows an experienced student to “hit the ground running” when they become an employee. The I/UCRC is a successful practice that fosters early training by allowing students to work on company-sponsored research projects, exposing them to the technologies of particular interest to the company and to product development staff. The legal resources of the hiring company are likewise available to counsel investigators about efforts to exploit products of I/UCRC research. Universities themselves could use the I/UCRCs as conduits to updating their academic programs; this provides another avenue for them to interact with industry. Another opportunity for expanding the resources available to the I/UCRC is by allowing smaller companies to gain membership through a reduced fee structure or by making in-kind contributions. At present, the NSF permits a research site to elect to use one in-kind membership to help meet the $150,000 minimum required to begin their first year of operation. In-kind contributions come in the form of equipment, facilities, personnel, software, or even business specific data that allows researchers to take the next step in validating their research beyond using contrived or public domain data. Encourage university research centers to indentify industry resources which are most interested in technology advances in a changing regulatory environment or for which industry collaboration is necessary to fund otherwise cost prohibitive individual research projects. Federal regulatory agencies involvement is important to the attraction of industry involvement and creates an opportunity to sponsor research with regulatory agency and industry collaborating in a perceived “neutral” research setting. The emphasis on the ability for industry to work with a variety of competitors and /or regulatory agency (s) and researchers is a catalyst for participation and growth.

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TechColumbus (Ted Ford)

Students enrolled in the Technology Commercialization curriculum of The Ohio State University work in concert with the university’s office of Technology, Licensing and Commercialization along with commercialization specialists at TechColumbus, the region’s non‐ profit technology‐based economic development organization, to identify promising technologies that can be transformed into viable, fundable, and sustainable companies. A recent report authored by SRI International contends that a key factor in successful technology‐based economic development (TBED) is convincing industry, universities, and other institutions to be aligned in their interests and to collaborate in their actions. The study, entitled “Making an Impact: Assessing the Benefits of Ohio’s Investment in Technology‐Based Economic Development Programs,” was conducted on behalf of the Ohio Third Frontier, a public‐private partnership initiated in 2002 by the Ohio Department of Development to establish the state as an innovation leader through diverse programs that support research and commercialization, entrepreneurial assistance, jobs creation, and the expansion of the state’s high tech innovation economy. At the center of this three‐way collaboration is master’s level coursework offered through the Technology Entrepreneurship and Commercialization (TEC) Academy, a part of the Center for Entrepreneurship at Ohio State. Over the course of two quarters, interdisciplinary teams including students, executive mentors, and technologists explore a variety of technologies (currently between 24 and 30 technologies a year, many of them recommended to the class by TLC) to determine which ones represent IP platforms upon which viable startups could be launched and sustained. Upon completion of coursework, those teams wishing to pursue an actual startup find business support services and funding readily available to them through TechColumbus. TLC has also made a concentrated effort to shift its focus from one of “pushing out” technologies brought to its attention by faculty and researchers to one of “pulling” technologies out of the university’s research laboratories. The office has become more proactive in identifying technologies and technologists that are strong candidates for a startup. This shift in emphasis from reactive to proactive has proven critical not only in leveraging existing knowledge and innovation, but also in heightening awareness within academic researchers of the potential for having their discoveries commercialized. Once a promising platform technology has been identified, TLC has several ways in which it can begin the commercialization process. One way is to recommend the technology to the TEC Academy as part of its master’s level coursework in technology commercialization and entrepreneurship. TLC is very selective about which technologies it submits to the class, basing recommendations on its practical experiences and ability to identify which technologies and technologists are right for the class.

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Since FY2005, there have been 72 university technologies submitted by TLC to the TEC Academy for evaluation. These technologies represent many areas including medical devices, research procCollective Genius: Innovation, Entrepreneurship, and the Commercialization University esses, software, agriculture‐bioscience, decisionofsupport, andResearch advanced materials and energy.

Since FY2005, there have been 72 university technologies submitted by TLC to the TEC Academy for evaluation. These technologies represent many areas including medical devices, research processes, software, agriculture‐bioscience, decision support, and advanced materials and energy. At the core of the Academy’s coursework are two master’s level classes, BUS‐MHR 890 and 891. These classes take live technologies, including those recommended by TLC, and put them through the full rigors of the entrepreneurial process including identification, evaluation, strategy development, validation, and business case concept development in order to determine if a research discovery can be developed into a viable business opportunity. At the start of BUS‐MHR 890, each team is assigned three to four live technologies that have come primarily from TLC to evaluate. Teams use a rigid iterative process to quickly assess the potential of an IP platform for supporting viable product/market concepts. From these three or four, the team chooses one technology to continue along the commercialization pathway. This selection is usually completed within the first four weeks of the class. Page 7 of 23 Next, teams are encouraged to develop 12‐15 product market concepts based on their selected technologies. Each team’s technologist (typically the researcher whose discovery is being pursued) helps determine the technical feasibility of the various product concepts. Concepts are evaluated against specific criteria that can include, among other indicators, a product performance‐to‐cost advantage over competitive products, market size or growth potential, stage of development and technical risks as well as profit potential. The goal is to teach students the transferable skills of applying proprietary TEC Academy methodologies to evaluate a product concept’s viability while expending minimum time and resources. By the end of the quarter, each team has developed a prioritized list (and the rationale behind that prioritization) of product concepts based on its chosen technology platform. Those teams choosing to continue on with the BUS‐MHR 891 class then have the opportunity to further refine and validate the merits of these product concepts through the development of a profitable business model. In BUS‐MHR 891, students take the product concepts that rose to the top during BUS‐MHR 890 and focus on completing the market analysis, strategy development, and business case concept brief. The culmination of the class is a go‐to‐market commercialization strategy suitable for funding and capable of attracting critical resources (i.e., entrepreneurial talent and seed capital) to take the business forward. These strategies have been used to fashion grant applications, secure investments, and recruit and align managerial talent. Apart from continuing to fund basic scientific research through federal research grants and contracts (e.g., NIH research funding) which creates a pipeline of discoveries and innovations, we call on Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research the federal government to allocate for the establishment of universi-117 ty‐based Proof of Concept (POC) Centers. Thes POC Centers would provide funding to test the technical feasibility of select scien dis-

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Cook Inc. (Stephen Ferguson) Virginia Tech Intellectual Properties, Inc. (Mark Coburn)

Semiconductor Research Corporation (N/A)

Apart from continuing to fund basic scientific research through federal research grants and contracts (e.g., NIH research funding) which creates a pipeline of discoveries and innovations, we call on the federal government to allocate for the establishment of universityâ&#x20AC;?based Proof of Concept (POC) Centers. Thes POC Centers would provide funding to test the technical feasibility of select scien discoveries and inventions (e.g., translational research for a cancer therapeutic) and thus increase the economic value of early stage technologies to the university and to potential industry licensees or startâ&#x20AC;?up investors. One option is for the federal government to provide matching grants to universities for the establishment and operation of these validation and testing Centers. Less regulation and more transparency. (They are a medical technology company). The areas in which we think the federal government can have the most impact, especially in the short term are in the areas of gap and/or seed funding, partnership acceleration, and developing an entrepreneurial approach to a common innovation infrastructure to encourage commercialization initiatives. It is also important to acknowledge that a common framework involving leadership direction, legal structures, and technology commercialization policies are important to make this common innovative infrastructure grow. We experience some of this disconnect in universities just by having separate legal frameworks between universities and other regional organizations and research institutes. While there are valuable legal reasons, organizational structure differences, operating imperatives, and historical considerations to keep these separate entities, the structures that lead to effective commercialization require innovation partnerships that cross boundaries and effectively bridge multiple institutions in a common framework for entrepreneurship and innovation. The Federal government can play a role in encouraging such partnerships on the state and regional level, by making best practices and successful models for such ventures more widely available and supported. The federal government can and should facilitate, encourage, and incentivize more industry consortia by (1) joining with industry to identify common technology needs (2) increasing the R&D tax credit for such investments (i.e. industry spending on university research through nonprofit consortia), (3) matching industry funding on a basis greater than one-to-one ratio for government industry support and (4) calling upon agencies to - 2 -use existing flexible authorities (e.g., Other Transaction Authority) that are suited to such collaborations between the public and private sector.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Open publication or presentation of university research results has a significant limitation with respect to commercialization. Communication between the researcher and the potential commercializing agent is one-way and generally occurs only upon completion of the research. Furthermore, because such disclosure is open to all, anyone is free to exploit what it contains. Private entities can be reluctant to make the investment in time and resources needed for successful commercialization of an invention without the protection of the intellectual property system – patents and copyrights – to exclude others from exploiting the invention. Congress addressed this concern by creating a new avenue to commercialize federally funded research with enactment of the so-called Bayh-Dole Act. 200 U.S.C. §§ 200-207 (1980). Commercialization Benefits of Consortium Model for University Research The consortium model offers many inducements and advantages with respect to commercialization. - 6 a. Early Input: Commercialization considerations are built into the research design. The attention to commercialization also spans much more than a single product or the commercial interests of a single company. b. Constructive Interaction: There is continuous guidance and feedback between those with commercial interests and the university researchers. This not only adds valuable perspective to the research, but it increases the prospects that the research results can be used by industry. c. Stake in Commercialization: Member companies have a stake in the research by virtue of their financial commitment and close surveillance of the research. This increases the effort that is devoted to potential commercialization. It also exposes the research to existing and substantial sources of funding for commercialization. d. Commercial Input for IP: Discoveries are accorded intellectual property protection based on the wide and informed judgment of commercial entities as well as that of the researchers and university officials. This signals that the research is likely to be of special interest to the member companies. Because the research is pre-competitive to the member companies, they can each exploit it in their own products and processes. Having commercial entities participate with university researchers throughout the research cycle increases the likelihood of commercialization and enriches the research. e. Freedom of Action for Universities: Universities obtain ownership of the inventions arising from their research and are free to exploit the commercialization of the research results with respect to non-consortium members or in different fields of action.

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MJB Development, L.C. (Barry Bartlett)

Since the early 1970’s I’ve been closely involved with the commercialization of university-based technologies including WordPerfect’s word processor, the world’s first computer-based instruction systems using Internet data transfer, and tech deployment into numerous manufactured products. Four decades of professional experience including several years as the Salt Lake City regional SBDC director and currently a consultant to the Utah Manufacturing Extension Partnership and the National Centers of Excellence (NCOE) have continuously underscored the following points: 1. Products. People do not buy technology. They buy products (and services) that contain and utilize technology. Thus, to increase the commercialization of university technologies, it is absolutely imperative to get such technologies DEPLOYED into marketable products. 2. Licensing. Universities focus on technology licensing as “commercialization”. Until a technology is fully DEPLOYED into a viable, sustainable product, it is not commercialized. 3. Needs. Manufacturers—especially small manufacturers—are keenly aware of the needs of markets, i.e. the products and services customers need and will buy. Universities must be much more closely aligned to manufacturers to increase university tech DEPLOYMENT. 4. Policy. Federal government policies have varied by administration, agency, circumstances and global economic conditions relative to promoting university tech DEPLOYMENT. The best policies have always been those that encourage, incent and reward local creativity while also providing a national “vision” and federal financial support for entrepreneurial activities. 5. Risk. New tech DEPLOYMENT has become increasingly more complex, and thus riskier. 6. Most commercial financing options have correspondingly become increasingly more risk adverse. States have responded by increasing public investments into tech-based economic development (TBED) strategies to help mitigate some of this risk. For university tech to be more widely DEPLOYED, a new strategy is needed to increase tech deployment financing. 7. Startups. In recent decades, tremendous effort has been made by university R&D programs to spin out new companies to DEPLOY new university tech. In reality, new tech can often be DEPLOYED into successful products much faster, cheaper and more successfully by existing manufacturers that have seasoned management, existing customers, credit lines, etc…provide the new tech is a match for their manufacturing and market capabilities. 8. Entrepreneurs. Most university researchers and staff are NOT entrepreneurs. But successful university tech DEPLOYMENT depends on entrepreneurs, especially in manufacturing. A strategy that leverages existing manufacturing entrepreneurs and develops more of them will continually best address the nation’s needs to increase university tech DEPLOYMENT.

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In recent years I’ve been working with the National Centers of Excellence (NCOE) to develop a truly unique, elegant and workable strategy that will significantly improve the quality of university research, and immensely increase its DEPLOYMENT through entrepreneurial manufacturing firms. Entitled the Federal Acceleration of State Technologies (F.A.S.T.) Deployment Program, it is based on a realloCollective Genius: Innovation, Entrepreneurship, andofthe of University Research cation of a small portion theCommercialization nation’s federal R&D budget. My understanding is that details of that program are being sent to you in a separate response to this RFI. Certainly you can obtain all program

and immensely increase its DEPLOYMENT through entrepreneurial manufacturing firms. Entitled the Federal Acceleration of State Technologies (F.A.S.T.) Deployment Program, it is based on a reallocation of a small portion of the nation’s federal R&D budget. My understanding is that details of that program are being sent to you in a separate response to this RFI. Certainly you can obtain all program information directly from Mike Alder, Chair, National Centers of Excellence through the NCOE website at: www.nationalcoe.org. Significant elements of the F.A.S.T. Deployment Program that will immediately help universities increase the DEPLOYMENT of their technologies (and thereby increase their technology licensing royalties, opportunities for faculty and student involvement, etc.) can be summarized as follows: 1. Reallocation. Unlike almost all existing federal initiatives, the F.A.S.T. Deployment 2. Program requires NO new federal spending authorization. Rather, it “reallocates” a relatively small percentage of the total existing federal R&D budget as match to state funds to stimulate technology DEPLOYMENT. This reallocation is consistent with President Obama’s commitment to help the government become smarter and more effective in the way it allocates scarce resources to accomplish economic and societal well-being. 3. Deployment. Unlike all other federal programs that support technology research primarily for federally established priorities and needs, F.A.S.T. focuses on tech DEPLOYMENT into commercial products to meet market needs, as locally determined, under state control. Thus F.A.S.T. is unique, unlike anything else currently being done to facilitate tech deployment. 4. Match. By matching state technology DEPLOYMENT investments, F.A.S.T. stimulates additional local investment into university technology commercialization from all kinds of partners, sources of assistance, and rewards states most willing to make such investments. 5. Jobs. The F.A.S.T. Deployment Program generates approximately 6,000 new long-term product DEPLOYMENT projects per year. Thus it generates a large number of relatively high paying, longlasting, high tech, advanced cire U.S. manufacturing jobs each year, plus additional support and indirect employment. F.A.S.T. is an effective, ongoing jobs program. 6. Entrepreneurship. F.A.S.T. includes a required, strong, ongoing new project management, oversight and training program to help all participant manufacturers be very successful, and permanently become much better technology DEPLOYMENT entrepreneurs. Thus each year will expand the nation’s base of companies seeking to deploy university technologies. 7. Royalties. By generating 6,000 competitively selected technology DEPLOYMENT projects each year, F.A.S.T. will significantly increase the number of university technologies that generate ongoing royalties. Such funding will rapidly enable increased basic and advanced research directly responsive to university strengths, interests and market opportunities. Again, I strongly encourage you and your associates to include the innovative Federal Acceleration of State Technologies (F.A.S.T.) Deployment Program as part of your recommended strategies to inCollective Genius: Innovation, Entrepreneurship, and theand Commercialization of technology University Research crease the amount rate of university commercializa-121 tion.

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Romny Scientific, Inc. (Andrew Miner)

Again, I strongly encourage you and your associates to include the innovative Federal Acceleration of State Technologies (F.A.S.T.) Deployment Program as part of your recommended strategies to increase the amount and rate of university technology commercialization. Big believer in SBIR process.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Universities OSTP # 3

5 8

Respondents New York State University (Theodore Hagelin) SUNY Buffalo (Robert Baier) University of Utah (Brian Cummings)

Key Points N/A.

Old (2000). N/A. We categorize these into five areas that a successful technology commercialization program requires. While this list is obviously neither complete nor exhaustive, it nonetheless focuses on strategies and tactics that are within the control of those managing it. One cannot count on having a Nobel Laureate, but we can play to our strengths and maximize what intellectual assets we do have. Leadership: Use the 'bully pulpit', make sure leaders fully understand what it takes. And be clear in your strategic intent. Understanding and Managing the Context: Here, some programs are more blessed than others but even absent a munificent environment, there are positive options. Changing the Culture: Increasing market orientation, strategic focus on commercialization and, most importantly, increasing the entrepreneurial climate and training to support and sustain the culture change Engage the Ecosystem: Improve connectors, align resources, engage internal stakeholders, take advantage of students. Leadership in the Process: Empower the professionals, insist on private sector leadership, and develop the right metrics some environments support technology commercialization more readily than others. Arvids Ziedonis's (e.g. Mowery, et al. 2001, Ziedonis 2007) illustrates some patterns when university spinouts proliferate (and where they do not). Ziedonis observed that there were more spinouts where there were more experienced founders available and where science and technology classes included a commercialization focus. There were more spinouts where there was an obvious local/regional industry cluster for that technology, which provides greater tacit/local knowledge of the industry and the local business community. Interestingly, spinouts were also higher in highly uncertain environments (e.g., where research funding was less secure). Spinouts were lower where there was less access to complementary assets and complementary technologies (as the lack of cluster suggests) and less access to critical resources such as financing. Consider the problem of commercializing a new idea. The â&#x20AC;&#x153;fuzzy front endâ&#x20AC;? (e.g., Koen, 2001) of technology commercialization

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features the development of marketable ideas. Narayanan (2007) maps this as “T-P-M”. That is, we develop new products (P) in the messy space where the features of a new technology (T) are translated into the benefits desires by potential buyers in markets (M). What does it take to find the connections where market desires match features of new ideas? The answer is not “what” but “who” - it takes someone to figure out the opportunity, it takes the unique skills of “entrepreneurs.” This means that not only do we need entrepreneurs at the very heart of technology commercialization, we need entrepreneurial thinking through the technology commercialization ecosystem. Need market orientation not product orientation. Considerable research has tested a model that argues the entrepreneurial organization exhibits three necessary attributes. Entrepreneurial organizations are proactive, accepting of risk and uncertainty, and innovative. While strongly bureaucratic organizations such as universities have institutional (and possibly statutory) constraints on being truly entrepreneurial, they can support entrepreneurial individuals and subunits. Cornelia and Jan Flora showed how entrepreneurial communities are characterized by a broad set of enabling social and cultural conditions [entrepreneurial social infrastructure] that support entrepreneurial thinking and entrepreneurial action (Flora & Flora 1993). Krueger (2000) argues that where entrepreneurs and potential entrepreneurs perceive an entrepreneur friendly environment [cognitive infrastructure] that encourages the identification of personally viable opportunities, we do see greater quantity – and quality – of entrepreneurial thinking and action. These authors also stress that increasing entrepreneurial intent is not the goal, the goal is to create an informed intent based on expert (not novice) entrepreneurial thinking. Randall Goldsmith developed a model that mapped out 18 stages of a new venture where across each of six phases of the life cycle we can separately examine the needs and key deliverables for the market, technology/idea and venture dimensions of a new business. For example, a business plan isn't actually appropriate until stage 9. At each stage entrepreneurs' needs will vary sizably: Different kinds of advice and information, different sources of funding, etc.5 Given the differing needs across the life cycle, programs need to identify resources for each stage and ensure that the ventures get connected. 5 For the full model, see http://www.bsutecenter.com/tools

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Students Are Our Secret Weapon: Trying to identify what potential user wants might map onto the features of new technologies requires multiple observers with highly diverse knowledge sets, skills and experiences and the willingness to think highly creatively. Many programs have used even undergraduate students (even non-business, non-science majors) to assess the commercialization potential of new technologies. The TRAILS program at the Idaho National Lab used student teams to identify potential licensees for their newly-patented work (Krueger 2005). The TEAM program at Colorado uses student teams to assess, even market their new cleantech developments. 7 The number of these Collective Genius: Innovation, Entrepreneurship, and the Other Commercialization of University programs has grown globally. ways to engage students Research in technology commercialization is through vigorous competitions. The more-traditional business plan contest has not been terribly effective,

tial licensees for their newly-patented work (Krueger 2005). The TEAM program at Colorado uses student teams to assess, even market their new cleantech developments. 7 The number of these programs has grown globally. Other ways to engage students in technology commercialization is through vigorous competitions. The more-traditional business plan contest has not been terribly effective, nor are they terribly inclusive, so the University of Texas created a global competition where students take relatively raw intellectual property (“idea”) and through several iterations develop the idea into something genuinely marketable (“product”). This Idea to Product® (I2P®)8 competition is a recent, but fast-growing model for an effective way to both provide genuine experiential learning to participants and to accelerate the commercialization of new ideas. For example, the US Department of Energy's Oak Ridge National Laboratory offers a large regional I2P® event,9and I2P® programs have been offered in Asia, Europe, Africa and South America. I2P® is a perfect example of how engaging the entire ecosystem professionally reaps huge dividends. Moreover, the I2P® process is also a perfect example of the kind of truly experiential learning that grows expert entrepreneurial thinking where the more routine competitions clearly do not (Krueger 2007, 2009). Recognition of the value of deploying students has been recognized by key supporters of entrepreneur development. The National Collegiate Inventors & Innovators Alliance (NCIIA) is a significant champion, coach and funder of university programs where cross-campus student teams learn technology commercialization experientially. NCIIA also developed a blueprint for technology entrepreneurship boot camps called “Invention to Venture” (I2V). The Ewing Marion Kauffman Foundation has also funded a wide range of entrepreneurial projects that support directly or indirectly technology development. For example, there are multiple “Kauffman Campuses”10 where cross campus entrepreneurship was heavily supported with the proviso that entrepreneurship be defined as transdisciplinary and that it run by people with genuine expertise and credentials. (All Kauffman program directors are both internationallyrecognized entrepreneurship scholars and educators and significant personal entrepreneurship experience. Kauffman, NCIIA, NSF, et al argue that a program needs both to be successful and to get funded.) This echoes the earlier point that it isn't about nurturing entrepreneurial thinking, it's nurturing expert entrepreneurial thinking. 7 See http://ei.colorado.edu 8 See http://ideatoproduct.org 9 See http://www.globalventurechallenge.com

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University of California, San Diego (N/A)

How might the federal government provide stronger incentives to private funding, from Angels or others, for new high-tech startup enterprises? First the Congress must implement the Presidentâ&#x20AC;&#x2122;s call for eliminating capital gains taxes on these young firms, and this feature should be extended to individual investors in qualifying new firms. This extension would provide a strong incentive to Angel investment. Secondly, firms that invest in research and graduate education in the POCCs should be able to include those expenditures in the R&D tax credit. As AUTM proposed (Idea #10) in their submission to the RFI, this same credit could be extended to individual Angel investors in new firms spinning out of university research. Third, the Technology Innovation Program in NIST should be fully financed and used to cost share new technology initiatives between NIST and partnerships between university-based innovations and the startup firms seeking to commercialize them.

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Duke University (Stuart Benjamin)

Finally, the Department of Commerce is the agency through which science-based economic development should be fostered, through the marriage of entrepreneurial academic research and investors in innovative new firms. The departmentâ&#x20AC;&#x2122;s Science and Technology Policy Administration should be re-created, reporting to the Secretary and supported by a Commerce Technology and Innovation Board, staffed by experienced innovative small business executives, Angel investors and venture capitalists, and academic experts in innovation-based economic policy research. Make the argument that a larger more powerful federal agency is required to fully implement innovation across business and industry. [This is an article that appeared in the G. W. Law review]

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

University of Minnesota (Jacob Johnson)

Since the establishment of the Bayh-Dole act of 1980, research institutions are responsible for the transfer of technology to the public via commercialization. Research institutions are reporting record numbers of disclosures and implementing new business development functions. Because the ecosystem of extraction, evaluation, and potential business formation of commercializable technology can be an expensive and daunting task, many institutions need to implement new sources of funding. This report will focus on one type of funding known as “gap funding.” The first section of this report shows that the gap between research grants and external investments is growing and creating a hindrance in the transfer of technology from the lab to the marketplace. Research funding from federal grants is really meant for unapplied research often too “young” to deem commercializable. Angel investors, while coming together in groups, still need some organization to truly be effective at the early funding stages. Venture capitalists are investing larger amounts in later stage companies but only 1.67 percent in the earliest stage deals. Today at research institutions, it appears advantageous, if not necessary to establish either an internal fund or gain access to an external fund to increase options and opportunities for the efficient development of commercializable technology. While a research institution, with a “gap fund” may have to deal with political and structural issues that potentially arise from a funding program, it is my opinion that the positives outweigh the negatives, which in an effective program can be minimized and even avoided completely. Overall, a “gap funding” program provides a research institution power over the commercialization of its inventions by allowing it to create movement in a sometimes static process. It also adds value to technology by making money available to do further research, proof of concept, or due diligence. The rest of this report will focus on results of surveyed current “gap funding” institutions and how they structure their funds to most effectively meet these objectives dependent on location in the “gap.”

Arizona State University (Geral Heydty)

The second section of this report looks at the survey results of 50 research institutions, utilizing nearly 90 funds currently attempting to fill this funding void. After tabulating results, the funds were broken down by both regional location and the “need” each fund was seeking to aide. The four regions considered were Midwest, East, West, South. The “needs” were determined by one of four positions along the length of the gap, where funds played the biggest part. These include Research, Prototype/Proof of Concept, Pre-Incorporation, and Post-Incorporation. N/A

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Roswell Park Cancer Institute (Edward Tirpak)

Shifting the imbalance between considerable funding for basic research (R) and scarce funding for development of technologies (D) ever so slightly couldhave a very large impact in bridging the socalled â&#x20AC;&#x153;valley-of-deathâ&#x20AC;? for technologies in various commercial environments. Business Management Skill-sets Business management skill-sets associated with technology commercialization (business management, entrepreneurship, intellectual property management, basic technological competence, FDA/ regulatory requirements, export regulations, what corporations and LLCs are and why they exist, raising capital, etc, etc) are a form of knowledge capital that should be shared fully and freely with everyone who may become involved with technology commercialization, particularly the younger people who are more likely to join or create technology based start-up companies that will create our future jobs (High school students, undergraduate college students, graduate/ professional school students, and adult continuing education).

Ohio State University (Raj Singh)

Georgia Institute of Technology (Robert Nerem)

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Because technology commercialization requires skill-sets from business, science and law, entrepreneurship competitions and other educational efforts that bring such people together and encourage teamwork among people from the interrelated specialties (e.g. high performance work team training centered around bringing an innovation forward) could provide considerable long term benefit. We strongly support the idea of the Proof of Concept Centers as a means to further research & development. Linking them with well established I/UCRCs will facilitate research beyond mere models and theory into practice to produce hard results, which will strengthen industry's ability to develop products for commercialization. Funding for the National Science Foundation must be increased in order to allow for more research and thus more commercialization. Supports POCCs.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

University of Washington (Melvin Koch)

STAGES OF DEVELOPMENT 0. Request for Proposal/Proposal Submission – A project is in this stage when an RFP has been issued for a specific need, or when a proposal has been submitted in response to a specific RFP or a general proposal call. 1. Initial Experimentation – A project is in this stage when funding has been approved and initial experiments are being planned and equipment assembled. 2. Gathering Data – In this phase experimentation is underway and data gathered on “model” systems. Initial reports and publications are being generated and an expanded parameter field for further experimentation is being developed. 3. Defining Project/Focusing – At this stage the project is being narrowed to address a more focused measurement need. Interaction with sponsor technical personnel is occurring to aid in understanding the requirements for a successful demonstration of principle. 4. Proof of Concept/Principle – A project has reached this stage when work has progressed to a point where the concepts and technology may be transferred to an end user or vendor for further development or implementation. Hardware is not at a stage where it could be considered a field prototype. 5. Prototype Development – At the prototype development stage significant interest has been generated that resources have been made available to create a device(s) that can be tested in field studies. Initial designs are created and equipment is fabricated. In most cases active instrument vendor involvement should be encouraged. CPAC PIs may or may not play an active role at this stage. 6. Prototype Testing/Spec Development – Field studies are underway at selected alpha prototype test sites and data is acquired in order to provide specifications for the next level prototype.

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University of Illinois (Thomas Overbye)

Vanderbilt University (Thomas Harris)

7. Final Design/Testing – A final beta prototype design is created and a full system is constructed and installed. Final phase testing has begun in a “real” application. From my personal experience I am a strong proponent of programs that help faculty either start small businesses, or interact with existing small businesses. This is a tremendously important means for transferring technology from the university research labs to commercialization. Hence the NSF SBIR program is quite useful. An idea would be to extent the SBIR program to focus on companies and faculty already involved in IUCRCs. NA

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University of Texas (Keith McDowell)

The linear pipeline model advocated by Vannevar Bush in his famous document Science the Endless Frontier has been a useful model,4 but the quadrant model advocated by Donald Stokes in Pasteur’s Quadrant is much closer to the reality of how one should parse the R&D enterprise as it relates to commercialization.5 The goal should not be to force fundamental change in the elements of the innovation ecosystem that already exist – diversity is essential to being adaptive, but to connect and build bridges that permit evolution of the ecosystem. Public-Private partnerships that connect universities, national laboratories, and industry are a key strategy. Those partnerships should recognize “the power of place” or location and involve regions and local government. Transformational change leading to an environment for disruptive innovations with commercial potential and leadership in the 21st century world economy requires a connected and layered ecosystem. Failure can be success! Taking risks means some failures will occur, but that is success overall. It is very easy in this game to be trapped by one-dimensional thinking. What enterprise or activity are we trying to measure in order to determine success? Is it the research enterprise, the development enterprise, the innovation enterprise, technology transfer with respect to converting invention disclosures into patents and licenses, university engagement with respect to a community, economic development through the formation of startup companies, economic prosperity through either wealth creation or jobs, and so forth? All of these are part of the greater innovation ecosystem and play in some part to the commercialization of university research. Each has its own role to play and metrics appropriate to one are not necessarily appropriate to another. Differentiation in the nature of metrics. We have inputs, outputs, and outcomes. But an output for one part of the innovation ecosystem is an input to another part. Transactional measures versus portfolio measures. To date, success has been measured mostly by transactional measures (number of patents, licenses, startup companies) rather than portfolio or asset measures (clean energy targets, relationship building with the industry, growth of commercial enterprises). Garbage in equals garbage out. For example, AUTM data are selfreported, not all universities report on an equal footing, and some universities don’t report at all.

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AUTM data do not reflect the full spectrum of activity. AUTM is one of our Nation’s most important assets and the work they do to report university technology transfer activity is essential. However, the AUTM reports capture only part of the activity. For example, in UT System over 80% of the startup companies in System incubators are not reported to AUTM because of the tight definition used by AUTM for a university spinout company. The 18 companies reported to AUTM in the latest report by UT System does not include all 25 that fit the AUTM definition, nor does it remotely capture the fact that UT Collective Genius: Innovation, Entrepreneurship, and the250 Commercialization of University Research System is engaged with over startup companies at present. • The ranking conundrum. Funding, policy and decisions are often based on one’s rank on a given metric, no matter the quality of the

by AUTM for a university spinout company. The 18 companies reported to AUTM in the latest report by UT System does not include all 25 that fit the AUTM definition, nor does it remotely capture the fact that UT System is engaged with over 250 startup companies at present. The ranking conundrum. Funding, policy and decisions are often based on one’s rank on a given metric, no matter the quality of the data or the appropriateness of the comparison. We must beware of becoming what we measure. Quantitative metrics are only one aspect – the “story” in its full richness can be equally or even more compelling. Success comes in many forms. Proof of concept is an essential stage in the commercialization process and helps bridge the notion of the “valley of death” along the technological axis. We define “proof of concept” (POC) as being that point at which a nascent idea for an innovation/invention derived from a research discovery first occurs, typically in a university research laboratory. The Purdue Research Park is an example of a successful community of innovation. D. E. Stokes, Pasteur's Quadrant: Basic Science and Technological Innovation. 1997: Brookings Institution Press. Open Innovation at Proctor and Gamble, https://secure3.verticali.net/pg‐connectionportal/ctx/noauth/ PortalHome.do. http://bits.blogs.nytimes.com/2009/09/21/netflix‐awards‐1‐million‐ prize‐andstarts‐ a‐new‐contest/. NIH SHIFT Program, http://grants.nih.gov/grants/guide/pa‐files/PA‐ 10‐122.html. 38 32

Louisiana Tech University (Les Guice) Maryland Proof of Concept Alliance (Jacques Gansler) University of Florida (Christopher Batich)

NA NA

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Missouri State University (Ryan Giedd)

Broadly stated, the mission of JVIC is to enhance commercially viable technologies for the benefit of our corporate partners and community while providing interdisciplinary learning experiences for our students. The JVIC model for commercial success is somewhat unique and should be considered as a rare, but effective model for technology transfer. As demonstrated below, the JVIC model works well for medium sized companies (or medium sized divisions of large companies) with some “high-tech” commercial market sales, and for universities (e.g. Missouri State University) that do not have the resources to support large numbers of expert faculty generating prodigious amounts of application oriented research. The JVIC model stands on four fundamental principles: New technological ideas are more focused on market demands if they originate in companies or commercial interests rather than in academic or non-profit institutional laboratories. The high-risk versions of these ideas would greatly benefit from the expertise and advanced academic research infrastructure present at the University. The academic-based research center should encourage companies to join that represent different strengths in the integration of the technology into a commercial success and do not compete for the same share of the marketplace. The primary holder of the intellectual property and patent rights associated with the research should reside exclusively within the company and not at the University. Once commercial success is realized, a royalty stream of funding will be established for the benefit of the University. These fundamental principles change the “typical” model of academic technological transfer as shown in Figure 1. In the traditional approach, as indicated in the top blue portion of the figure, an idea with commercial promise is discovered or invented by an expert faculty member. This invention or discovery is commercialized by forming a partnership with an existing or startup, and usually, for-profit company. This company develops the appropriate business model and provides the market research necessary for commercialization. In a collaborative effort between the academic center and the company, the invention or idea is optimized and developed toward commercial success. The company licenses the intellectual property (IP) or patent rights for the technology from the University.

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This process works well in many cases but for some companies can present significant challenges. The JVIC model (shown above in the maroon part of Figure 1) assumes that the companies will be responsible for the invention or technological idea formation process. In this sense, the academic center is not designed to support faculty research, but instead, designed to support corporate research. This difference is significant enough so that many academic institutions are not interested in the JVIC model since it does not directly support faculty based research. Many of the new product ideas conceived in medium sized businesses (or divisions of larger corporations) cannot be supported by their internal research and development (IRAD) budgets for a variety of reasons. Chief among these reasons is the lack of sufficient facilities for research. It may be prohibitive for companies to acquire the necessary expertise and research infrastructure sufficient to research and develop a new idea. As shown in Figure 1, Collective Genius: Innovation, and the Commercialization ofdo University JVICEntrepreneurship, provides that infrastructure and can afford to so sinceResearch the cost of the facilities and expertise is spread over a group of companies.

University of Delaware (Patrick Harker)

lack of sufficient facilities for research. It may be prohibitive for companies to acquire the necessary expertise and research infrastructure sufficient to research and develop a new idea. As shown in Figure 1, JVIC provides that infrastructure and can afford to do so since the cost of the facilities and expertise is spread over a group of companies. To incentivize individual and institutional investors, the federal government might consider a program explicitly focused on universitybased technologies. While myriad funding programs are offered to small businesses, a university-targeted initiative would incentivize venture capital activity and risk-taking on the part of private entrepreneurs and reward those who maintain their interest over long periods of time. These incentives are critical, given that investor capital provides a foundation for job growth and economic development. National studies, such as those undertaken by the Kauffman Foundation, have determined that successful centers of technological advancement and commercialization require critical mass—clusters—of science and technology resources and entrepreneurial talent. In many instances, university research parks are where these long-term strategic public-private partnerships are formed and where the resources needed to sustain them are most cost-effectively assembled. The federal government can facilitate the development of strategies that promote strong regional clusters in science and technology. The University of Delaware, like many research universities, has limited access to venture capital investors as a source of funding for its emerging technologies. Consequently, our faculty has had to rely on SBIR and STTR funding to underwrite their commercialization efforts. While faculty are learning to use this source of funding, the process is time-consuming and labor intensive, and can be somewhat of a disincentive for faculty to pursue commercial applications related to their IP. Furthermore, these grants do not fill the funding pipeline gap between initial discovery and proof-of-concept—funds that are so critical to the commercialization process. Therefore, the federal government could consider providing an alternative source of funding to help qualified faculty underwrite these initial investment costs prior to the SBIR process or the identification of an industry partner that can support commercialization with a clearer expectation of an IP’s commercial application. Such an approach could streamline the technology transfer process and greatly reduce the barriers to successful IP commercialization. In addition to a physical space supporting technology transfer and commercialization efforts, there is a critical need for a robust information network that allows faculty and industry representatives to interact with venture capitalists and marketers who can help align emerging technologies with the resources essential to maximizing their value. The federal government should develop the technology and supply the data—collected from grant awards and patents—that will enable an interactive arena for constituents involved in the IP process (venture capitalists, industry reps, etc.).

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University of California, Davis and Kansas State University (Martin Kenney)

My colleagues and I at the University of Delaware hope that the federal government will take a leadership role in collecting, evaluating and publishing Economic Impact, Knowledge-Based Activities and Knowledge-Based Capacity data so that states, regions and universities can effectively determine the degree to which they are supporting the innovation economy and the areas in which they are achieving broader public policy goals. Both technology licensing professionals and academic researchers agree that the key to effective university technology transfer is the interest, support and involvement of the inventor (Siegel et al. 2003; Thursby and Thursby 2004; Thursby et al. 2001). Because of their central role in the transfer process, it is of vitally important to understand their experiences, perceptions, and beliefs concerning the transfer process. These will differ by department and university (Colyvas et al. 2002; Kenney and Goe 2004). One way to measure and understand the perceptions of the inventors is to survey them. A properly designed survey will allow the identification of universities where inventors and researchers are satisfied with the technology transfer process and those were there is less satisfaction. The results would provide information on what inventors believe is needed to improve the transfer process and also identify possible research sites for more detailed qualitative policy research.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Virginia Commonwealth University (Ivelina Metcheva)

In 2008, VCU established the VCU Technology Validation Fund to invest in selected VCU technologies in pre-licensing stage to perform proof-of-concept studies. The goal was to advance these technologies to a more mature stage and thus improve their chances of being out-licensed. The VCU Technology Validation Fund was expected to benefit the university in the following ways: Optimize commercialization of products and services based on VCU technologies Maximize valuations in licensing deals and increase licensing income Increase follow-on research funding to VCU from companies licensing VCU technologies The types of studies that were considered for funding were: prototype development, generation of data (animal, clinical, etc.), development of new applications for a disclosed technology, minor software coding and user interface work, etc. For a period of one and a half years, the Fund awarded a total of $140,000 to six inventors at an average of about $23,000 each. These were one year projects that required milestone completion. The funding decisions were made by an Investment committee made up of VCU Tech Transfer staff and external industry experts. In mid2009 the Fund was suspended due to lack of funding. Of the six funded inventions, one is in the process of due diligence and new company creation; another has a refined prototype that is being tested at the university hospital; a third has lead to collaboration between the inventors and an industrial partner; and two others were awarded additional funding for further development by the Virginia Innovative Partnership Program and Coulter Foundation, respectively. The results from the final project helped us to determine that further investment in patent protection and marketing for the invention was not warranted. Thus, even for its short existence, we consider the Validation Fund as very successful in helping bring VCU inventions closer to commercialization, supporting entrepreneurship, building alliances with the industry, bringing additional research funding, and vetting early stage inventions. This Fund is an example of how a small amount of money can go a long way in benefiting translational research and technology commercialization.

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University of Massachusetts, Amherst (James Capistran)

Stanford University (Ann Arvin) University of California, Berkeley (John Huggins)

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University of Kansas (Paul Terranova)

UMass has been developing programs that engage students in both the science and technology disciplines with those in our business school. The University offers courses in entrepreneurial activities and provides additional support and counseling through various entrepreneurial associations. Training the next generation of business and scientific leaders is key to moving research outcomes from the University to innovations relevant to the commercial enterprise. Integrating the various disciplines during their education and training will foster more effective translation to new business. The University regularly conducts business plan competitions and the “Innovation Challenge” to encourage students to collaborate cross-discipline as they move new ideas and concepts to sound business plans and models. These programs work very well and are endorsed by our campus and industrial partners. Stanford’s Entrepreneurship Corner http://ecorner.stanford.edu. Materials and video clips on leaderships, strategy, marketing, innovation and entrepreneurship. Also, see Stanford’s d.School. Goals of a leadership l I/UCRC Three of four of the BSAC goals relate to industrial / commercialization performance: Create a leadership research environment. Combine the best researchers, faculty, and industrial partners. Bind them through the collective appeal of top rank University resources, an environment of collaboration, and access to a diverse group of Industrial members who are usually current or future market leaders in their segments. Enhance the educational experience of the graduate students. Reduce the time to commercialization of research by Industrial Members and entrepreneurial researchers by establishing systematic progress in multiple phases of new technology formation: a) materials/process/packaging; b)devices and structures; and c)system integration. This strategy requires a broader range of projects and a larger research organization than most research consortia would be able to maintain. Maintain collaboration with Industrial Members to insure commercial relevancy of the research. IAMI Fellows Program IAMI has an educational and training arm called the IAMI Fellows Program. Through the fellowship development activities, IAMI Fellows acquire the skill sets to successfully both work in multidisciplinary environments and commercialize life science technologies. The IAMI Fellowship Program strives to create an entrepreneurial support system for the Fellows and instill a sense of urgency to drive research toward outcomes that can be translated from the university setting and into the market place. The selection criteria were developed with extensive consultation with faculty, The University of Kansas Center for Technology Commercialization (KUCTC), the

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Kauffmann Foundation and the IAMI board. Candidates for the IAMI Fellowship are assumed to be Masterâ&#x20AC;&#x2122;s students and Doctoral candidates initially from Health Sciences, Medicine, Engineering and Business (future candidates may be recruited from other exemplary sources). Fellowships are awarded for renewable one year periods. Renewing candidates are judged on progress made against their research objectives. A comprehensive Research Commercialization Plan is the required deliverable for successful completion of the program. The selection criteria are summarized below: A record of inventions, even unrelated to their research or life sciences. Strong communication skills. Unusual experiences/achievements through internships (both research and industry). Special projects undertaken to learn new knowledge and skills. Early experiences with entrepreneurship (from the lemonade stand to the online business run from the dorm room). Capability to learn and apply acquired skills in a multi-disciplinary environment. Strong achievement orientation. Above average capacity for successful teaming and team management with the ability to motivate others to share and pursue personal vision and enable excellent execution. Understanding of health sciences, engineering and business as demonstrated by avocational pursuits or in field experience. High level of intellectual curiosity, moral centeredness and selfactualization. Precompetitive Proof of Concept Centers: MIT and UCSD. A report published in 2008 by the Kauffman Foundation provides a detailed analysis of two Proof-of-Concept Centers that specialize in commercializing academic innovation. These are the Deshpande Center at the MIT School of Engineering and the von Liebig Center at the University of California San Diego Jacob School of Engineering. Another approach would be to modify and streamline the Corporative Research and Development Agreement (CRADA) system to allow university researchers to partner and exploit innovations in federal government laboratories. In a recent discussion between a federal laboratory and university researchers to initiate collaborative efforts in drug discovery and development, it was revealed that this agency has never entered into CRADA agreement with academic centers. All CRADA agreements to date were between a federal agency and private companies, and it may take up to two years to complete such an agreement through this agency. Such roadblocks should be removed to leverage tax dollars return on investment, promote collaboration between federal agencies and academia, and spur and accelerate commercialization from academic institutions.

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University of California, Davis – NSF Center for Biophotonics (Dennis Matthews)

George Mason University (Jennifer Murphy) University of Illinois, Chicago (Bernard Santarsiero)

We also strongly recommend a mandate that university tech transfer programs receive a percentage of each federal research award, specifically for commercialization activities. This will protect against universities (especially public universities) balancing their budgets by cutting these critical, but under-valued commercialization programs. We believe that technology maturation programs are critical for improving technology commercialization from universities, and should be developed immediately. POCCs should (1) provide sufficient funding for prototypes; (2) sufficient technology in-flow; (3) unbiased management for vetting. Should be regional or statewide. The major obstacle to commercialization of university research is the gap between identification and validation of an idea, approach, concept, target, or invention, and the translation of the idea into a product that can sustain a unique entity with inherent value that is attractive to industry and VC investors. This gap is the true “valley of death” which continues to hinder the development of transformational inventions into products and services that can transform lives as well as the US economy. There are at least two broad approaches that can reduce this obstacle: (1) increased incentives for industry and VCs to collaborate and engage early in the process of discovery, evaluation of innovation, and efficient commercialization of university research, and (2) increased funding of the university resources necessary to add value to the idea, approach, concept, target, or invention. The former approach includes funding for greater networking to increase and strengthen interaction across various sectors and eliminate silos. An example of this type of funding is the STTR program that encourages commercial research through industrial and nonprofit/academic collaborations. Establishing regular student competition programs in creating business plans not only train our next generation of entrepreneurs, but they are essential in the pursuit of successful commercialization. These types of initiatives engage both students and faculty in activities that promote the advancement of technologies, induce industry and VCs to get involved without large financial commitments, and encourage ongoing dialogue and collaboration. The metrics typically include (1) increasing competitiveness in an entrepreneurship program (number of students, faculty, mentors, and case studies in courses and workshops), (2) number of disclosure statements filed, (3) patent applications filed, (4) patent applications issued, (5) licenses and options adopted, (6) start‐ups established and sustained, (7) income and revenues earned, and royalty generated vs. funding pool, (8) expansion or acquisition of start‐ups, and (9) job creation and financial impact on community.

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Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

Center for Dielectric Studies, Pennsylvania State University/ Missouri University of Science & Technology (Joanne Aller) Center for Biorenewable Chemicals, Iowa State University (Peter Keeling)

University of Mississippi (Alice Clark)

Proof of Concept Centers would provide a useful steppingâ&#x20AC;?stone to industrial utilization of technology developed within a University environment. It is sometimes apparent that the more fundamental work undertaken at a University needs significant additional work to allow industrial adoption. This is often a barrier to industry as it is not always clear what needs to be done. We believe that a center that is guided, in principle, by interested industrial members, would be a successful approach to proving concepts and would be welcomed by many companies. As such we would suggest that such a center could be linked to a IUCRC in the same area. Universities hosting NSF Engineering Research Centers (NSF-ERCs) offer a unique and remarkable foundation of assets on which to consider developing topic-based Proof of Concept Centers (POCCs). Some Centers will be better based than others because of additional infrastructure and capital investments available in or associated with the lead university. The NSF-ERCs are already mandated to move ideas through their R&D programs to develop testbeds (Fig. 1) and are normally expected to hand over the next stages of development to industry. Industry in-turn must assume the technical and investment risks of moving the technology to pre-pilot and pilot stages before commercialization. By housing these prepilot and pilot stages in a POCC, it becomes possible to visualize the development of technologies that might otherwise never survive the risk factor that must be included in techno-economic evaluations by industry. As a consequence it is conceivable that key novel technologies, which might be more transformational and have a bigger impact on the economy, are eliminated from consideration due to a high risk factor. The latest generation of NSF-ERCs also provides an opportunity for further investments from their Innovation Partners, often composed of significant venture capital firms. Collaborative Programs. Programs that encourage multidisciplinary collaboration between faculty and students of different disciplines lead to technologies with more commercial potential than programs that are not multidisciplinary. These programs are difficult to initiate and require an ongoing commitment of resources to manage the programs. Seed funding and project management support is provided by the Office of Research and Sponsored Programs to help initiate and sustain multidisciplinary teams. 5. Training and Educational Programs. In general, entrepreneur training programs and â&#x20AC;&#x153;Boot Campsâ&#x20AC;? work well to stimulate the formation of non-technology based and IT based companies. For technology based companies (e.g. a company established to develop a new pharmaceutical product or a sensor) the entrepreneurial training appears to provide the scientists and engineers with a surface understanding of terminology and the entrepreneurial process, but an under appreciation of the time and effort required to establish and maintain a high risk, capital intensive technology based company. Our Technology Management group utilizes MBA students, MBA teams and graduate students to conduct market analysis and work with the inventors on development plans for promising technologies.

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6. Business Plan Competitions. Business plan competitions that require the submission of a plan describing a true business opportunity presented by a real management team promotes technology transfer from the University to a startup company. These competitions help the management team address weaknesses in the plans, attract angel investors and provide seed money at a critical stage of incubation of the company. Competitions that involve make believe companies, especially technology based companies, may have educational value but do not have a positive impact on technology transfer. 7. Open Innovation Models. Although we have limited experience with open innovation models, projects involving partners with diverse technology strengths that do not view each other as competitors appear to work well because the ultimate goal of the collaboration supersedes concerns about competitive advantages gained or lost through sharing of intellectual property. Open innovation models with homogeneous participants are less productive due to concerns of openly sharing proprietary information with a competitor.

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University of North Carolina (Joseph DeSimone)

University of Connecticut (John Hanson)

A key to success in this environment is to have a long-term strategy that capitalizes on the research strengths of the University and a commitment by the university and the local community to encourage and support entrepreneurs. Once the long-term strategy is in place tactics critical to success include business plan competitions, MBA teams to work on promising technologies, entrepreneur training and education, an aggressive technology transfer process, facilities to incubate and promote growth of companies, access to seed capital and the development of an angel network. Federal grant programs such as NSFâ&#x20AC;&#x2122;s Partnership for Innovation Program, the Integrative Graduate Education and Research Traineeship Program (IGERT) and the SBIR/STTR Grants are valuable sources of funding. Refer to a Kauffman report (2010) entitled, FACILITATING THE COMMERCIALIZATION OF UNIVERSITY INNOVATION: THE CAROLINA EXPRESS LICENSE AGREEMENT TO LEARN MORE The Carolina Express License Agreement documents are posted on the Kauffman Foundation Web site at this address: http://www.kauffman.org/expresslicensedocs and on the UNC Web site: http://research.unc.edu/otd/documents/CAROLINAEXPRESSLICENS EAGREEMENT.pdf; http://research.unc.edu/otd/documents/CarolinaExpressLicenseUser Guide.pdf Same old stuff as everyone else.

Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

University of Rochester (Ralph Kuncl)

University of California, Los Angeles (M. MastermanSmith)

Case Western Reserve University (Pamela Davis) Ohio State University (Taylan Altan)

The Office of Research Alliances The mission of the Office of Research Alliances is to identify and enhance strategic research partnerships between the University's research community and industry, government agencies and laboratories, and other academic institutions. This is part of a broader multiyear effort to enhance support for science and engineering research activities and the translation of research results into technologies that benefit society. Potential research alliances include joint research projects, sponsored research, technology development, educational partnerships and related activities. Private Proof of Concept Center Xactiv Inc. is a private for-profit entity located in Rochester that provides the commercialization path for industry- and university-based technologies, principally in energy and healthcare. The University of Rochester and Xactiv work together to identify university intellectual property that can benefit from Xactiv scientific and engineering resources and funding channels. Their capabilities advance the commercialization and the market value of select technologies to accelerate market entry. Xactiv uses private capital and SBIR funding to bridge the gap between academic inventions and commercial reality. The process results in new products, spin-out companies or enhanced licenses. Proposed Solution #1a: To incentivize faculty who would otherwise avoid commercialization, clear guidelines and instruction from granting agencies should include methods on how academic faculty can use grants as a source of non-dilutable investment into their projects. Proposed Solution #1b: Granting agencies should advise POCCs and universities that a commercial start-up based on the resulting technology will likely become a vendor and the university’s role will be as a valuable first customer. This minimizes the chance of a technology entering the valley-of-death and provides the opportunity for ‘tweaking’ the particular academic-industrial relationship in a familiar environment as the technology prepares for scale-up. N/A

I/UCRC (Industry University Cooperative Research Centers) have been probably the best NSF investment in encouraging university/ industry cooperation. (I am currently the Director of an I/UCRC – Center for Precision Forming.) The I/UCRC’s are successful because NSF program rules require that a) there is a certain amount of “matching” (about 1 NSF to 3 industry) with industrial funds, and b) I/ UCRC recipient universities are encouraged to reduce the overhead for the funding provided for these Centers by NSF and industry.

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West Virginia University (Lawrence Hornak)

Georgia Institute of Technology (Connie Ruffner)

At West Virginia University (WVU), we are now standing up the Transition Readiness Assessment Center (TRAC). TRAC leverages, expands and seeks to institutionalize the successful pathways and relationships to enhance the transition of technology created by the Center for Identification Technology Research (CITeR), an NSF Industry/University Cooperative Research Center (IUCRC). The Center functions as a discovery and innovation cooperative between academia, industry, and government. Industry and government organizations become affiliates of the center through execution of an NSF agreement and payment of a minimum $40,000 annual fee. Fees from these affiliates are pooled by the Center and at biannual meetings allocated for new research projects proposed by faculty and selected by the Affiliate Advisory Group. This group is composed of all affiliates of the Center and meets during the final day of each Center meeting. Currently, approximately $800K in research funds are allocated annually. As a result affiliates receive a 20:1 leveraging of their research pool investment. Any intellectual property (IP) generated from this shared portfolio is owned by the originating universities but shared among the affiliate via royalty-free nonexclusive licensing. Advanced Technology Development Center (ATDC) The ATDC, Georgia’s high‐technology incubator, is a proof‐of‐concept center. It was formed 30 years ago to drive new economic development in Georgia and facilitate the translation of research into the marketplace. Its member companies are comprised of university‐based start‐ups as well as other technology start‐up companies not affiliated with the university. Having university start‐ups co‐existing with entrepreneurs not from the university setting creates a blended culture and a symbiotic learning experience: researchers glean knowledge on running a business to eventually make a product (which is different from living under the umbrella of Georgia Tech), and the non‐university start‐up gains connections to campus contacts and methods to prove its concepts scientifically. In FY2009, 149 invention technology disclosures were evaluated from 61 faculty members, resulting in the formation of 20 university start‐up companies. University‐derived innovations that do not have any patent or sponsored research conflicts are evaluated by ATDC’s Startup Services staff. This staff is composed of seasoned serial entrepreneurs who are now Georgia Tech employees dedicated to assisting university‐spawned and community‐based start‐ups. They evaluate the innovative concept to see if it is strong enough (and disruptive enough) to form the nucleus of a company. If so, the Startup Services staff interacts with the faculty/staff/students to see if the individuals actually have the desire and capability to form a company. A specific Startup Catalyst is then assigned to provide one‐on‐ one coaching/mentoring for the faculty/staff/students as they form their company. In the beginning, the Startup Catalyst functions as the business arm of the university‐based company, helping in company formation, guiding the company in obtaining the technology license, writing the business plan, introducing the company to early‐stage funding, and providing matchmaking services with the company and potential management team members.

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The Startup Catalysts not only review submitted invention disclosures, they regularly meet with faculty, staff, and students to discuss current and future research projects. They “walk the halls” of the laboratories to see what research is being conducted. Startup Catalysts discuss possible funding sources such as SBIR/STTR, Georgia Research Alliance (GRA), angel investors, Venture Capital, and traditional small business loans. Startup Catalysts and key industry guest speakers present Brown Bag lunches to encourage researchers to transform their research ideas into marketable products. By walking the halls, Startup Catalysts also act as a bridge to complementary research going on in other labs around campus. This Georgia Tech model of proactively monitoring the research enables gems of raw research to be more quickly identified and evaluated, efficiently moving a potential idea from laboratory to company innovation idea to end product. Once a company has been formed, the Startup Catalyst essentially serves as a temporary proxy CEO helping the company make businesses decisions. Having this business‐savvy mentor to help the university start‐up until it is mature enough to support a dedicated CEO, the faculty or student researcher can concentrate their efforts on developing the technology and not be bogged down in the long learning curve necessary to transform an idea into a commercialized revenue‐producing product. Faculty, staff, and students unwilling to launch or unsuitable to launch their own start‐up still play a crucial role in helping launch or sustain other university start‐up companies through consulting, university/company partnerships, facilities/laboratory space, and making connections between the small business and the prime contractors‐‐contractors who might already be engaged with Georgia Tech on sponsored research projects. Incubation Suite Georgia Tech has been developing new models for assisting in the commercialization of innovation through incubators/ accelerators. We have created a continuum of incubation suite of services which range from pre‐incubation to post‐incubation. Community Readiness: Working with communities to assess the availability of building blocks which could support an incubation system (innovators, entrepreneurs, sources of innovation, community leaders). Incubation Start‐up: Assisting communities in a turn‐key effort to erect a bricks and mortar or virtual incubator. The start‐up needs to develop an ecosystem to support its success (access to mentors, access to gap funding, access to management team members, access to peer‐to‐peer learning). Virtual Incubation: This term refers to broadening the traditional definition of incubators to include those without a tenant program. ATDC is perfecting such a model. With the expansion to virtual incubator, the membership has grown from 30 companies to over 300. We are developing innovation methods for group and virtual coaching to serve this larger cohort. The more companies we touch in a productive manner, the greater the potential economic impact. Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research Incubation Assessment Tool and Remediation: Georgia Tech has de-143 veloped a comprehensive importance/ performance assessment tool based upon the success measure for ATDC. The instrument includes

developing innovation methods for group and virtual coaching to serve this larger cohort. The more companies we touch in a productive manner, the greater the potential economic impact. Incubation Assessment Tool and Remediation: Georgia Tech has developed a comprehensive importance/ performance assessment tool based upon the success measure for ATDC. The instrument includes interview templates for graduate companies, member companies, mentors, board members, and incubation management and operations. The output is a detailed technical assistance or remediation plan to turn around the incubator’s performance. Post‐Incubation Growth Services: In partnership with our NIST MEP, we are developing a program for these high‐growth incubator graduates. They have unique needs related to staffing, managed financial growth, new market and product development, and channel development. Educate Companies Programs that support peer‐to‐peer learning are a key component of the value ATDC provides to accelerate the growth of technology start‐ups. ATDC has found that entrepreneurs learn best from peers – as one entrepreneur said, “having access to others who have been there, done that has incredible value.” The foundation of peer‐to‐peer learning is a safe, trusted environment. ATDC fosters this trusted environment by maintaining a set of rules and guidelines that govern the start‐up community. These rules include: Companies are invited to participate based upon a fit with the community – they are open to feedback/coaching and want to be part of a learning community No competing companies – if companies compete, there is a risk that the information someone from another company shares may be used against them No hiring away of employees from another member, or any other actions that hurt another company in the community Entrepreneurs help other entrepreneurs by sharing experiences, not by telling them what they must do. A commitment to confidentiality – information discussed at peer meetings is never to be discussed outside the room The ATDC has developed programs based upon peer‐to‐peer learning. Entrepreneur in Residence (EIR) – Seasoned entrepreneurs (retired individuals as well as current entrepreneurs wanting to give back to their community), volunteer one day a week to assist member companies by sharing their experiences. EIRs provide encouragement, but also give realistic advice on the difficult issues that arise in the life of a start‐up company.

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CEO Roundtable – As part of their membership commitment, CEOs of ATDC member companies are required to meet monthly. They bring their most pressing issues to the group and learn how others have handled a similar situation. CTO Roundtable – CTOs meet quarterly to discuss technical and technology management questions and issues. Hardware Circle – Members of hardware companies meet to discuss Collective Genius: Innovation, Entrepreneurship, and experiences the Commercialization of University Research a specific topic and share on that topic. Bootstrapping Bootstrapping is focused on paying bills with cash. By having a

CTO Roundtable – CTOs meet quarterly to discuss technical and technology management questions and issues. Hardware Circle – Members of hardware companies meet to discuss a specific topic and share experiences on that topic. Bootstrapping Bootstrapping is focused on paying bills with cash. By having a small, up‐front capital requirement, short sale cycles, short payment terms, and recurring revenue, companies have more control of their products and the future direction of their products. ATDC holds regular Bootstrapping Circles—monthly educational/networking meetings hosted by serial entrepreneurs who have been successful with bootstrapping. Companies come together to learn and discuss best practices and glean knowledge from other entrepreneurs’ experiences. To prepare companies to make quick and effective presentations, monthly Startup Gauntlets are held, offering companies a chance to give their “3 minute presentation” followed by in‐depth critiquing by Startup Catalysts. Over time, presentations improve until the company is ready to present at a Venture Forum or make a one‐on‐one presentation to a customer or investor.

Virginia Tech (Fred Lee)

Why ATDC Is Successful ATDC is successful because it proactively looks for technologies to evaluate. Then, if the technology appears to be disruptive, it provides in‐depth consulting/management and partnering assistance to companies. Membership in ATDC is not just subsidized rent, but coaching, planning, customized business plans, and introductions to key people that can enable the business to grow. The model is successful and could be transferred to other incubators and POCCs around the country to help federal, not‐for profit, and university IP move across the Valley of Death to become productive, successful companies. N/A

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University of Kentucky (Leonard Heller)

What’s Working at UK and in the Bluegrass Region UK’s new Office of Commercialization and Economic Development integrates the tech transfer office, campus incubators, business development services, SBDCs and UK’s Coldstream Research Park under one VP reporting directly to UK’s President. This increases the pace of licensing to start-ups and industry. Two UK Commercialization Specialists (“research harvesters”) funded by the EDA University Center grant provide education and commercialization support working with researchers across campus to identify new IP with commercial value. The UK/Lexington Innovation and Commercialization Center, part of a state-wide program, provides business services to both university scientists and regional entrepreneurs. UK’s close partnerships with local and regional angel investors and VCs provide regional network of early-stage funding critical to launching companies based on university research. Local angels created a 2 million fund companion fund that leveraged $29 million of investment. They just closed the first round of $3 million in Fund 2 with a second close of $2 million by December. Kentucky’s state funding programs provide matching funds for SBIR/ STTR grants and for private investments in early-stage companies for Phase 1and Phase ll. Kentucky is the only state to fund both phases. The Kentucky Science and Technology Corporation (KSTC), an independent non-profit organization, manages many of the state’s technology investment programs that includes a prototyping fund. UK’s close partnerships with both state and local economic development organizations provide a seamless team approach to growing knowledge-based companies in Kentucky. UK’s student Entrepreneurs Club (UK eClub) and Wildcat Investors Club provide undergraduate and graduate students an interdisciplinary opportunity to learn about entrepreneurship, form project teams and compete in business plan competitions. Several student businesses have been launched from the UK eClub. Numerous networking forums, both on and off campus, provide networking opportunities for entrepreneurs, service providers and investors. New UK Economic Development Initiatives UK’s Alumni Expert Network, www.ukyexperts.net, provides free technical and business consulting from UK alumni experts to small businesses in Kentucky.

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UK’s new Clinician Innovation and Commercialization program is focused on commercializing ideas from doctors, nurses and technicians who do not have research funding and lab support. UK has taken a unique approach to create a private, for-profit, privately funded company to work with UK clinicians through a master university agreement. The corporation has the opportunity to develop prototypes, to license to industry or new companies and to create startCollective Genius: Innovation, ups. Entrepreneurship, and the Commercialization of University Research Continuing Challenges for UK and the Bluegrass Region

funded company to work with UK clinicians through a master university agreement. The corporation has the opportunity to develop prototypes, to license to industry or new companies and to create startups. Continuing Challenges for UK and the Bluegrass Region Finding experienced C-level managers to work with university faculty in growing UK-based startup companies to their full business potential. Avoiding the relocation of companies and jobs in Kentucky as these companies receive investments from west/east coast VCs with a desire to move them out of the state. Funding multidisciplinary, entrepreneurial programs at UK that will foster the entrepreneurial spirit in our students and build future entrepreneurs and C-level executives in Kentucky. For example, UK is seeking funding to establish a graduate level, interdisciplinary fellows program focused on education and hands-on experience in the commercialization process. Funds for constructing more laboratory space for new companies that graduate from incubators to our research park. This could be a joint venture with private investment. Acquiring high end shared equipment such as mass spectrometry, electron microscope, culture lab, refrigeration, etc. that is available to industry partners and startups. Summary Creating knowledge-based jobs in Kentucky is one of UK’s core missions along with the traditional university missions of education and research. We strongly believe the keys to success are: Placing a strong emphasis on commercialization and job creation starting with the senior leadership of the university. Providing on campus support services to educate and support faculty, staff and student entrepreneurs through business services, rapid prototyping and incubator facilities. Building a seamless university public/private partnership that includes both state and local economic development organizations. Building active regional investment groups including angel investors and VCs…a continuing challenge in the “fly over” states, but something UK has shown universities can influence through leadership and investment in regional funds. Creating interdisciplinary university programs that provide educational and hands-on team experiences in the commercialization process including prototyping, market research, intellectual property, and business plan development.

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Rose-Hulman Institute of Technology (William Kline)

Brigham Young University (Dee Anderson) Rochester Institute of Technology (William Bond) University of Georgia (Sohail Malik)

The Rose‐Hulman Ventures (RHV) program at the Rose‐Hulman Institute of Technology has demonstrated that a university focused on undergraduate engineering, math, and science education can play a successful role as a ‘proof of concept center’ (POCC) in the commercialization of research and technology in the health and medical technology areas as well as for a broad range of industry segments. The RHV program focuses on providing technical services in the ‘innovation’ stage of development where the commercialization process is segmented into the basic steps of research/invention, innovation, and then business scale‐up. In the innovation stage, the RHV program focuses on transforming ideas, technology, and IP into designs and functional prototypes – a key step in the commercialization process. File would not open. N/A

The development of an entrepreneurial culture within academia may be – at least partially ‐ hindered by the fact that university researchers are not well‐versed on matters regarding intellectual property and business development. Although nearly all tech transfer offices in the US conduct training sessions for their researchers and technology in‐ reach, these programs are not broad enough to address the entirety of the academic population. Simply put, they are not staffed or funded at levels that would permit frequent training sessions to their researchers. The development of broad and frequent training programs directed at topics such as IP protection and licensing, public‐private partnerships, industry sponsored research opportunities, business formation, product development, regulatory requirements for drug and medical device development will have the potential to increase the audience dedicated to entrepreneurial activities. Suggested solutions: Creation of institutional funds and funding policies for proof‐of‐principle work to enable demonstration of commercial applicability and broaden the scope of intellectual property for early stage innovations. Matching federal funds would help in reducing the institutional burden. Creation of competitive mechanisms for funding of (i) technology/ IP‐driven research, (ii) translational research/product development, and (iii) prototyping work by federal agencies such as NSF, NIH, USDA, DOE and DOD An important element to driving the commercialization of University technologies and the attraction of private industry investment is risk mitigation. Over the last ten years, the venture capital industry has substantially changed showing much less tolerance for commercialization risk, while focusing primarily on opportunities that involve

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fewer regulatory hurdles and less research and development. Unfortunately, this bypasses many of the opportunities with the highest potential for economic and social impact. We therefore believe that Federal agencies can contribute to the development of new University born technologies by working to lower the costs associated with regulatory approval. Likewise, the costs associated with securing a strong intellectual property portfolio can be significant, and the backlog of cases at the USPTO has resulted in an increased uncertainty regarding the patentability of some technologies. The GRA VentureLab program is the primary instrument for bridging the “valley of death” in the State of Georgia. VentureLab, through an extremely efficient peer review process, enables small seed contracts issued to University based start‐up companies for the achievement of critical commercial milestones; the goal being to mitigate enough risk early on that by the time a company has completed VentureLab phases, it should be a “fundable opportunity” for private sector investment. The seed awards are issued in phases that increase in scope as the companies mature. Phase 1 is a $50,000 contract for the achievement of proof of concept milestones, and projects range from the development of a commercialization plan to laboratory studies. If the milestones established in Phase 1 are achieved, a VentureLab company may be eligible for Phase 2 funding, which is a $100,000 contract that requires a 1:1 match of from a source corroborating the commercial potential of the company. This requirement de‐politicizes the process, and suitable sources of matching funds can be from SBIR/STTR awards, private investment, and/or sales revenue. A Phase 3 loan can then be issued to a company if it has continued to meet its project milestones. This loan can be for as much as $250,000 and involves low interest and generous repayment terms that do not burden the young companies with large debt service obligations. The intended result of the VentureLab program is to develop companies that are attractive to institutional investors on the other side of the “valley of death”. In our experience, not for profit sources of funding have not played a large role in supporting new companies at UGA. Successful Practices: The Implementation of the GRA VentureLab program is the most effective tool for the commercialization of UGA owned technologies. This program is successful because it: a.) Incorporates a tiered approach that provides a clear incentive for early stage companies to meet their commercial milestones, b.) Encourages the development of commercialization strategies in concert with technological development, and c.) Requires matching funds as projects progress to Phase 2. The requirement of matching funds places some pressure on the companies to begin generating outside interest in their activities and ensures that GRA is not the only investor and believer in the technology.

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Mississippi State University (Gerald Nelson)

Entrepreneurial Academic Issues Undergraduate Minor Expanding the Entrepreneurship Certificate Program to create a minor. The starting point would be the five courses currently in the Entrepreneurship Certificate Program. Principles of Accounting (ACC 2103), Microeconomics (EC 2123), Engineering Economy (IE 3913), Principles of Marketing (MKT 3013), and Entrepreneurship (MGT 3323). Two courses would initially be suggested as additions to start the minor. They are Legal Aspects of Entrepreneurship (BL 4243/6243) and Field Studies in Entrepreneurship (MGT 3333). The Business Law class is currently being offered once a year and could easily be offered more frequently as need arrives. Field Studies in Entrepreneurship (MGT 3333) was offered in Fall 2009 where a diverse group of students from 11 different majors came together to study entrepreneurship via iPhone Apps projects. The course was team taught by (1) an entrepreneur in residence (2) a management professor, (3) an information systems professor, (4) a marketing professor, (5) an internet marketing professor. Teams of students created, designed, and launched new iPhone Apps on the Apple Apps store. This method of distribution gave the student teams instant access to a distribution channel (the Apps store) to potential customers in 90 countries around. The students explored entrepreneurship, from forming their management teams, product design, target markets, etc., through the hands-on experience of their own App. The class ended in December 2009. To foster further entrepreneurial learning, the MSU Innovation Challenge launched in December and ended in April 2010. Students who entered their App in the MSU Innovation Challenge were eligible to win prizes totaling $10,000, awarded in the categories of most downloads, most revenue, and best innovation. The class and Innovation Challenge were so popular, enrollment may need to be capped for Fall 2010. MBA minor and/or Masterâ&#x20AC;&#x2122;s Thesis Option The MBA degree involves 30 hours which includes a 3-hour elective. An MBA with a minor involves taking the elective course along with two other courses in the same field of study for a total of 36 hours. MSU would need 3 graduate level courses in Business and/or Engineering that would be Entrepreneurial in nature. Legal Aspects of Entrepreneurship (BL 4243/6243) could already be taken for graduate credit (please note that only 2 courses at the 6000-level may be taken for credit on a graduate degree). To get the minor started 2 more courses would need to be developed. Once courses are proposed by business and engineering faculty, the new courses as well as the minor would have to be approved by the Curriculum Committee of COB and the UCC. It is unlikely that this program could be taught prior to the fall of 2010. Initial costs should not exceed $125,000, which would go to staffing for the new courses A proposal for the Masterâ&#x20AC;&#x2122;s Thesis option is included in Appendix A

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a. Assigned to each NEWCO university spin-out of scientists b. Evaluate initial and developing business plans c. Help scientists realize commercial opportunities d. Identify target markets e. Assist in preparing companies for business plan competitions Collective Genius: Innovation, Entrepreneurship, and thepitches Commercialization of University Research f. Critique presentations and g. Teach e-center-based curriculum h. Host entrepreneurial competitions

Entrepreneurial E-Center Activities Develop E-Curriculum E-Center Faculty Mentors Assigned to each NEWCO university spin-out of scientists Evaluate initial and developing business plans Help scientists realize commercial opportunities Identify target markets Assist in preparing companies for business plan competitions Critique presentations and pitches Teach e-center-based curriculum Host entrepreneurial competitions Business Advisory Committee Monthly NEWCO reviews Follow VC review process Entrepreneur in Residence Works with all companies Engages with student entrepreneurs Supports outreach efforts Capital Formation Issues in light of lack of available start-up investment, angels or VC Finalize Business/Operating plan for E-Center utilizing SBA grant process to build the model. Raise endowment funding to generate support level of budget for combined entity. Establish a financial network that includes alumni entrepreneurs and CEOâ&#x20AC;&#x2122;s, Angels, and VCâ&#x20AC;&#x2122;s to mentor and invest in start ups. Raise sponsorships for business plan competitions for students and faculty. Fostering an Entrepreneurial Eco-System 1. Business Plan Competitions MSU Innovation Challenge Best Student Start-Up Best Pre-Revenue Start-Up Internet Marketing Business Plan Competition Networking Events Hosted a Start-Up Strategy Day for all MSU start-ups Guest Speakers Series Coordination with Mississippi Technology Alliance (MTA) MSU companies enter the MTA business plan competitions Adjunct Entrepreneurial Faculty Assist with Courses Campus Wide Entrepreneurship Certificate Fostering Research on Entrepreneurship For university research to successfully transition to the commercial marketplace, a great emphasis on entrepreneurship research is needed. Are entrepreneurs born or made? What are the event sequences that lead to successful new venture creation? What are characteristics of the venture team, strategy, resources, and organization structure that contribute to success? How are venture opportunities identified and how can opportunities with high potential be distinguished from opportunities that lack such potential? How can outsiders contribute to the new venture creation process? What models of technology commercialization are successful? These and other questions regarding new ventures can be answered through Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research How- 151 scientific examination of entrepreneurs and entrepreneurship. ever, federal agencies funding university research, such as the National Science Foundation do not offer funding to support these in-

distinguished from opportunities that lack such potential? How can outsiders contribute to the new venture creation process? What models of technology commercialization are successful? These and other questions regarding new ventures can be answered through scientific examination of entrepreneurs and entrepreneurship. However, federal agencies funding university research, such as the National Science Foundation do not offer funding to support these inquiries. In 2009, researchers at Mississippi State University, the Center of Family Enterprise Research, ranked #2 in the University Entrepreneurship Research Productivity World Rankings (rankings provided by the M.J. Neeley School of Business at Texas Christian University based on peer-reviewed publications in the top three entrepreneurship journals, Strategic Entrepreneurship Journal, Journal of Business Venturing, and Entrepreneurship Theory and Practice). 94 97

Florida State University (John Fraser) San Diego State University (Bernard Janov)

Good metrics for PIE. Tech transfer is a state-wide phenomenon in Florida. Attached interesting report from The Licensing Journal. (printed out). San Diego region offered extensive entrepreneurial, market, business, and investment resources that collectively could be used for the program. A sister Center was established in San Bernardino which had limited resources by comparison. To make the program effective in this region, operational and administrative program processes were modified to fit the region. Both centers proved to be effective in the execution of the program with an overall success rate of approximately 51% in advancing technologies to the marketplace. The key is to tailor the program to the available resources in the region and augment them through partnerships with organizations such as Tech Coast Angels, national industry associations, etc. CCAT has supported clients nationwide. 2. Business Plan Competitions and Related Programs: The SDSU Entrepreneurial Management Center has been the sponsor of an intercollegiate business plan competition – Venture Challenge – since 1989. In the past 10 years, the EMC has seen a significant increase in the number of venture teams who are commercializing a university technology. In those cases where these teams win Venture Challenge – or place in the final rounds – it is usually because the judges find that the technology solves a clear market need and the team has accessed people and resources needed to commercialize it. Technologies in search of markets rarely win. In our experience, this ecosystem of business plan competitions is an engaging experience for students, venture capitalists, university faculty, and entrepreneurs-inresidence. The process occurring on each campus preceding these competitions begins to create the culture of change necessary for faculty who wish to move their technologies to the market. In addition, across the U.S. graduate students in business, sciences, and engineering are being exposed to the commercialization process.

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The main features and processes of the CCAT model are as follows: The CCAT Process model, refer to Figure 1 on the next page, focuses on the traditional gap that exists between a technologyâ&#x20AC;&#x2122;s development from proof of concept to prototype development and the introduction into the commercial and/or government market in the form of a new product. The model recognizes that small companies, academic research institutes, and government laboratories require extensive market, business, and IP support. All too often their technologies fall into â&#x20AC;&#x153;The Valley of Deathâ&#x20AC;? due to a variety of factors including: Immaturity of technology development Lack of investment capital Lack of business acumen and experience Poor understanding of the market Insufficient business planning Inadequate intellectual property protection Technology commercialization not an organizational priority (government laboratories and academic research institutions) Risk Assessment and Mitigation Activities As noted above in the previous section, there are several factors that impact the ability of the small business, academic researcher, or government scientist to transition their technologies from the laboratory to the marketplace. A solid understanding of these factors and the attendant risks is critical in the development of an effective commercialization strategy which defines the key transition stages, resource requirements, and services needed to advance the technology to the marketplace. The CCAT team with support from a pool of approximately 200 technical, market, business, investment, IP and government professionals performs risk assessments during the various stages of the evaluation and selection process. For example, CCAT uses an unbiased and open decision-making multi-stage process in the review, evaluation and selection of technologies to mitigate risks and customize a set of services to transition technologies to market. It begins with the application for CCAT services. The key attributes/questions used in the solicitation applications include: Technical Merit: How sound is the technology? Is the technology novel and non- trivial? Value Proposition: To what degree does the technology demonstrate the potential for a superior solution to a significant problem compared to competitors? Does the proposal address a documented need? Commercialization Potential: Are commercial and defense markets identified? Does the applicant have a plan to commercialize the technology into these markets? Does the applicant have a well articulated plan to secure further funding to commercialize the technology? Has the applicant identified existing products or technologies that it either enhances or competes with? Project Plan: How likely is the technology to achieve the goals of the project plan? How realistic is the timetable and schedule of deliverCollective Genius: Innovation, Entrepreneurship, andapplicant the Commercialization of University ables? Can the do what they say than canResearch do? Is the re- 153 quested funding adequate to achieve the goals of the project plan? Competitive Advantage: Is there intellectual property and is it ade-

Project Plan: How likely is the technology to achieve the goals of the project plan? How realistic is the timetable and schedule of deliverables? Can the applicant do what they say than can do? Is the requested funding adequate to achieve the goals of the project plan? Competitive Advantage: Is there intellectual property and is it adequate to sustain a competitive advantage? Are there sufficient barriers to entry? Product Development Experience: Do the project manager and development team have a proven track record in connection with the development of similar technologies? Have the project manager and development team worked together on this technology for a reasonable amount of time? Commercialization of University Research â&#x20AC;&#x201C; Request for Information San Diego State University Research Foundation 10 The subject matter experts (SME) from the pool of professionals evaluate the applications and score them based on viability, relevance, potential for success, and other criteria. In the next stage, panel review, selected applicants scoring high in the SME evaluation are invited to present to a panel of experts, again of similar composition to the SME teams. The presentations and the subsequent Q&A sessions offer a second opportunity to identify barriers to commercialization. Detailed assessments, including strengths and weaknesses are assembled for each applicant and a set of customized services are identified with the intent of reducing the risk and facilitating successful transition along the commercialization pathway. The final effort in risk determination and mitigation is conducted by the CCAT team, again with selected government program representative participation where appropriate. For the pending awardees, a CCAT team of market, business and technical professionals perform due diligence on all concerns raised by the SMEs and Panel. This includes patent searches, preliminary market assessments, and oneon-one discussions with the awardee. The final output of this process is an initial commercialization strategy and set of services designed to mitigate risk and achieve the intended commercialization objectives. Underlying conditions for a successful POCC: Universities in the POCC region must have a culture committed to spinning-out sponsored technologies into commercial products. Technology Transfer Offices must participate in the identification of technologies ready for commercialization efforts and be committed to not just generating royalty payments through license agreements but to the commercialization process. Research faculty with a portfolio of candidate technologies motivated to champion the commercialization of their technology. A properly staffed and funded POCC must be in place and ready to execute a regional commercialization program. Adequate pool of investment resources (Angel and Venture Capitalists), preferably in the region, but may be anywhere provided they are willing to collaborate with the POCC region as potential licensees of University technologies and/or resources that will support incubating a new company. 154

region as potential licensees of University technologies and/

Collective Genius: Innovation, Entrepreneurship, andwill thesupport Commercialization University Research or resources that incubating of a new company.

o Strong business support: Collaborations in research between universities and industry

Strong business support: Collaborations in research between universities and industry to share in costs and risks associated with university research. An engaged business/entrepreneurial community to assist in technology assessments, mentoring, business and marketing advice; entrepreneurs-in-residence; potential licensees

Stevens Institute of Technology (Christo Christodoulatos)

Integration of Business/Entrepreneurial Community into POCCs: Give engaged business executives and entrepreneurs a prominent role in the POCCs. They sponsor a series of workshops for the community. Interdisciplinary Skills Systems Thinking: The need to develop a solution that is successful in a comprehensive way requires that the students employ a ‘systems perspective’ to solve their problem. In addition to applying what they have learned to a selected task, students with an entrepreneurial project must link those tasks. They must execute those in the most appropriate sequence, and they must fit that sequence of tasks to external elements. They must learn and apply skills that enable them to be successful in an interdisciplinary environment. Collaboration: To optimize and streamline solutions, students must learn to capitalize on collaborative expertise. When they are effective, they avoid “reinventing the wheel” or “Rube Goldberg” approaches. For example, it is common for a student team to propose building their own circuitry from rudimentary components, but upon collaboration with an industry advisor who can provide some expertise in computers, they learn to utilize commercially available data acquisition, processing, and control devices which they had not experienced in their classes and labs. Communication: To collaborate successfully, each student must learn to communicate effectively. He must be able to convey and exchange ideas with team mates, professors, and advisors. He must communicate both within his discipline and outside his discipline, reaching beyond engineering, e.g. financial, clinical, industry, faculty and administration. He learns to write purchase orders, e-mails to vendors and doctors, as well as write project plans for his team meetings. He builds his formal and extemporaneous oral presentation skills. Learning and Doing Finally, many of us have been fortunate in our careers to have had a mentor who helped us to understand why we were doing things a certain way; our “on the job” mentors would take time, when possible, to provide the “learn” component of “learn and do”. They would explain why things are done a certain way; they might explain the regulatory, cultural, or historical reasons. They may share stories of past failures of alternative methods. Unfortunately, economic pressures of today have significantly limited the availability of those mentors. And, since an employer’s mission is to get the job done as

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swiftly and cost effectively as possible, an employee may receive limited or no education as he participates in the process of task or project execution. Stevens approach to this problem lies in further ‘Funding through the Chasm’ with new and unique mechanisms where money is invested to de-risk the technology in order to attract the increasingly cautious, milestone-by-milestone driven investors who are skeptical of the market value of university-based research. This value perspective is based on investors’ historical beliefs that university research is “90% theoretically correct, 100% unproven, and 300% overpriced by its inventor.” In good times, investors selectively took the risk and discounted the value, receiving non-balance sheet value for whatever government investment had been invested in the company. In today’s market, angels and VCs alike are not willing to consider taking such risk. In essence, de-risking university technology requires that universities take their technologies further toward commercialization as a means of reducing risk to the next round of investors and as a means of supporting a future valuation for that technology which will in turn give a better return for their effort. Stevens’ new Technogenesis® II program is designed as the next phase in the Institute’s combined commercialization and education effort to continue Stevens’ evolution toward becoming the leading Innovation College. This program uses both a virtual incubator concept and a unique funding mechanism through a newly formed company called Stevens Innovations, LLC (SI). More specifically, the Virtual Incubator supports both internal and external researchers and entrepreneurs by providing them with temporary office facilities, assistance with market research, strategy development, business plan development, and access to Stevens research support, in return for fees and/or equity participation. While this formula has been used successfully in other universities around the world, Stevens is combining it with the Stevens Innovations funding mechanism, which specifically contributes funding for early commercialization efforts…post prototype. Primary focus is given to getting a product to market, typically in a limited geographic area that is sufficient to prove its commercial value and the potential for scale-up, and for hiring a professional management team to drive the company forward.

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Stevens Innovations (SI) is an independent LLC and has an investor group consisting of sophisticated angel investors, small fund-tofunds, accredited university alumni and friends of the school. As a potential investor, SI sees the university’s deal flow and has the ability to discuss potential investments with the administration. What differentiates this approach is that SI is set up to take a license from the university at a negotiated pre-money valuation based on the level of product development and the amount of investment the fund is willing to commit. The fund operates like any other investment fund with the exception that SI takes a license to the technology without requiring that an independent company be set up, thereby saving the university considerable funds and carrying costs. Instead of stock being purchased, an agreement on valuation and funding is reached Collective Genius: Innovation, Entrepreneurship, andas thethe Commercialization of University Research by the parties and serves basis of stock ownership to the parties once the technology is ultimately spun-out into a separate company, typically at the point that the market is proven, a management

requiring that an independent company be set up, thereby saving the university considerable funds and carrying costs. Instead of stock being purchased, an agreement on valuation and funding is reached by the parties and serves as the basis of stock ownership to the parties once the technology is ultimately spun-out into a separate company, typically at the point that the market is proven, a management team has been put in place and the early-stage risk is taken out of the business.

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Indiana State University (Joshua Powers) Brigham Young University (Larry Howell)

As an LLC, the investors also get to write-off their investment losses, get to spread their investment risk over a basket of high-tech investments and take advantage of a continued strong relationship with the university. Because SI is a private company, it can also apply for SBIR grants and pool its expenses in order to maximize returns. SI also has a professional Board of Directors who makes up the advisory and investment committees that are independent of the university. This brings a more objective and dispassionate view on investments. N/A.

Challenges to University Commercialization: There are a number of barriers to commercialization of university research, and I will note three here. These specific items are noted because they are often overlooked but they can offer key insight into creating effective commercialization strategies. Cultural Gap: There can be significant differences between what is valued by the university and by industry. Examples of differences in where value is placed include: proprietary versus open, applied versus theoretical, specific versus general, benefit to share holders versus benefit to society in general, and immediate returns versus long-term outlook. Commercializable research often falls in this gap (similar to the “valley of death” often discussed) in that it is too applied to be fully valued by academia, but not yet applied enough to be of commercial interest. A related challenge is that industry sponsorship of university research is often very short term (my contracts with companies have usually been measured in months rather than years) which is difficult to fit into the research model discussed earlier (e.g. the length of time is too short to fund a graduate student’s thesis research). Publication restrictions due to intellectual property concerns can also be a challenge. “Innovation Drain”: There is an unfortunate paradox in commercialization: professors that are successful in commercializing university research have an amplifying effect on innovation if they stay in the university environment, but their success can also result in strong financial incentives to leave the university (e.g. employment with, or ownership in, the company utilizing their results). If they stay in academia, they can mentor students and other professors, who in turn are successful and mentor others. (To illustrate this, I have had 64 student co-inventors who can use that experience in their own

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careers. But in addition to 7 professor co-inventors, 8 of my past student co-inventors are now professors and they all have the opportunity to influence other sets of students, and so on.) When professors successful in commercialization leave the university, this amplifying effect is lost, there can be a significant impact on the culture of innovation at the university, and the long-term benefit to industry is diminished. Conflicts of interest: Professors involved in commercializing their research are often in a position for potential conflicts between their university assignment and commercialization efforts (e.g. directing university resources to benefit themselves financially, conflict-of-time commitment, and loss of impartiality in reporting research results). High-impact, Low-cost Policy Changes Focusing on solutions that specifically address the challenges listed above have the potential to result in low-cost approaches that will amplify the economic impact of federally funded university research. Addressing Cultural Gap: The first set of suggestions is intended to narrow the gap between university research and commercial application. Rankings: A set of university rankings, based on innovation and commercialization metrics, could have an influence on universities’ response to commercialization. If these rankings were encouraged and sponsored by a federal agency, it would add prestige that would enhance their impact on commercialization. An alternative approach would be to encourage current ranking systems (e.g. the U.S. News and World Report graduate school rankings) to include innovation metrics as part of their overall rankings of engineering programs. Publication venue: The creation of credible, peer-reviewed research journals that focus on case studies of applied or commercialized university projects would help narrow the gap. The credibility of such a venue could be established by the support of a federal agency, a quick turn-around process (which dramatically affects the journal’s impact factor, and this could be achieved by modeling the editorial process after that used by the journals Science and Nature), and strong peer-review. An alternative model is that attempted by the American Society of Mechanical Engineers (ASME), which is experimenting with “design innovation papers” within their current research journals. Awards: Recognition for individuals and organizations that successfully increase the economic impact of university research, mentor others in the process, create cultures of innovation, or otherwise facilitate commercialization, could make a significant impact at a low cost. These may be most productive if there were many awards perhaps at multiple levels so as to be achievable by more people. These may have a coordinated focus but come from many federal agencies (similar to how SBIR/STTR and PECASE grants have similar structure across multiple agencies).

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Tax incentives for supporting university research: To help close the gap from industry’s side, tax incentives could be offered to companies that support university research with a goal of commercializing federally funded research. Larger incentives would be offered for multi-year support that is of adequate length to support graduate Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research student research. These incentives could have a large amplifying effect because it would leverage industry funds rather than government funds to support the commercialization goals.

nies that support university research with a goal of commercializing federally funded research. Larger incentives would be offered for multi-year support that is of adequate length to support graduate student research. These incentives could have a large amplifying effect because it would leverage industry funds rather than government funds to support the commercialization goals. Addressing Innovation Drain: A possible key to addressing the innovation drain is to encourage policies that encourage successful faculty to stay at the university. Closing the culture gap: Policies that address the culture gap were discussed previously, and those same policies may be effective in retaining faculty who are successful in commercialization. Individuals who pursue academic careers often do so because they see the university environment as a place where they can make a difference in the lives of students and in society. Policies that help faculty that are successful in commercialization feel that they are succeeding in making a difference and that they are highly valued, will help them stay at the university in spite of financial enticements to leave. Royalty sharing for faculty: Many universities have policies that allow royalty sharing with university inventors and these programs could be encouraged and increased (e.g. BYU’s policy gives 45% of net royalty income to the inventors, which is higher than most and may be a model for other universities to consider). Federal matching funds for royalty income directed back into university research: Some universities allow faculty to take their share of the licensing income and direct it to their labs rather than take it as personal income. The university will often match those funds from their portion of the royalties (e.g., at BYU if inventors put all 45% of their portion of royalties into research, BYU’s match would bring it to a total of 90% of the licensing income). A federal match for these funds could be an effective use of funds for the following reasons: it is prescreened to support faculty who have been successful in commercialization and who have the experience to mentor students and other faculty, and it rewards faculty who are passionate enough about their work that they are willing to take personal income and direct it back to support their research. This matching would be contingent on the professor staying at the university. Encourage university policies that help retain successful faculty: Some proposals suggest “industrial leaves” for faculty to pursue commercialization. A danger with such policies is that they can have the undesired effect of losing successful faculty. The leave is a way to try the waters in the commercial side and keep one foot in the door at the university in case it doesn’t work out. If the venture is successful, then the professor leaves the university and joins the company. The result is that successful faculty leave the university and unsuccessful faculty return, which is not the ideal situation for building a culture of innovation at the university.

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University of Delaware (John Gillespie, Jr)

There are several key aspects of our model, which can be generalized as: A balance between high risk, exploratory and discovery with needs driven basic and applied multidisciplinary research. A portion of our research enterprise should foster new discoveries which may take decades before possible applications can be identified and additional decades to successfully commercial products based on this discovery. In the Delaware Model, we identify the needs of our customers and develop basic and applied research areas and projects to address these needs. The common belief that research related to an application cannot be considered basic research is not necessarily true - and is one of the reasons why the gap between basic research and commercialization is large. Todayâ&#x20AC;&#x2122;s technical and performance challenges become our research problems of tomorrow and establishing strong customer interest for advancing these technologies from project inception is essential. At UD-CCM, we maintain this balance through federal grants and a strong partnership with industry. Our underpinning research philosophy is based on a Systems-byDesign approach that will rely on the creation and use of simulation and modeling to accelerate the insertion of new materials and technologies into products. To achieve this goal, a systems approach is adopted where materials, processes, properties and component design are considered concurrently to deliver an overall solution that satisfies performance, cost and schedule requirements. At UD-CCM, we have found that faculty and students working together with research scientists and engineers, is very effective in maintaining academic excellence and successful technology transfer with industry. Full-time non-tenured research staff. While University basic research is generally led by the faculty, technology maturation and transition activities are led by our full-time research staff. This is necessary to address concerns of industry partners (proprietary aspects), timescales of the program (generally do not fit Masters or PhD timelines) and publication aspects (not all aspects of a technology maturation program may be publishable). Converting a lab concept or prototype to a functional prototype ready for implementation generally requires a significant amount of â&#x20AC;&#x153;engineering know-howâ&#x20AC;? that is provided or developed by our research staff. They are also able to work on shortterm quick reaction projects, where necessary.

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iDEA Institute, Case Western Reserve University (Gary Wnek)

The “i” is meant to emphasize several words beginning with “i” in addition to innovation, including invention, interdisciplinary, industry, imagination, integration, and impact. The comments that follow are targeted only to Part I (University Research, Promising Practices, and Successful Models) of the Request for Information and are based on our experiences as we build the campus-wide entity called the Case iDEA Institute. Promising Practices and Successful Models: We have been looking very closely at MIT’s Deshponde Center for Technological Innovation and UC San Diego’s von Liebig Center for Entrepreneurism and Technology Advancement. Best practices of their centers that are important for any university to consider emulating include: • The team approach of support to help faculty and graduate students understand the commercial path of their research. • • Involvement of mentors (alumni, community members) in the support of the potential projects. • • A one-stop approach for faculty and students who are interested in moving their ideas toward the marketplace. • • Seed money for innovative, technology-based projects that have the potential to move into the more traditional funding space. Areas where we will expand our Institute beyond those models include the following: • We hope to involve undergraduate students in the Institute—starting their freshman year—to instill our philosophy early in the educational process. Through freshman design courses and informal activities such as business plan competitions, design competitions, mentoring, unconferences, barcamps, etc., as well as student-faculty research projects, we will work to infuse an understanding of the relationship between research advancements, innovation, and societal benefit/commercial impact. • In order to create the culture of exploration and innovation, the iDEA Institute will manage a wide variety of laboratories to give students and faculty the opportunity to “tinker” with ideas on equipment. For example, with easy access to rapid prototyping machines, a student who wants to create a new product idea can see their designs become a tangible reality. While such activities may or may not result in a potential commercializable idea, it sets a tone of discovery that we believe leads to more innovation, creativity, and game-changing ideas. • Weaving “iDEA” into the curriculum (i.e., freshman engineering, senior projects) as well as in faculty/student research projects, we will work to integrate the role of entrepreneurism and innovation throughout the University. It must not be seen as a layer of education or activity, but rather integrated. port these collaborations through matching interests, offering seed

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scholars and students from various corners of the University and regional community.

â&#x20AC;˘ Collaboration throughout all disciplines and colleges/schools of Case Western Reserve University and into the community will be key features of projects supported through the iDEA Institute. We will support these collaborations through matching interests, offering seed funding for projects, and encouraging activities that bring together scholars and students from various corners of the University and regional community.

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University of Texas at San Antonio (Jeffrey Kantor)

â&#x20AC;˘ While the primary focus of the iDEA Institute is on the students of Case Western Reserve University, there is a great interest to reach out not only to other area institutions of higher education as teams are built (both students and faculty), but also to the K-12 community to help nurture interested middle and high school students who may be encouraged by the connection between design, tinkering, and commercialization to the STEM fields of study. By including this as an operational principle, the founders of the iDEA Institute believe they are contributing to building a strong human knowledge base for the entire region. While many universities offer pure entrepreneurship degree programs as a series of courses leading to a degree, the UTSA CITE has identified a deeper need of establishing a technology entrepreneurship context through experiential education as part of existing degree programs. In this vein, a mechanical engineering student will still graduate as a mechanical engineer, but can partake in the $100K Student Technology Venture Competition by teaming with business students to turn proof of concept products into new companies. This novel approach to education does not change course requirements for either the engineers or business students, but does provide the technology entrepreneurship context that their work can generate new IP, be the basis for a business plan, and can be translated into a new product for an existing company, or a new company unto itself. Since creating the $100K Student Technology Venture Competition in the fall of 2007, UTSA has enabled almost 45 companies to pitch new technologies to investors and given over 300 undergraduates technology venture start-up experience. This has added to the base of UTSA IP developed and led to the creation of new technologybased companies in the area. In some cases, the teams dissolve after the competition, and the technologies are then licensed to the appropriate licensees, with royalties going to the students as they do for faculty.

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University of South Alabama (Ker Ferguson)

Part of the mission of the OCAI at UTSA is to help foster collaborations with industry. A pilot Industry Partnership Program (IPP) has been run to test the demand for linking the university with external companies. Since inception a little over a year ago, this program has supported about a dozen SBIR, STTR, and State of Texas Emerging Technology Fund (TEFT) proposals linking research labs at UTSA and local companies. The intention is to help accelerate technology commercialization of university IP by partnering labs with technology-development companies and seeking the appropriate commercialization support to move forward. The IPP thus provides an alternative to traditional licensing whereby IP is created, protected, and then a licensee is sought. In the IPP model, the industrial partner is already teamed with the lab as IP is generated and is immediately ready to license the technology as part of their sponsored research agreements. The extension of this effort has been to create the UTSA New Venture Incubator, or NVI (http://vpr.utsa.edu/commercialization), which enables some of these companies to co-locate on the UTSA campus. The NVI focuses on three types of companies, namely: Companies licensing and commercializing UTSA intellectual property Companies collaborating with UTSA researchers on sponsored research programs

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Center of Integrated Nanomechanical Systems, University of California, Berkeley (Margaret Taylor)

New student and faculty start-up companies entering the San Antonio technology based business ecosystem In this manner, the university becomes a part of the regional technology-based business incubation system, and can graduate technology-based companies originating with UTSA ideas and IP into the broader business environment. According to the academic research on entrepreneurship and universities, there is considerable evidence that university spin-offs have an important direct impact on economic development. As reviewed in Shane (2005), university spin-offs: Had a direct economic impact of $33.5 billion between 1980 and 1999, or about $10 million per company founded (Pressman, 1999) Created jobs per firm at a far greater rate than the average new firm in the U.S. over the period 1980 to 1999 (Cohen, 2000) Created jobs at a greater rate than established company licensees of university inventions1 Commercialize academic inventions that would otherwise go undeveloped (Matkin, 1990; Lowe, 2002; Hsu and Bernstein, 1997)2 According to the academic research on entrepreneurship and universities, there is considerable evidence that university spin-offs have an important direct impact on economic development. As reviewed in Shane (2005), university spin-offs: Had a direct economic impact of $33.5 billion between 1980 and 1999, or about $10 million per company founded (Pressman, 1999) Created jobs per firm at a far greater rate than the average new firm in the U.S. over the period 1980 to 1999 (Cohen, 2000)

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Created jobs at a greater rate than established company licensees of university inventions1 Commercialize academic inventions that would otherwise go undeveloped (Matkin, 1990; Lowe, 2002; Hsu and Bernstein, 1997)2 This is evidenced in studies like a Pressman et. al. (1995) analysis of the technology licenses of MIT showed that spin-off companies “accounted for 70% of all new jobs created from MIT-licensed technology, even though spin-offs only composed 35% of the licensees,” and a Charles and Conway (2001) analysis with similar results in the context of the United Kingdom. Are more likely to invest in the further commercial development of academic technologies once they are licensed than is the case for established firm licensees tend to exert multiplier effects on the economy through hiring of employees and sourcing of supply and production. For example, spin-offs focus on inventions that are too uncertain or at too early a stage for established companies to pursue (Thursby and Thursby, 2000; Thursby et al., 2001), and they permit the development of inventions that require substantial inventor involvement (Lowe, 2002; Jensen and Thursby, 2001). For example, Pressman et al. (1995) found that spin-offs accounted for three-quarters of the induced investment in the development of MIT technologies, even through they made up only one third of licensees. In addition, Mustar (1997) and Blair and Hitchens (1998) found that French and British university spin-offs invest more heavily in research and development than typical startup companies, respectively. Shane (2005) conducts a similar review of the available evidence regarding six categories of “best practice” policies for encouraging the creation of university spin-off companies and thereby directly and indirectly enhancing economic development through academic entrepreneurship. He finds that: Perhaps the most important policy to support university spin-offs is the federal government’s provision of R&D funding to U.S. universities, since there is a direct empirical relationship between university R&D expenditures and the number of licenses and spin-off companies they create (Adams and Griliches, 1996; Siegel et al., 1999; DiGregorio and Shane, 2003) Provision of intellectual property rights with institutions (rather than with inventors, as in most European nations) provides three particular benefits that encourage spin-offs: It provides institutional support for an entrepreneurial attitude amongst faculty and university administrators (Goldfarb and Henrekson, 2003)

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It leads to the development of offices of technology transfer which have expertise in developing new companies (Golub, 2003) It pools the risks and costs of developing and licensing inventions over a large number of technologies (Goldfarb and Henrekson, 2003; Collins and Wakoh, 2002) The Bayh-Dole Act of 1980, which gave universities “the right to own Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University federally funded inventions developed on their campuses andResearch ended the requirement that universities use institutional patent agreements negotiated bilaterally with government agencies” (Mowery, 2001),

over a large number of technologies (Goldfarb and Henrekson, 2003; Collins and Wakoh, 2002). The Bayh-Dole Act of 1980, which gave universities “the right to own federally funded inventions developed on their campuses and ended the requirement that universities use institutional patent agreements negotiated bilaterally with government agencies” (Mowery, 2001), enhanced the rate of spin-off creation by: Making spin-offs acceptable, and even desirable, at universities (Bok, 2003) Making exclusive licensing of university inventions easier to undertake (Mowery et al., 2001, Pressman et al., 1995), thereby providing a competitive advantage and a signal to investors that a given invention is promising, even though it might be at a pre-commercialization stage prior to licensing (see Pressman (2002), Roberts and Malone (1996), and Hsu and Bernstein (1997) for empirical study of exclusive licensing and university spin-off formation) Direct mechanisms to encourage economic development through spin-off creation can pay off, through examples such as support for incubator facilities, buffer institutions, and applied research, as well as establishing direct ties of university research to government procurement efforts, such as those undertaken by the Department of Defense. Of these direct mechanisms, Shane (2005) particularly highlights policies that permit government entities, such as state universities, to invest in spin-offs in return for equity stakes Other policies that seek to reduce the financing gap in early-stage technological development enhance the growth of university spinoffs up to the point that early-stage technologies become developed enough to be of interest to private investors Finally, policies that enhance the willingness of academics to participate in the formation of spin-off companies – such as leaves of absence from academic institutions and permission for academics to hold equity in spin-offs based on their own inventions – appear to be effective in encouraging the formation of spin-offs. On a related note, anecdotal evidence supports the idea that additional labor practices – such as training academics to engage effectively with the business community – also has benefits in economic development.

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Global Connect, University of California, San Diego (Mary Walshok)

Center on Knowledge Translation for Technology Transfer (KT4TT) (Jennifer Flagg)

The University of Washington, the University of California, San Diego and an increasing number of such institutions, through the creative use of low power broadcasting mechanisms, web casting and YouTube, have demonstrated ways in which research activities and important findings can be disseminated rapidly and efficiently to corporations and schools as well as the general public. The reach of these media is demonstrated by the 750,000 downloads in a single month of "Treating the Invisible Wounds of War," a University of California, San Francisco program which offers guidance to mental health professionals and families dealing with military veterans returning from Iraq and Afghanistan. Successful innovative regions are building the workforce that is needed by the research, commercialization and new business startups simultaneous with funding basic research and developmental work. Metrics should reflect curricular changes through such things as the development of new degrees, certificates and credentials; the provision of lifelong learning within S&T sectors, as well as Workforce Investment Board activities focused on skills and competencies needed in new economy companies, not just within the lower-skilled and service industries in the region. An additional metric that is reflective of the overall growth in prosperity of a region is the growth in philanthropic organizations, such as family foundations, community foundations and corporate foundations, most of which tend to make investments in cultural and social services in their region. In summary, funding intended to increase the impact and success of the commercialization of university research should be directed towards activities such as the following: Programs that help researchers perform due diligence to answer market, business and technical feasibility questions. Knowledge translation programs that help researchers to understand their customers’ needs (i.e. industry’s needs), and put their outputs into formats that are meaningful to these audiences.

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Southwest Virginia Higher Education Center (Edwin Rogers)

Forums where industry needs are explicitly made available to academic researchers. It is my opinion that the indispensable ingredient in the commercialization of university research is the entrepreneur. Researchers/ inventors are important, but crucial are the talented individuals–the entrepreneurs–who are willing to taken as cent technologies and try to turn them in to wealth. There as on university research does not get commercialized enough is not because there is not enough research. Rather,“the harvest is plentiful but the workers are few.” Talent is more important than money, too. Often it is said that financial capital is the key missing ingredient in commercialization of university research. But while financial capital can play a vital role in technology commercialization, the entrepreneur is the essential role. Inadequate human capital will thwart commercialization of university research more surely than lack of financial capital.

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Southern Illinois University Carbondale (Linda Martion)

Gap competitions are somewhat similar to business plan competitions but are directed towards an earlier stage (pre‐company) than business plan competitions. Florida State University has such a program designed to bridge the gap from lab to company in commercializing university research. Bootstrapping Innovation Ecosystems‐ in absence of a university ecosystem prevalent in larger cities, an entrepreneur‐in‐residence program would help to fill this void. Matchmaking of seasoned business executives with raw university start‐up companies has demonstrated promise in other markets, and we would like to see this in southern Illinois. The FastTrac® TechVenture™ program consists of the following modules. Module 1: Exploring Entrepreneurship Module 2: Defining the Target Market Module 3: Conducting Market Research and Analysis Module 4: Testing Your Business Concept Module 5: Entering and Capturing the Market Module 6: Planning for Financial Success Module 7: Building and Compensating Your Organizational Team Module 8: Protecting the Business and Your Intellectual Property Module 9: Identifying Funding and Working with Investors Module 10: Managing Cash and Operating Your Business Module 11: Enhancing Your Investor Presentation

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Ohio University (Roderick McDavis) Rutgers University (Dipanjan Nag)

Upon completion, participants will have evaluated and improved their business concept; developed and effectively communicated their business idea; completed an elevator pitch, business plan, and investor presentation; and built a valuable network of entrepreneurial peers and mentor relationships. Research has found that FastTrac® graduates make better business decisions after completing the program. N/A The basic challenge for almost every university technology transfer is the lack of a proof of concept funding opportunity to cross the “valley of death” a chasm where the basic research funding has ended and no venture capital or angel funding are available to support it. Thus the classic phenomenon of unfinished business occurs. Just looking at the funding provided by the Federal government from 1991 to 2007 shows that there is not enough number of technologies taken to the market to complete the cycle of innovation where the general public benefits from the enormous research investment by the federal government.

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Texas Tech University (David McClure)

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Center for Advanced Life Cycle Engineering, University of Maryland (Michael Osterman)

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Texas Tech researchers have also been limited by a scarcity of venture capital to support businesses creation in the region. With an estimated 90% of nationwide start-up funding provided by Angel groups, Texas Tech inventors are handicapped by the lack of angel investors in this region. A program to encourage tax incentives for private investments of less than one million dollars by registered angel investors might stimulate more angel investment, encourage additional angel network growth, and result in more university technologies benefitting from this very important early stage funding. N/A.

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University of Utah (Jack Brittain)

The University of Utah is also home to the nation’s largest studentrun private equity fund, the University Venture Fund. It has over $18 million in investment dollars under management. The University hosts the National Student Private Equity Fund Conference every year in conjunction with the Sundance Film Festival and hosts 150 students from other institutions interested in a career in new venture financing. The University of Utah has hosted over 80 site visits in the past two years from groups struggling to redefine the commercialization functions at their university. As a result of these visits, we have come to understand the common challenges faced by universities attempting to commercialize inventions: Most universities are using a “cost reimbursement” model for running their technology operations. What this means is that the employees of the commercialization office are trying to get reimbursed for patents. Since a typical university is only able to license 25%, any licensing agreement has to pay the costs for three bad patents plus all the office overhead. At least 80% of university commercialization offices lose money. We refer to this immediate focus as “squeezing the nickels.” The University of Utah has adopted an “investment model” of commercialization, which encourages support for companies in the formation process. We provide product development support, space, services, and business plan support and gap funding in small amounts based on milestone achievement to support the value creation process. Income has remained robust while the university has accumulated tens of millions of dollars in company ownership over just a few years. University of Utah’s start-ups raised over $246 million in venture financing in the past 3 years. We have “quit squeezing the nickels and now pick up the dollars.” As a result of bringing value into the licensing process with gap funding and product development support, our up front licensing income has increased, which was a surprising result for us. Since we are coinvesting in our technologies, we are able to get greater up front value as well as long term value. We are a principal in the Western Innovation Initiative, which is partially funded by NSF and is looking for additional funding to support seed capital formation in the West, develop resource sharing structures for equipment and expertise, IP pooling and joint marketing, and best practice development to accelerate commercialization at all research university partners. In addition, we are developing programs to support commercialization at non-research universities. There are approximately 200 universities that fall into some definition of “research university” and nearly 4,000 non-research universities. If the non-research universities can support even an average of 2 spinoffs per year, the number of economic entities emerging from universities every year will go up tenfold.

It is important that, whatever metrics are used, there is a conscious understanding of what is happening in how value is generated and distributed. This is important because federal research dollars are the major mechanism used to support the research mission of the nation’s universities (like Pell grants are the major mechanism for supporting the educational mission and are distributed differently across Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University the wide number of U.S. institutions). When researchResearch universities 169 squander value by failing to commercialize or “giving away” technologies with poor management, federal investment dollars in the

The University of Utah is also home to the nation’s largest studentmajor mechanism used to support the research mission of the nation’s universities (like Pell grants are the major mechanism for supporting the educational mission and are distributed differently across the wide number of U.S. institutions). When research universities squander value by failing to commercialize or “giving away” technologies with poor management, federal investment dollars in the country’s research infrastructure are lost. Certainly one set of “value generation measures” are effectiveness in translating research funding into commercialization outcomes like (1) spinoffs per research dollar; (2) licensing income per research dollar; and (3) patents generated per research dollar. There are national institutions that receive extraordinary amounts of research funding and produce very little output per research dollar, while other institutions with much more modest funding account for up to a third of total economic impact for the entire nation. The most powerful tool the federal government has to influence universities behavior is the overhead rate. The people that need to be influenced are not the presidents; it is the chief academic officers who have titles like provost and senior vice president. You will never win a chief academic officer’s heart. The only solution is to buy their soul. And you do this by giving a 10% overhead incentive to support successful commercialization (and you only give it for demonstrated success, not promises). Buying the soul of chief academic officers is actually much cheaper than starting programs.

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Case Western Reserve University (Mark Coticchia)

There is a need for an organizing superstructure that spans university communities and provides models for best practices and helps integrate the nonresearch universities, which are clusters of creative and inventive people in their own right. These centers do not need to be the ecosystem, just a supplement to existing ecosystems with an objective of achieving important national goals. Also not hugely expensive. The nation is putting huge amounts into national labs and has relatively little to show for it. There is a case for investments in scaled facilities, but it is not clear that research funding should be similarly concentrated. A lot more “shots on goal” are going to produce more economic development than big bets on single experiments. N/A

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Arizona State University (R. F. Shangraw)

Arizona Technology Enterprises (AzTE) is a separate limited liability company formed in 2003 which acts as ASU’s exclusive intellectual property management and technology transfer organization. Funded by ASU, AzTE is comprised of industry and university professionals with extensive experience in technology evaluation, product development, marketing, capital formation, IP protection, and licensing and commercialization. These professionals have developed deep networks within the relevant industry, venture capital, and investment communities. Because the Arizona state constitution does not permit public universities to hold any ownership interest in companies, AzTE acts as a proxy for the university with the legal ability to hold equity in ASU spin‐out companies. Operating as a separate entity from the university also frees AzTE from typical institutional constraints, yielding additional flexibility and speed in its deal‐making activities. Our core strategy and operations in technology transfer are focused on deal flow,rather than revenue generation. Many university technology transfer offices have zero or negative income, with licensing income being highly concentrated among infrequent “blockbuster” technologies developed by a small subset of universities (most with medical schools). In fact, few university licenses generate any substantial licensing income. According to the Association of University Technology Managers (AUTM), for instance, in fiscal year 2004, only 0.5 percent of all licenses (111 out of 22,465) generated more than $1 million in revenues. Moreover, any significant monetary return on investment can take five to fifteen years to materialize after an initial patent application is filed on a university invention. With these lessons learned, AzTE’s business development team focuses on maximizing opportunities to move university technology to industry as a longterm investment strategy. The organization manages its intellectual property for deal flow density rather than for revenue—in other words, work to maximize the number of inventions and discoveries actually moved into use instead of trying to realize near‐term income from fewer and bigger deals. This licensing strategy is intended to encourage third party licensing and investment in early‐stage university research and technology for the development of products and services for use in the marketplace. Speed to market, flexibility, and even some risk sharing are critical elements in AzTE’s approach to licensing deals with industry and investors. To address and overcome these issues, the Impact Accelerator optimizes the translation of bioscience research into valuable commercial innovations by forming, funding, and nurturing start‐up companies through a milestone‐driven, risk‐reduction program in the earliest, most critical stage of development. Only selected technologies rigorously screened by a selection committee are eligible for entry in this program.

The Impact Accelerator reduces early risks by: Demonstrating the path to product through technology integration and prototyping. Matching the technology to a clearly defined and validated market. 3. Establishing strong intellectual property positions and strategy. 4. Staffing with professionals and advisors to execute milestone‐driven results. Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research 171 5. Defining and implementing a validated regulatory strategy.

Establishing strong intellectual property positions and strategy. Staffing with professionals and advisors to execute milestone‐driven results. 5. Defining and implementing a validated regulatory strategy. Expanding on this model, we would propose federal funding of technology integration centers through two‐year grants at $2 million. The funding from each grant would complement existing infrastructure and activities already in place at a university and be used to:

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University of Virginia (Tom Skalak)

Support an integration leader whose job would be to assemble a milestone driven time phased plan to design a prototype, visit potential customers for feedback, solicit potential suppliers for input, and then seek investors. Design and implement a plan to integrate the required technologies and services to build the prototype. Protect key intellectual property in the prototype design. Perform market analysis and obtain customer feedback to develop a detailed business plan for investors. Design media materials for early stage product/company marketing. The central thought here is that “countless” discoveries are required. Federal funding of proof-of-concept research adds the new dimension of harnessing these countless discoveries by linking the people that make them to accelerate innovation, wealth creation, and societal good. Today, more than at any time on the past, universities are the platform for innovation for America and the world. The evidence is clear and the reasons can be identified in the investment behaviors of publicly held companies. Because of this, federal investment in both fundamental discovery-oriented research as well as “translational research” or research that moves ideas into proof-of-concept work so it can become attractive for private investment is essential to our national innovation ecosystem. We recommend a significant increase in proof-of-concept funding from the federal government. There will be no substitute for this in the stimulation of the innovation economy. The reason is that publicly-held companies cannot approve adequate investments in early innovation and proof-of-concept work, because they seek quarterly returns and 7-10% growth rates in valuations, forcing these companies to focus on short-term investments and incremental growth strategies. Thus, tax dollars must flow to university proof-ofconcept research, which then fills the pipeline for innovation for these same companies. It is why all large companies now seek university ideas.

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University ideas are perhaps 5% of the path to final commercialization, and the private sector provides the other 95% of work to push new ideas to the marketplace. However, this first 5% of the pathway is critical for federal funding – without it, our national pipeline for innovation will run dry, leaving future generations with no possibility for economic success. Universities do this best and in fact “de-risk” new ideas for the private sector via our stringent hiring practices and vision for long-term pioneering research. This must occur via federal funding of proof-of-concept work at universities, because public stockholder pressure will never allow it within the private sector. One of the very best companies at innovation – 108 year old 3M corporation, has about 800 people in early R&D or proof-of-concept work – while having 8,000 in the downstream productization work. Research universities in America each have 800-1500 individual labs or people each occupied in early stage work – demonstrating the tremendous potential of unleashing this national resource via enlarged proof-ofconcept funding to universities. Universities will NOT duplicate the excellent private sector productization work – but universities will greatly augment the proof-of-concept work. For the same reasons, tax breaks for manufacturing and development work in industry will not achieve the goal alone (these help with the downstream activities) – it MUST be done through increased funds for proof-of concept work at universities. At the same time, interaction and communication among university and industry partners must be improved, so that when proof-ofconcept work is performed, there are ready paths for the commercialization so that economic growth, job creation, and impact on social well-being can occur. At the University of Virginia, we have new models for each of these steps in place with excellent outcomes. In a recent study, The Information Technology & Innovation Foundation (July, 2008) reported data showing that active government support of innovation and early-stage research is critical to today’s economy, with twice as many of the 2004-2006 R&D 100 Awards for new product innovation going to ideas from publicly-funded research teams compared to privately funded teams. Remarkably, only five of the 2006 awards went to Fortune 500 company-derived products, compared to about forty in 1970. This shows the current importance of publicly-funded translational research at universities to today’s innovation economy, in which large corporations have largely abandoned early-stage, risky innovation projects. The public sector is now highly innovative when measured in comparison to the private sector. We expect many projects to bring new design-driven innovations for consideration, rather than only technologies determined by market pull. Key features of a proof-of-concept ecosystem: Multiple competitions per year, supporting rapid access to resources, in person reviews to judge people and teams, review groups with diverse expertise and experience, rapid decision making and award dispersal (90 days from deadline), relatively small awards ($100200,000 per team, or $1-3 M per institution/year) for focused milestone-driven steps along the path to commercialization, initial screening and due diligence by each partners’ office of technology transfer and/or local innovation project managers, commitment that IP and regulatory issues are under institutional management, and regular local review Board feedback that helps managers and invesCollective Genius: Innovation, Entrepreneurship, and the the American Commercialization of environment University Research tigators improve innovation and their own173 future pipeline projects. At these early stages, a start-up company may be envisioned but has usually not yet been established. Teams

transfer and/or local innovation project managers, commitment that IP and regulatory issues are under institutional management, and regular local review Board feedback that helps managers and investigators improve the American innovation environment and their own future pipeline projects. At these early stages, a start-up company may be envisioned but has usually not yet been established. Teams and projects that have already established a company, control the primary IP rights, and have professional management or a CEO should not be eligible to apply for federal critical proof-of-concept funds. Courses in entrepreneurship and commercialization practices need to become more widespread, although they are offered now at most top research institutions. With federal funding for 2 faculty and staff per institution, this effort could be greatly enhanced nationwide. The new funding ought to specify that it supports learning in a crossdisciplinary experiential fashion, not simply core business skills isolated from the underlying new ideas or technology. Thus, integrating across schools of business/commerce and engineering, arts and sciences, etc. would be highly desirable. At UVa, we offer a course in BioInnovation that spans engineering, business, biology, architecture, and medicine. Other practices that stimulate associative thinking is critical to the future of innovation in America. At UVa, we sponsor and “Art &Science initiative” and an “Innovation Initiative” with regular events such as a “Calder Conference” at our Art Museum that brings together sculptors, engineers, architects, writers, dramatists, economists, and others to share ideas around a common theme – for example, the value of abstraction or how to provide water for the world. It is important that tomorrow’s innovators do not become incremental in their thinking, and we believe this is the best preparation for insuring a strong American innovation economy. Connecting ideas laterally is the key to innovation, while building on the deep well of new discoveries that constantly emerge. A recent session with Hearst Business Media – one of the world’s most innovative companies, with 13% top line growth last year in a down year – allowed them to adopt new graphic design practices into one of their information-based businesses within a week of engaging at a UVa Innovation Design Event. Regional “clusters” can work in some cases, mostly because a larger group of educated and experienced personnel attract similar businesses to a single region. Given the ability to “fling intellectual resources” worldwide today, clusters are of lesser significance than before. Regionalism will still be important to economic growth, but I believe that heterogeneous regional clusters (arts/technology/design/ water/food production) will be more important in the future, rather than clusters of single focus.

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Bootstrapping Innovation Ecosystems – We have successfully created the needed interconnections with the venture capital community and industrial community by hosting well-designed events on campus and by having key leadership travel to forge executive links with new company partners. The UVa Venture Summit is a national model for this - at UVa, we attracted $15 B in active venture funds two years in a row – mostly from top quartile VCs, and 8 of 8 UVa-derived spin-out companies received funding as a result over the last 15 Collective Genius: Innovation, Entrepreneurship, Commercialization of aUniversity months in a tough yearand for the capital. We also portray 4-8 year Research “window on the future” in various sectors, which is a valuable vision our faculty can provide to VCs, who see all the best current deals any-

for this - at UVa, we attracted $15 B in active venture funds two years in a row – mostly from top quartile VCs, and 8 of 8 UVa-derived spin-out companies received funding as a result over the last 15 months in a tough year for capital. We also portray a 4-8 year “window on the future” in various sectors, which is a valuable vision our faculty can provide to VCs, who see all the best current deals anyway in NY, Boston, Palo Alto, and San Diego, among other key locations. We also travel to give talks to chief innovation officers, VPs, and CEOs at major corporations to inform them of our modern partnering approaches. What we have learned is that when VCs do a deal in Charlottesville – not a major industrial or venture hub – they achieve higher ROI because they are finding more untapped innovation here. This backs up the earlier point that proof-of-concept funds ought to be spread in a leaner fashion around the country, not concentrated in a few hubs where deal flow will soon be exhausted or incremental in approach. Underlying conditions for a successful POCC: institutional leadership support at Dean, VP level, low barriers to collaboration among technical, scientific, and commerce arms of an educational system, proof-of-concept funds, diverse review boards for picking projects (VCs, operations business people, scientists, engineers, entrepreneurs), in person reviews, quarterly reporting to the local boards, allowance for projects to change direction, connections to a community of capital and experienced business practitioners. Example at UVa: the UVa Venture Summit brought $15B in capital to campus, 100% (6 out of 6) UVa-derived start-up companies got funding after pitching to the Summit. Local project managers who link lab-topartners. Economic development organizations are NOT effective at innovation-based commercialization. They mainly deal with tax breaks and real estate practices. Those that do fund POC work have usually not followed the above key ingredients – they do longdistance email reviews, do not have high chemistry boards, do not kill projects, do not have quarterly reporting, and do not have local managers. Thus, they produce weak results. Core business skills training (legal, accounting, business plan writing) need to come after the key POC work is done – NOT BEFORE. They are necessary but not the most critical elements of an innovation ecosystem. The main value added by local legal contacts is the rolodex of investors, not the actual legal or accounting work per se.

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NSF Nanoscale Science and Engineering Center for Highrate Nanomanufacturing, Northeastern University (Ahmed Busnaina)

Stony Brook University (Ann-Marie Scheidt)

Our Centerâ&#x20AC;&#x2122;s Industrial Advisory Board is comprised of a select group of invited company representatives ranging from major Fortune 100 Firms with nanotechnology research like NSF Nanoscale Science and Engineering Center for High-rate Nanomanufacturing Raytheon, IBM, Textron, to national and local nanotechnology firms such as Brewer Science, NanoComp, and Nantero as shown in the chart below. Our Center does not charge membership fees, but we select member companies based on technological synergy, compatibility and willingness to collaborate. By selecting firms and representatives based on synergy, we have individuals who are fully engaged and actively participate in IAB meetings. Many are also research collaborators and some have research contracts with us and therefore, have a vested interest in the Centerâ&#x20AC;&#x2122;s research, collaboration and application development success. The establishment of Proof of Concept Centers (PoCCs) provides leading innovative universities with a strategic focus and incremental resources to develop nanotechnology commercialization infrastructures, methods, tools and processes to enable and to accelerate commercialization. However, the risk is high and other models that depend on collaborative research with companies (versus spinout) should also be considered. Applications based on Center research ideas developed jointly with industry have a much higher chance of success than spinouts that are done completely separate by a start up without potential customer involvements. Nurture an Entrepreneurial Ecosystem through New Venture Creation, Incubation and Strategic Business Services Universities should actively encourage and appropriately support faculty, staff and students to consider and pursue entrepreneurship to fulfill the institutional technology commercialization mission. Not all regions have an effective ecosystem of entrepreneurs, investors, service providers and successful companies. Consequently technology licensing and investment activity tends to favor start-ups and established firms in recognized industry clusters, while local company development stagnates. Technology transfer offices gravitate toward potential licensees that already have substantial resources and track records. Under these conditions additional assistance, support and even preference for entrepreneurial ventures must be seriously considered. Academic institutions can help by creating and providing direct business development support and strategic consulting services to new technology companies and incubator tenants, including incorporation and company formation, business plan development, market and competitive analyses, intellectual property strategy, product development and regulatory guidance, financial modeling and projections, marketing and communications, and technology licensing negotiations. An entire suite of economic development programs and services may be created, integrated and/or aligned to support new venture creation and emerging company growth, including :

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Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research

• “innovation boot camps” that help faculty-entrepreneurs understand the various intellectual property, regulatory and business issues involved in early-stage technology commercialization and new company formation • “first-look forums” to expose investors and entrepreneurs to emerging technologies and new business opportunities • “strategy sessions” that leverage internal and external expertise to evaluate new companies, provide advice and guidance, review business models, and prepare investor presentations • “technology commercialization clinics” that utilize professional staff, as well as technical, business and law students to help companies evaluate markets, assess competition, develop IP strategies, determine product development pathways, craft investor presentations, construct financial models, facilitate access to service providers, and identify potential managers (among other services) • “SBIR/STTR coordination, grant writing and submission services” to encourage, facilitate and support new grant applications to federal agencies, and convert Phase I to Phase II awards • “venture mentor networks” consisting of industry executives and service providers interested in supporting early-stage companies • “entrepreneur-in-residence programs” to identify and access experienced managers and industry executives that may be interested in leading new ventures once risks are adequately managed • “small business development centers” to assist with business planning and financial projections, as well as facilitating access to legal, accounting and banking services • “business plan competitions” to solicit creative business ideas from faculty and students, while providing initial capital for new company formation • “incubators” to provide shared space and equipment, reduced/ subsidized rent, access to conference rooms and administrative support, networking opportunities, and other business assistance • “marketing and communications” services to help new companies build initial websites, prepare press releases, interact with the media, and increase professionalism of documents and sophistication of presentations • create and cultivate regional resources, investor relationships and networking opportunities

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University of Pennsylvania (Michael Cleare)

During the twentieth century, the Federal Government has increasingly become the major funder of basic academic research at US Universities, with this trend accelerating rapidly from the nineteen fifties onward. The concept behind this funding has always been that unleashing the discovery of new knowledge and new technologies will not only ensure that the US has a strong academic base of excellence in research, but that the fruits of the research will find their way into industrial and entrepreneurial hands where they can be adapted and developed for the benefit of society while stimulating economic growth and all that goes with GDP expansion including new jobs. The original organic ‘trickle out’ ‐ via publications and academic interactions with industry etc has required modification on occasion to ensure that efficient transfer of knowledge was occurring. One major example of this was the passage by Congress of the Bayh‐ Dole Act in 1980 codified at 35 U.S.C. § 200‐212, and implemented by 37 C.F.R. 401. This was largely a response to the realization that knowledge/technologies from universities was increasingly coming in the form of patented intellectual property (IP) and that outside organizations needed this patent protection to justify spending the large amount of money needed for developing university early stage technologies into products and processes. By 1980, The number of university patents had grown to such an extent that commercialization by government funding agencies had become inefficient, so the act allowed the title (ownership) of patents on inventions generated under government funding to belong to the individual university doing the research. There were strict compliance and reporting regulations associated with this ownership, but, in effect, this law led to the formation of University Technology Transfer Offices (TTO’s) which have evolved into the organizations that we know today. CTT at the University of Pennsylvania is a prime example. TTO’s are charged with commercializing their university’s IP ‐via licensing to established companies, both large and small, and via the formation of startup companies. For many years this worked reasonably successfully as the university technologies comprised a lot of” low hanging fruit” and, in general, industry and investors were not overly risk adverse to the early stage technologies emerging from the universities. However, over the last 5 ‐10 years things have changed ‐due to general economic conditions and corporate/investment strategies. The university technologies need to be developed and validated much more than previously was the norm – and well past the research stage sanctioned and supported by federal agencies ‐ in order to achieve a viable risk level for private sector investment. This led to the emergence of the “Proof of Concept Gap” (POC) often referred to as the “Valley of Death”. While generally applicable to most University developed technology, the gap is especially acute in the commercialization of new medical devices and therapeutics, where the cost of bringing products to market has escalated dramatically. Interestingly, this is the same area where improved therapies could actually help to drive down the US’ spiraling health care costs.

Sadly, in our experience, many high potential early stage technologies die for lack of the initial Proof of concept (POC) funding, which is vital to enable the validation necessary for follow on investment by the private sector. There is just not enough high risk money from seed funds, VCs, angels or established corporations etc. to help the majority of promising technologies to either cross the "Proof of Concept Gap” – or to demonstrate that they are unsuitable for commerCollective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research cialization. We wholeheartedly believe that the USA is pre‐eminent, in global terms, at creating vast pools of innovative technologies ‐ especially at academic centers ‐ through the imaginative use of Federal

seed funds, VCs, angels or established corporations etc. to help the majority of promising technologies to either cross the "Proof of Concept Gap” – or to demonstrate that they are unsuitable for commercialization. We wholeheartedly believe that the USA is pre‐eminent, in global terms, at creating vast pools of innovative technologies ‐ especially at academic centers ‐ through the imaginative use of Federal Funding. However, the lack of translational research funds means that many of these technologies have no chance of reaching the stage of development/validation at which private investors can be reasonably expected to assume the risk of taking them through to viable products and processes. The relationship between Federal Funding for basic research and funding for the early stages of translating that research into reality is now significantly out of balance. This does not necessarily mean that we should reduce funding for basic research, but rather that we should seek new ways of taking promising research into development. Herein lies an opportunity to make a real impact on the economy in terms of both jobs and GDP. The USA is the best in the world at generating valuable breakthrough technologies, while also possessing a wealth of entrepreneurial talent. Sadly it seems that other countries (e.g. Singapore, South Korea, Hong Kong, Switzerland, Ireland, Finland, etc.) are placing more emphasis on the POC phase which could lead to threatening competition and a diminishment of our status as the most innovative country in the world. we believe that experiential learning programs across all schools and scientific disciplines should receive increased support. Experiential learning through internship programs and the like are an important element in training entrepreneurs of the future. At Penn, we have been very active in creating opportunities for students to become directly involved in technology transfer and venture creation activities. We have designed and launched a “Fellows Program” at CTT that provides training that is specifically tailored to students interested in IP, Licensing etc. and enhances their experiential learning by interacting with people who are active practitioners in translational research. The Program allows students to get directly involved in the evaluation and prioritization and early stage marketing of cutting‐ edge technology disclosures. We also co‐founded the Commercialization Acceleration Program (CAP), in partnership with the Wharton Business School, to provide MBA students with an opportunity to work on specific “real‐time” projects in a consulting capacity. Bottom line: with additional resources, we would be eager to create additional programs that would provide opportunities for students and faculty to become more involved in experiential learning opportunities. We also strongly recommend that consideration for this experiential learning approach be given for use in other universities. Bootstrapping Innovation Ecosystems Some universities participate in regional innovation ``ecosystems'' with dense concentrations of venture and angel investors, experienced entrepreneurs and managers, and a mix of large and small firms. These universities also have faculty who have been involved in commercialization of research and entrepreneurship, and can serve as mentors and role models to faculty or students. How can universities and their external partners expand their ability to commercialize research in the absence of these favorable conditions? Collective Genius: Innovation, Entrepreneurship, and the to Commercialization of University This issue has more do with the ecosystem of theResearch region than the179 desire of the University; and while Universities can and should be key players and local leaders in this area, without a vibrant innovation

as mentors and role models to faculty or students. How can universities and their external partners expand their ability to commercialize research in the absence of these favorable conditions? This issue has more to do with the ecosystem of the region than the desire of the University; and while Universities can and should be key players and local leaders in this area, without a vibrant innovation focused surrounding community their ability to influence ecosystem evolution is limited. A particular region may not be densely concentrated with VC firms and experienced entrepreneurs, but all capable investors and managers will be attracted to the same basic ingredients of value creation: high quality technology with appropriate protection, faculty with sophisticated and reasonable expectations and university decision makers who know how to get a fair deal done. If you have these ingredients, and are consistent in how you communicate available opportunities and negotiate deals, VCs and entrepreneurs will find you. If you don’t do/have these things, no amount of trying to artificially recreate the conditions of a robust innovation ecosystem will work. It is ,of course true that having investors and particularly entrepreneurs in the local region is a significant advantage, but if you don’t do/have an effective “ecosystem”, in our view, no amount of trying to artificially recreate the conditions for one has much chance of success. Just work hard at attracting them from outside! All Universities carry out technology transfer activities on a national – if not global – basis. The answer is not to artificially create regional POCC’s but to encourage universities to form relationships with a broader range of POCC’s –and this is where a central fund would come in. One can also envisage a network of POCC’s covering the nation via larger regions! Since some projects will fail during proof of concept, and others will be unpartnerable or uninvestable (despite upfront efforts to avoid this), POCC Centers should probably be prepared to support 3X‐5X more projects than will eventually be picked up and taken further by outside third parties. The key is to identify the failures as soon as possible and eliminate them, while reserving additional support for the projects that start to look more and more like big successes. Importance of brick‐and‐mortar facilities: Facilities are probably not that important at the very early stages, particularly if incubator‐like real estate or space is otherwise available locally. However this does vary considerable from case to case, and “wet lab” space is always scarce. Virtual organizations are cheaper and more flexible, but they need to be sure to address the central networking advantages in other ways.

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Geographic scope of participation: Ideally, should be no more than 1 hour drive (30 minutes or less preferable) from institutions providing technology access. Ideally, POCC Managers should be incentivized by project success alone, not by fiefdom building and political gamesmanship. One problem area that the Administration could take a leadership role in helping to address is the issue of available entrepreneurial talent. Many highly qualified entrepreneur candidates are unable or unwilling to become involved in very early stage companies (the entities that arguably need them most) because it would place an undue financial Collective Genius: Innovation, Entrepreneurship, andtheir the families. Commercialization of University hardship upon them and If POCC and/or relatedResearch federal programs could provide a safety net to qualified entrepreneurs while they are looking for their next big opportunity, it would have a

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University of Tennessee Research Foundation (Joy Fisher)

Many highly qualified entrepreneur candidates are unable or unwilling to become involved in very early stage companies (the entities that arguably need them most) because it would place an undue financial hardship upon them and their families. If POCC and/or related federal programs could provide a safety net to qualified entrepreneurs while they are looking for their next big opportunity, it would have a substantial impact on the ability of POCCs and other startup business creators to launch and sustain new ventures. According to the SCORE website (http://www.score.org/small_biz_stats.html) , small businesses generate the majority of innovations that come from U.S. companies. Innovations from universities are often the foundation of such companies, and several of UT’s campuses and institutes are embracing this concept by developing programs to facilitate entrepreneurial skill development. UTRF and Technology 2020 have collaborated with these organizations to provide the tools that support these efforts. The College of Engineering is in the process of developing an entrepreneurial culture among the faculty, staff and students. Through NSF funding, they have recently developed the coursework for and approved a minor in entrepreneurship. Three courses have been developed, and they are working with the College of Business Administration to cross-list business courses to help the technical students develop business skills. The capstone course, the first of which was held during the spring of 2010, involves experiential learning where students utilize the SBIR/ STTR solicitation process to identify problems that interest them and then develop proposals to potentially solve those problems. Students are required to work with UT professors to investigate the ideas and develop the proposals, which are submitted through a privately owned company, TNovation (see Start-Ups section). Any ideas that result in new intellectual property are owned and protected through UTRF, who has created a standard option agreement with TNovation for engaging in the development of the technology. If subsequent funding is received, a new company is launched and the license automatically reverts to the new company. Nine proposals were submitted during the first course and funding results will be known later this summer. Business Plan Competition. In the first round of the competition, students submit a concept statement. The entries are evaluated on the ability of the product or service to satisfy an identified need, sustain a competitive advantage and generate sufficient profit to succeed. In the second round, each semi-finalist makes a 15-minute presentation followed by five minutes of questions from the judges. Each judge is then given a copy of the participant’s plan for further evaluation. The final round consists of a five- minute “elevator pitch” with no visual aids and 20 minutes for judges to question the elements of the plan. It is intended to be a high stress situation that

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Georgia Institute of Technology (Rao Tummala)

University of Massachusetts (Abigail Barrow)

challenges the student to thoroughly understand and “sell” their value proposition, think on their feet and present themselves in a professional and convincing manner. This experiential opportunity, with feedback from the judges, creates a powerful learning tool and confidence builder for the students. Industry participation which includes the entire “Food Chain” of companies that span from supplying manufacturing infrastructure (tools, materials and processes) to making the end product. Any new pioneering technology requires five critical steps prior to manufacturing: innovative concept, demonstration of the innovative concept, development of the new manufacturing infrastructure for new technology, qualification and scale up of the new technology, and new human resource development with the expertise in the new technology. In the current ERC model and in traditional academic research at U.S. Universities, steps 1, 2 and 5 are standard practice. In some rare cases, steps 3 and 4 may occur. It is precisely these steps, 3 and 4, that are most often neglected by which commercialization of new technologies is prevented or prolonged. These steps can only be addressed by Industry; and the Center must involve so-called supply chain companies for development of new infrastructure for manufacturing. This process, typically performed after the technology is demonstrated, adds three to five years to the product cycle. “Proof of Concept Centers: Accelerating the Commercialization of University Innovation” Christine A. Gulbranson, director, Advancing Innovation, Ewing Marion Kauffman Foundation and David B. Audretsch, director, Max Planck Institute of Economics; Ewing Marion Kauffman Foundation, January 2008. Available at http://www.kauffman.org/uploadedFiles/POC_Centers_01242008.pdf The Platform Program The Platform Program provides inventors and company founders with an opportunity to refine their commercialization plans in a supportive environment and to solicit early-stage feedback from experts as they develop a strategic plan. Over the last 5 years we have hosted more than 80 such events. Each Platform is tailored to the specific needs of a single business opportunity, whether a startup company or a licensing opportunity. The researcher/entrepreneur gives a coached ten-minute investor pitch to an invitation-only volunteer roundtable of about a dozen investors, successful entrepreneurs, accountants, attorneys, regulators or other experts who can contribute to the company’s strategy. Following the pitch, the panelists spend about an hour providing feedback and providing advice on the strategic and tactical needs of the company or licensing opportunity. This program has proven highly effective in accelerating the development process, providing valuable new contacts and sharpening the entrepreneur's presentation.

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University of North Carolina (UNC)

Bootstrapping Innovation Ecosystems How can universities and their external partners expand their ability to commercialize research in the absence of favorable conditions? Leverage existing infrastructure and institutions. Within UNC, only six of the seventeen constituent institutions have infrastructure in place to support commercialization and transfer of innovations; yet each institution is pursuing innovative research, oftentimes with a focus on regional impacts. A model, UNC ACTION (Accelerating Commercialization and Transfer – Innovation Opportunity Network) has been proposed that would uniquely coordinate existing technology transfer capacities within the University of North Carolina and the State to provide quality commercialization and innovation transfer services to UNC’s seventeen constituent institutions. Services provided through the UNC ACTION model can include, but are not limited to, invention assessment, market assessment, marketing, licensing and start-up support, IP management, and campus in-reach. While UNC ACTION is primarily envisioned to serve as the commercialization outlet for campuses that lack internal capacity for this work, the model can also serve institutions with existing technology transfer operations. Two main components make the model functional. First, the ACT program (Accelerating Commercialization and Transfer) out of NC State University serves as the hub of the model, staying in close relationship with innovation liaisons at each UNC campus, receiving information from campuses about disclosures or opportunities, conducting key assessments, making recommendations for action, and facilitating the movement of an opportunity through the UNC Opportunity Council. The second main component of the model, the UNC Opportunity Council, will include UNC campus representatives and external partners. Campus representatives will initially be selected from the five pilot campuses in the UNC Innovation Development and Transfer initiative (East Carolina University, UNC Chapel Hill, UNC Charlotte, UNC Greensboro, Western Carolina University) and NC State. Their representatives to the Council must be empowered to make the decision to “adopt” opportunities from other sister campuses and to ensure that these opportunities move through the commercialization pipelines in place at the Council representatives’ institutions. Other UNC Opportunity Council members should bring strategic expertise to the table, such as experience in venture capital, small business development, entrepreneur development, or key industry sectors. These individuals may be engaged in the assessment of an opportunity based on regional interests or other such factors.

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Johns Hopkins University (Lloyd Minor)

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Portland State University (Dana Bostrom)

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There is a common misconception that universities do or should focus on monetary return as the driving goal of technology transfer, the amount of which should be anticipated based on the dollar volume of research. Nothing could be farther from the truth. An analysis by the Association of University Technology Managers (AUTM) demonstrates that there is no correlation between the size of the research budget and the income produced from technology transfer. Many factors can be attributed to the varying degrees of success in university technology transfer activities, including the early nature of the research activities and the commercialization culture at universities. The process from discovery to product may take 10 â&#x20AC;&#x201C; 15 years for early stage biomedical discoveries, and less than 1 in 20 ever become a significant commercial product. The earnings generated by technology transfer offices are generally dependent upon a small number of products. Statistically, the top five inventions at a university produce 76% of the revenue. Often times, more than 90% of licensing income comes from one or two products. Perhaps the most dramatic increase in commercialization of university technologies would be achieved by the government providing increased funding for university commercialization offices. Although the most important factor in the number of licenses achieved is the number of disclosures received by the technology commercialization office, the second most important factor is the size and sophistication of the technology transfer effort. However, as the size, sophistication and success of the technology transfer office has a direct impact on the willingness of faculty to participate and disclose, the quality of the office affects the number of disclosures, and may in fact be the most important factor. Incentivize the Ecosystem. Publicize university research.

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University of Florida (Brij Moudgil)

Entrepreneurial Enrichment Centers (EEC) Essentially, EECs will screen select innovations for commercial potential and apply a combined structured interdisciplinary technology enrichment/development approach and proven entrepreneurial and business planning process, to provide a set of deliverables (i.e., spinoff companies, technology licenses, entrepreneurs and innovation leaders of tomorrow) to the private sector. The integration of resources and programs in EECs will provide the universities with a unique resource that will serve to leverage and magnify the impact of organizations such as the Office of Technology Licensing, the College of Business Administration, as well as various interdisciplinary centers and other members of the entrepreneurial community. Key Features of the EEC Translational Research/Bench to Bedside: An industrially oriented stage-gate research and development plan focused on bringing already advanced innovations to a prototype stage will be designed, managed, and executed under this program. Projects will be aimed at resolving commercialization challenges the technology may face as part of prototype design, requiring substantial industry and investor input via external program and project advisory boards. At this stage, a market assessment will be undertaken to ensure further research/development will be focused on the parameters of viable products in the marketplace. In addition to project management professionals, select technical and business students and faculty (EEC Fellows) for each project will be recruited to provide them the experience of commercial development and a unique experiential education program. Proof of Concept/Prototyping: Centralized capabilities for prototype design and manufacturing will be offered or engaged by EEC. Expertise and other resources from across the campus will be leveraged to materialize the invention concept into a tangible, demonstrable prototype that will be attractive to potential investors and commercialization partners. Outsourcing with partner institutions, national labs or commercial firms will be used for specialized needs. One of the main foci will be to provide early involvement of private sector partners to guide prototype design and specifications for timely delivery to the market place. Entrepreneurship: Business plans, marketing strategies as well as regulatory and market assessments, etc., will be provided to EEC teams in partnership with the Business School to facilitate the translation of select later stage research to commercial markets. EEC Education Program: The EEC education program will focus on unique experiential training of future technology leaders. Educational needs of technology leaders from industry will be assessed and incorporated in a suitable curriculum that will incorporate nontraditional courses like leadership, multi-disciplinary/multicultural teamwork, business development, and entrepreneurial thinking. EEC will mold tomorrowâ&#x20AC;&#x2122;s leaders to serve cross-disciplinary industry needs. The program will also develop educational materials made available to others through the use of distance learning tools such as the UF Electronic Delivery of Graduate Education (UF EDGE) program.

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MIT (Susan Hockfield)

Implement Model Innovation Centers. Implement ten pilot model innovation centers across the U.S. at research universities to develop, document, and assist in nationwide dissemination of “best practices” for encouraging innovation and entrepreneurship by students, faculty, staff and alumni. These centers, similar to MIT’s Deshpande Center (described below), would engage in a variety of activities including making connections to industry and capital; educating and mentoring; creating ties to regional businesses; providing grants or seed money; and connecting faculty and students. These centers would also disseminate best practices and form the nucleus of a community amongst U.S. universities enhancing innovation. MIT takes a holistic and comprehensive approach to entrepreneurship and innovation that spans from education to business connections to the commercialization of university research. MIT’s Innovation Ecosystem serves the entire MIT community, including students, researchers, faculty, staff, alumni, and members of the local business community. This ecosystem is founded on the concepts of: 1) nurturing and mentoring potential entrepreneurs; 2) pursuing patent protection for technological innovations resulting from MIT research to foster commercial investment in bringing such innovations to the marketplace to benefit the public; 3) engaging deeply with the surrounding business and VC community; 4) integrating entrepreneurship and innovation across all schools and departments; and 5) focusing on long‐term relationships, rather than short‐term gains. The success of MIT’s model is outlined in a 2009 Kauffman Foundation report that describes the Entrepreneurial Impact of MIT,2 and documents the development of its Innovation Ecosystem.

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Venture Mentoring Service Many discoveries and inventions never make it to market because researchers lack the necessary knowledge, skills, and access to resources. The MIT Venture Mentoring Service (VMS) addresses this gap by providing MIT students, alumni, faculty, and staff with powerful advisory resources to both increase successful outcomes and accelerate the commercialization of university innovations. The MIT VMS harnesses the knowledge and experience of volunteer alumni and other business leaders to help prospective entrepreneurs in the university community bring their ideas and inventions to market. Entrepreneurs receive practical education through a hands‐on, team mentoring process that builds a trusted long‐term relationship. MIT VMS offers its services without charge. This un‐biased, hands‐on mentoring has proven effective in helping scientists and engineers who are passionate about their ideas learn how to be entrepreneurs – how to conceive of and perfect their products and services, identify markets, build business organizations, and seek funding. For potentially game‐changing innovations, this process may take five to seven years or even more before a company and product are truly launched. Furthermore, VMS’s innovative experiential learning process is more efficient than traditional institutional approaches because it leverages university resources and the collective knowledge and capacity of a large pool of highly qualified volunteer mentors who commit many thousands of hours of time each year. Since its launch in 2000, more than 1,400 entrepreneurs involved in nearly 800 ventures have enrolled in VMS mentoring. Of these, more than 130 have advanced to become real operating businesses. Currently, more than 175 ventures are participating (and we continue to enroll between 5 Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research and 10 new ventures each month).

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Princeton University (Claire Gmachi)

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Carnegie Mellon (Richard McCullough) University of Minnesota (N/A)

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tures have enrolled in VMS mentoring. Of these, more than 130 have advanced to become real operating businesses. Currently, more than 175 ventures are participating (and we continue to enroll between 5 and 10 new ventures each month). My strongest recommendation is to significantly grow the NSF ERC program. A tripling of the program in size and scope is a minimum recommendation. Additional recommendations pertain to retaining the SBIR/STTR program, and to growing the overall NSF budget. Pretty typical stuff. Increase funding. Connect with the community.

OTC has identified a number of key factors for success: • Identify customer needs • Recognize problems that UMN technology can solve, and the value of the solution • Understand the importance of customer responsiveness • Deliver on these needs by having the appropriate staff and resources • Employ systematic stage/gate evaluation process to assess technology • Incorporates industry best practice and experience • Ensures the office focuses resources on high value opportunities • Utilize quality management principles of continuous process improvement • Execute a balanced licensing and start-up approach I think leadership, University, State, and Federal levels play a key role in getting promising practices more widely adopted.

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University of Arkansas (Lisa Childs)

We enthusiastically support new programs such as the new “NSF Innovation Ecosystem” program proposed in the President’s 2011 budget request which aims to: increase the engagement of faculty and students across all disciplines in the innovation and entrepreneurship process; increase the impact of the most promising university innovations through commercialization, industry alliances, and start-up formulation; and develop a regional community that supports the “innovation ecosystem” around the university. The division will provide research grants to universities in partnership with other institutions to increase the economic and social impacts of university research. The goals of the grants would be to (1) increase the engagement of faculty and students across all disciplines in the innovation and entrepreneurship process; (2) increase the impact of the most promising university innovations through commercialization, industry alliances, and start-up formulation; and (3) develop a regional community that supports the “innovation ecosystem” around the university. Need better metrics for outcomes from activities.

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University of Oregon (University of Oregon)

Regional context, of course, can also have an extraordinary influence: what works well for the commercialization of Stanford University research in Palo Alto may prove completely ineffective for the commercialization of science at the University of South Alabama in Mobile, and vice-versa, yet both institutions have recently proven their mettle in translating research discoveries into commercial innovations. Federal policy-making must take into account this extraordinary diversity, and in this regard, some of the questions asked in the RFI—such as the role of proof-of-concept centers (POCCs)—strike troubling chords. Sometimes federally supported POCCs may prove effective in addressing a particular technological challenge; but POCCs do not represent a panacea for all technology commercialization challenges and in many instances a broad dispersion of federal grant funding—the placement of many “small bets” across a wide swath of investigators and institutions—would likely prove a much more effective approach. Moreover, in certain circumstances template agreements may provide enormous gains in speed and efficiency for university technology transfer programs; in other situations, however, the use of template agreements would be wholly inappropriate and would surely encourage ineffective, bureaucratic approaches to the commercialization of university research. In summation, UO strongly encourages OSTP and NEC to focus on highlevel policy initiatives that will generally enhance American research, innovation, entrepreneurship, and private-sector investment. Recent studies demonstrate the value that active angel investor networks can add to regional innovation ecosystems, especially in predominantly rural parts of America such as Lane County, Oregon. Angel investors not only bring early seed money to startups, but also connect fledgling ventures with a cadre of active, successful business people. These individuals have much to offer budding entrepreneurs, and it is appropriate that they be encouraged and rewarded for their participation in the innovation ecosystem. Tax incentives and other policy initiatives that promote either the formation of new angel groups, and/or encourage the expansion of existing angel groups into new business sectors in their home region, not only would foster the development of a more robust angel community, but also would incentivize angel investors to embrace new methods of university interaction and portfolio expansion. In summation, UO believes that federal policies to encourage angel investment would serve to accelerate startup formation, to promote job creation, and to extend and strengthen the networks that connect universities to their respective regional innovation ecosystems.

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Indiana University (Anantha Shekhar)

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Tennessee State University (N/A)

We have identified the three critical skills that first-time entrepreneurs often lack: financial expertise, the ability to generate accurate economic impact analyses, and good grantsmanship. We envision creating a separate entity funded by IURTC to attract inexperienced entrepreneurs by providing consulting services in these three areas. The clearing house will form standardized licenses with IURTC and joint ventures with the startup CEOs. The intent is to create an efficient micro-community with the knowledge and guidance to assist CEOs, and the ability to tolerate failure through close business relationships and the chance for additional business opportunities. The new ventures will be spun out of the clearing house as they become self-sufficient and begin to receive public or private financial support. This model of creating a clearing house with a service/equity relationship to help create new entrepreneurial ventures has the potential to attract and nurture new generations of entrepreneurs in local economies. Federal agencies, research institutions, federal researchers, and the private sector can work together to foster more successful POCCs that accelerate commercialization into the marketplace by utilizing existing federal-agency/stakeholder review panels and advisory boards to identify and establish best practices for cradle-tocommercialization endeavors.

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Carnegie Mellon University (N/A)

A related barrier is that university researchers tend to move on to new problems leaving valuable results on the shelf. Quite often this is a matter of survival: funding streams dry up and new ones must be pursued. This is prevalent in faculty without tenure and can be partially mitigated with long-duration funding such as those provided by ERC’s. Even still, a wealth of commercially viable technology can and should be mined. Again, this is best done by the embedded entrepreneur who actively ferrets out technology nuggets. Exec-in-Residence is assisted by additional Entrepreneurs-inResidence, EIR’s, and teams of interns – business, law and innovation management students from CMU and other local universities to perform early due diligence, industry and market analysis and develop a preliminary business model and plan. These efforts are then put through additional screenings by potential investors, industry advisors and domain experts. The EIR’s are consultants with timelimited contracts to discover and nurture a spin-off company he/she champions and founds. Each EIR owns the QoLT Foundry’s initial due diligence process for a few technologies, focusing on the business side; the primary selection criterion for EIR’s is, in fact, their business acumen and domain experience. Because they have a defined window of opportunity, they also have a vested interest in getting the company moving quickly. The QoLT Foundry’s due diligence and the EIR’s provide business credibility that complements the ERC researchers’ technical credibility.

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University of Illinois (Avijit Ghosh)

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The Industrial Partnership for Research in Interfacial and Material Engineering, University of Minnesota (Bob Lewis)

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The QoLT Foundry also leverages a large aggregate network of seasoned advisors and thought leaders, experienced investors, and industrial partners. The collective bandwidth of several EIR’s provide a much greater connectivity with the University Entrepreneurial Ecosystem of CMU. ERC researchers therefore enjoy the connectivity of multiple people. POCCs seem to thrive in ecosystems characterized by interdisciplinary academic research centers. They have ample external and philanthropic funding. They use experienced entrepreneurs. Offer grants. The eagerness of faculty to collaborate with companies is one of the key competitive advantages of IPRIME. To quote one Professor: “I get my research money from the government but many of my ideas from industry.” At the level of individual faculty member, effective listening skills and a curiosity about how things are made and how they work are key attributes to a successful interaction with industry. Seeking out faculty skilled at the networking and relationshipbuilding is an important step in finding industrial collaborators. Placing value on effective communication is essential for any URC interacting with industry. Clear and concise communication that can be processed in a minimal amount of time is highly respected by industrial representatives. At the individual faculty level, effective listening and an eagerness to learn are also key skills. An acknowledgement that interpersonal relationships and rapport are very important is an important first step.

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Innovation Alliances and Services, University of California (William Tucker)

Universities are focused on research, not product development, and consequently one of the challenges of commercializing university innovations is that often, university research leads to innovations that are not yet commercially proven. This gap between the development of intriguing, but unproven innovations, and the investment to commercialize those innovations is characterized as “the valley of death”. The SBIR and STTR programs have provided the gap funding to companies for proof-of-concept (PoC) work, and thereby enabled many innovations to cross this valley of death. While modifying or expanding the SBIR and STTR programs could provide solutions for university research, the Federal programs should not completely circumvent the nation’s highly mature market system for vetting technologies, teams and business models; otherwise, the government might fund weak commercialization opportunities and failed companies. One possible change to SBIR/STTR programs could be the allowance that a certain percentage of Federal dollars could be utilized to support U.S. patent coverage. For nascent companies, IP protection can be a difficult cost to support technologies created through Federal funding. Within UC’s commercialization offices, we share a growing awareness that traditional commercialization metrics are poor indicators for what we consider successful outcomes. For example, a patent is not a measure of commercial potential without a commercialization partner that wants to take advantage of the patent rights. Likewise, licensing income can be an indicator of commercial success, but it is a lagging indicator that has little value as a predictor of short to medium term commercialization success. Alternatively, measuring the strength of the networks that comprise the innovation ecosystem could provide a better short-term assessment of value creation. Over the past year, UC has reviewed a range of possible innovation commercialization metrics that could be used to better characterize the value created for all our stakeholders. However, assessing such strength is not easy, and therefore new Federal initiatives should include support for studying how best to measure success. It is well recognized that an important element of sustainable economic development is the creation of a critical mass in a particular sector that includes a pool of technology, infrastructure, and management to support emerging companies. A regional PoC fund could contribute to this effort. These funds could be “pan-technological” or agency-based. For agency-based funds, the particular agency would be charged with identifying appropriate translational research that identifies key needs in that particular technology area. Agencies would require regional centers to establish appropriate panels of technical and business experts to determine program priorities and to review funding proposals.

Beyond demonstrating the commercial potential of technology through showcases, it is equally important to nurture the professional development of individuals whose function is OSTP – Commercialization of University Research: Request for Information Page 12 of 14 to cultivate university-industry relationships and shepherd the technology from universities to industry. Such “boundary spanners” have a distinct role from that of traditional technology licensing officers who are more focused on the due diligence, patent protection, marketing, contract negotiation, and post-license administration aspects Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research of the technology transfer process. Boundary spanners within the 191 university environment can be the people who help match an industry need, whatever that may be, to the resources available within the

a distinct role from that of traditional technology licensing officers who are more focused on the due diligence, patent protection, marketing, contract negotiation, and post-license administration aspects of the technology transfer process. Boundary spanners within the university environment can be the people who help match an industry need, whatever that may be, to the resources available within the institution. They also recognize the commercial potential of basic research discoveries and bring that potential to the attention of the researcher, the institution, and the appropriate business partner. UC has created the Discovery Fellows program to train existing and new staff to operate at the university-industry interface. The Federal government could create programs implemented regionally, modeled on the UC Discovery Fellows program to create and train boundary spanners to be conversant with the capabilities and needs of the regional economic environment.

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Colorado State University Research Foundation (David Conrad)

Developing a Federally-funded mechanism for Entrepreneur in Residence (EiR) programs could be advantageous. EiRs serve two roles. First, they actively “scout” for technologies within an institution that could be the basis for creating a new venture, and second, they act as educators for faculty, students, and staff on real-world issues associated with entrepreneurship. As with the mentorship program described above, universities and research institutions would apply for funding to support an EiR, and proposals would be selected on appropriate merit-based review. Regional collaboration among TTOs at Colorado State University, University of Nebraska Medical Center, University of NebraskaLincoln, South Dakota State University, and the University of Wyoming would enhance individual institutions’ technology commercialization efforts by allowing better access to the region’s limited commercialization resources and promote technology-based economic development in the region. Moreover, the organizational arrangement described here could be achieved for modest upfront costs. Time commitments by TTO agents would be greater at the outset of collaboration as scope and processes are formalized. Initial investments would also include set-up costs for relevant IT infrastructure, as well as those associated with a regional office retreat and/or employee “exchanges.” Adding new personnel to the collaboration group to fill regional roles would increase the cohesion among member institutions, and would add the personnel capacity necessary to extend technology transfer efforts in the region to include a POCC, a venture capital fund, and a better connected network of regional resources for new startups. Although additional funding would be required to exploit the full potential of a regional technology transfer collaboration, the economic benefits to the region resulting from improved commercialization efforts—new jobs, new products, and new processes—could more than offset the costs of establishing and maintaining a regional operation.

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Office of Technology Licensing University of California, Berkeley (Michael Alvarez Cohen)

4.1. Recommendations for the Government: In recognition that the optimal way to increase the commercialization of research at universities can vary for each university (depending on its particular attributes), the government could publish an RFP soliciting universities to propose customized plans to increase their commercialization of research. Then the government could use this framework to help assess responses, and provide grants to universities that develop outstanding plans. 4.2. Recommendations for Advanced University Commercialization Environments: For advanced universities (i.e. a large research enterprise and a robust entrepreneurial ecosystem), the single best approach to increase their commercialization results is to augment their research – as that will result in more commercially viable innovations that will be aggressively pursued by their entrepreneurial ecosystems (although, ongoing investments to refine their entrepreneurial ecosystems can help). 4.3. Recommendations for Scrappy University Commercialization Environments – Part 1: For scrappy universities (i.e. a relatively small research enterprise but a relatively robust entrepreneurial ecosystem), the single best approach to increase their research commercialization is to augment their research (although, continually refining their entrepreneurial ecosystems can help). 4.4. Recommendations for Scrappy University Commercialization Environments – Part 2: However, if these scrappy universities want to augment their research via corporate sponsorship (in addition to government funding), then they might need to evolve their approach to managing IP from a conventional, license-oriented approach to a progressive research-oriented approach – as highlighted in Table 1. 4.5. Recommendations for Under Exploited University Commercialization Environments – Part 1: For under exploited universities (i.e. a large research enterprise but a nascent entrepreneurial ecosystem), the single best approach to increase their commercialization results is to enhance their entrepreneurial ecosystems in order to increase their capacity and competency to successfully address existing commercially viable innovations.

4.6. Recommendations for Under Exploited University Commercialization Environments – Part 2: Moreover, for these under exploited universities, the best approach to enhancing their entrepreneurial ecosystem is to start with a 4M analysis of their strengths and weaknesses in each of the four commercialization pathways. This will enable these universities to methodically establish priorities and strategies for enhancing their entrepreneurial ecosystems. Commercialization of University Research RFI: MACohen Response 7/29/10 Version: 193_UC Berkeley Office of Licensing.doc Page 10 of 10 4.7. Recommendations for Under Exploited University Commercialization Environments – Part 3: There are 10 programs, activities and events that an under exploited Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research university should develop as part of its entrepreneurial ecosystem in193 order to optimize its 4M commercialization pathways, and correspondingly maximize its research commercialization. These 10 ele-

4.7. Recommendations for Under Exploited University Commercialization Environments – Part 3: There are 10 programs, activities and events that an under exploited university should develop as part of its entrepreneurial ecosystem in order to optimize its 4M commercialization pathways, and correspondingly maximize its research commercialization. These 10 elements are listed in Table 2.

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University of Washington, Center for Commercialization (Linda Rhoads)

4.8. Recommendations for Niche University Commercialization Environments: For niche universities (i.e. a small research enterprise and a nascent entrepreneurial ecosystem), if these universities aren’t likely to achieve a critical mass of the top 10 programs, activities and events required to maximize their entrepreneurial ecosystem (as listed in Table 2), then they should attempt to partner with the nearest universities that already have robust entrepreneurial ecosystems. Our Entrepreneur‐in‐Residence (EIR) program brings highly successful business leaders into daily contact with our researchers and accelerates higher quality company formation. This program is overseen by two Directors who are also from industry, bringing deep experience in starting companies. We have a well‐established gap‐funding program for UW researchers, and we are developing a bridge fund to support our start‐up companies. We are partnering with the Institute of Translational Health Sciences (ITHS), the regional NIH Clinical and Translational Science Awards (CTSA) program, with the goal of making this a national model for translating life‐science research results into daily use. The ITHS serves a five‐state region: Washington, Wyoming, Alaska, Montana, and Idaho. We are in the process of entering the NSF Partnerships for Innovation (PFI) program, in a West‐regional partnership with the University of Utah and Oregon State University. In conjunction with the state’s Higher Education Coordinating Board, we are piloting a program to provide commercialization services to other universities in the state. Within the university we have created a cross‐organizational virtual team, the Industry Relations Task Force, to pursue unified and proactive engagements between the university and industry. Entrepreneur‐in‐Residence Program Strong management talent has repeatedly been identified as key ingredient for a start‐up company’s success and many University‐based entities have failed because this ingredient was lacking. An EIR program was established at UW which dramatically increased the support we offer during company formation. This initiative brought seasoned business executives into our office to evaluate

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technologies for forming a start‐up company which would include forming a management team and attracting investment. The EIRs are paid a modest stipend of $3,250 a month, which provides a formal engagement and is a nod to the value of their time. The initial goal of our program was to bring in this management expertise for emerging start‐ups, but we have also observed the following benefits: • The EIRs provide real‐world feedback to faculty/student innovators about commercial potential and challenges. • As a valuable external resource provided by our office to the researchers, the EIRs add to the credibility and visibility of our work in the university community, in the business community, and in the state government. • The EIRs work closely with our licensing staff, which increases their expertise within the domain area. • The EIRs also provide our staff invaluable constructive criticism of our own processes and plans.

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Drexel University (Robert McGrath)

Program Improvement Opportunities: If more EIRs were engaged then more technologies would be vetted for commercial potential. We have also discussed having the Seattle‐based EIRs travel to other universities in the state to review technologies there. Funding from the Federal Government that could be used for these types of program to support salaries and market research activities would increase the probabilities of success. This “valley of death” is a significant barrier to technology commercialization, and the Coulter Foundation aims to provide the funding that will allow the technology to successfully make its way through. The program in its details and approach are noteworthy for many reasons, but there are several key aspects to it that have a very beneficial effect on commercialization. • Researchers interact closely with technology transfer staff to identify and develop intellectual property underlying a research project • Funding decisions are made by a diverse committee representing academic, tech transfer, corporate, entrepreneur and investor constituencies • Funded research is oriented toward development and not discovery • Funded research must be interdisciplinary with active participation by both engineers and clinicians • Selected projects develop technology that will have impact in patients, and possess a combination of intellectual property, data and business opportunity that make them attractive licensing candidates

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University of Southern California (Krisztina â&#x20AC;&#x153;Zâ&#x20AC;? Holly)

Last summer I wrote a policy paper called IMPACT (http://bit.ly/IMPACT), which outlined a pilot initiative for the federal government to accelerate and make more accessible the great potential of breakthrough innovations arising from academic research. This $20million pilot program would invest a small amount of federal funding to create rational experiments that test and demonstrate clear, replicable methodologies to bring existing research results into the U.S. commercial marketplace through ten local demonstration sites. Funding for the ten pilot initiatives to bridge these gaps would equal $2 million per year, per university, for five years. These local sites would nurture a culture of entrepreneurship within each university, create and enhance the innovation ecosystem around each university, and provide the resources necessary for researchers to effectively translate their ideas into products and processes that have significant societal impact. The outcomes would be measurable, reproducible, and scalable. The initiative would not simply provide financial resources, but would build capacity at each funded institution to cultivate sustainable innovation ecosystems. At a policy level, this implies strongly that if we would like to see research commercialized, we should be developing educational programs to prepare our academics and disciplinary experts to be an effective part of the innovation process. This does not mean turning them into entrepreneurs, necessarily. But it does mean teaching creativity and design thinking; business and finance; intellectual property basics; identification of opportunities and needs; and skill in communicating ideas to a general audience. Entrepreneurship centers and programs are widespread nationally, yet few have broad impact beyond the business schools. Ideally, programs would be university-wide and focus on innovation-based and high growth entrepreneurship that will drive new industries. Novel educational programs related to innovation include the University of Utah Lassonde fellows, MIT Innovation Teams course, the USC innovation diploma for PhDs program, and the University of Miami Launchpad program which places entrepreneurship support within their career center. These can and should integrate into the work that technology transfer offices are already doing. Beyond Technology And finally, not all innovation is driven from the engineering and medical departments in universities. Although technology is often what leads to great scale, new companies and products can spring from a variety of disciplines. In fact, usually some of the most exciting opportunities lie at the intersection of disciplines. As a result, the administration should put a premium on supporting programs that engage all corners of the university rather than being housed in any one particular school.

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Further, social innovation and the non-profit entrepreneurship can lead to job creation and the development of social capital. Programs that harness that idealism among students can teach innovation and entrepreneurship skills and lead to impact beyond financial returns. Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research As we drive towards greater support for the university innovation process, there are common themes that emerge and we should heed:

lead to job creation and the development of social capital. Programs that harness that idealism among students can teach innovation and entrepreneurship skills and lead to impact beyond financial returns. As we drive towards greater support for the university innovation process, there are common themes that emerge and we should heed: • A university forms an ideal nexus for innovation ecosystems: with its faculty and students generating groundbreaking ideas, its teaching mission, strong brand and links with alumni, commitment to the local community, and ability to serve as a neutral convener of partnerships with industry. • Innovation is driven by people and relationships. Focusing only on the ideas themselves will limit the benefit of programs and policies. • Technology transfer operations are critical for seamless and efficient commercialization. Technology transfer operations should be engaged and supported rather than marginalized when new federal funding programs are created. Further, success metrics that emphasize service, impact, and education rather than patents and revenues should be used to evaluate universities that are competing for commercialization-related funding. • Technology transfer operations should have an educational mission. They can integrate the already important work with what they are doing with long-term education. • Basic research is the foundation for pioneering new technologies and industries. Research funding should not shift towards the applied at the expense of basic research. • With the right approach, we will create lifelong innovators and entrepreneurial ecosystems that will create new industries and new jobs, and sustain economic development in the long term.

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Rutgers University (Fernando Muzzio)

In practice, our center functions as a mini-ecosystem, where (i) end users of technology help identify needs and validate concepts, (ii) technology providers and integrators, working with university researchers and in constant dialogue with the intended users, help develop the required solution, and (iii) commercialization partners help create a viable distribution model for the solution. Several additional elements have contributed to the development of commercially viable technology in this environment, including • A focus on a regional industry with clear technology needs • The creation of a culture that fosters outcomes-driven research, where efforts concentrate on developing technologies to meet a specific need, and where every component (and every participant) of the effort is selected, and periodically evaluated, for its ability to contribute to the desired outcome • The integration of multidisciplinary project teams involving not only university researchers but also representatives of technology end users, technology suppliers, and technology integration and commercialization specialists. • The use of project management methodologies, allowing us to make consistent progress in spite of geographic dispersion and disciplinary diversity. Implementing these “best practices” in many cases require a change in the prevailing academic culture. Leadership needs to be invested in center goals and able to function effectively. Ego and turf protection are early barriers to establishing an effective team. Establishment of an outcomes-driven philosophy is extremely useful in overcoming these barriers, providing a common mission that is more important than individual preferences and an objective basis for evaluating capabilities and contributions by other team members. Team composition must include industry stakeholders as strategic partners. This provides necessary diversity of experience and expertise to help make the correct strategic decisions regarding the focus of the program and the selection of technology targets. Project selection needs to be informed by major desired strategic outcomes. Availability of a strategic plan where main goals are identified and the roadmap for achieving them is clearly articulated and properly resourced is essential in order to ensure that projects are selected based on their need, rather than individual preference or political expedience.

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Optimum scale of effort depends on the scope and need of the target industry and the growing capability and expertise of the team. The current level of funding of an ERC (approximately four million dollars per year) is appropriate to catalyze the formation of the center. Once the center is functioning effectively, it becomes resourcelimited, as opportunities for development are more plentiful than available funds. Progressively increasing the budget of a successful ERC after its fourth year, to perhaps a level of $10 million per year, will appropriately address this issue for many applications. This could be done through multiple mechanisms, including proposaldriven grants, but it is important to realize that the core funding of a center is the element that provides cohesion to the research team, Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research maintains the participation of industry, and enables addressing a variety of technology development opportunities.

could be done through multiple mechanisms, including proposaldriven grants, but it is important to realize that the core funding of a center is the element that provides cohesion to the research team, maintains the participation of industry, and enables addressing a variety of technology development opportunities. Geographic scope is a major issue. Effective management of a large center, particularly at the beginning, requires many face to face meetings devoted to planning and management of the activity. In order to promote effective team work and fluent contact between academics and industrial members, it is highly desirable to have a geographically concentrated industry and to have participating universities at relatively close distances.

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Yale University (Dorothy Robinson)

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U of South Alabama (W. K. Ferguson)

Multiagency involvement is highly desirable both to provide a richer mission (we currently work not only with NSF but also with FDA and with the ARDEC), and also to provide additional opportunities for funding and for multi-purpose research efforts. We hope the Administration will play a more active role in urging Congress to enact the patent reform legislation now pending in the Senate. The legislation, which addresses several important issues, would make it easier for US firms to seek global patent protections by harmonizing with other major patent systems around a first-to-file system. It would create an administrative mechanism for challenging patents, thereby accelerating the process for weeding out poor-quality patents that skew market signals and divert capital away from productive opportunities. It also would reduce the cost of patent litigation by reducing the importance of subjective elements that complicate litigation. And it would provide additional resources for the Patent and Trademark Office to reduce the backlog of pending applications. Active engagement by the Administration could make the difference in enactment of this important legislation. The typical operating process for technology transfer offices at universities (Siegel, Waldman, Link, 2003) starts when an invention disclosure is received from a faculty researcher. The staff within the technology transfer office (â&#x20AC;&#x153;TTOâ&#x20AC;?) then initiates an analysis of the invention from a technical, patentable and commercializable standpoint. After this initial review, and if the invention is deemed to have merit, TTO staffers will seek to protect the intellectual property, usually by filing a patent application. The National Science Foundation has reported the ratio of basic research to applied research to developmental research at universities as being 76:21:3 and by contrast, this ratio for industry is almost the mirror image, namely 4:21:75 (NSF, 2008). In absolute dollar terms, universities spend 3x the amount industries expend on basic research, whereas industry spends 157x the amount universities expend on developmental research. This data confirms that TTO decisions to patent are being made at the very earliest stages of the innovation process. One of the primary reasons for proceeding to patent at such an early stage reflects the need for the university researcher to publish his/her results. Publication of research results is a bar to future patent protection and accordingly patenting decisions

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must be made in a timely fashion vis a vis a publication deadlines. Also, the governing act for technology transfer (Bayh-Dole) requires that if any future commercialization is sought, the technology needs to be protected via patent. With respect to actual efficiency at which universities can produce a commercial invention, we find that the average R&D expenditure (dollar amount of grants) associated with a university patent is approximately $165,000, whereas industry expends $1,160,000 in R&D for each patent (NSF 2008). This puts universities at about oneseventh the cost of R&D per patent. This differential can be interpreted a number of ways (for example university researchers might say they are seven times as efficient as industry), but if we use the industry data as the basis of our analysis and it takes industry a little over a million dollars to go from concept to the market with a patented invention, then we can postulate that university technologies are approximately one-seventh of the way to being market ready. The following diagram indicates the relative position of university commercializable technology on the industry R&D spectrum: we are seeking to fully leverage the benefit of early stage university research against the capability of industrial developmental research, then it would appear prudent that a fitting “transfer” point might be at the transition from “applied” to “developmental” research on the industry research spectrum. Based on this model, this would mean that university technologies would require additional investment of only $125,000 (on average) to be appropriately positioned. From another viewpoint, this calculation may be considered a quantified measure of the “valley of death” for early stage technologies.

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The historic operating data of TTO’s, as collected by the Association of University Technology Managers (“AUTM” - the US based professional membership body of university technology transfer managers), reveals that the ratio of initial invention disclosures to patent applications to approved patents to licensing contracts is: 6.9 : 3.6 : 1.5 : 1 (AUTM, 2008). That is to say, for every 6.9 invention disclosures 3.6 patent applications are filed, which results in 1.5 patents being issued and one licensing contract being executed. Practically speaking, in moving from invention disclosure to patent application the typical TTO has less than a month at the front end of the process to determine what intellectual property (“IP”) to protect. For example, there were 17,694 invention disclosures in 2008 that were reviewed by 902 licensing professionals in 154 TTOs; along with support from another 902 TTO full time equivalent staff; an average of 1 invention disclosure per licensing officer every 18 days. The decision process entails a technical and scientific assessment, reviewed against the existing literature and patent landscape; a potential market analysis; and then development of a commercialization strategy, appropriate to the market analysis, to determine financial feasibility. On the surface it would appear that the largest gap in this process is the difference between the number of patents filed and the number of patents issued. This is represented by a success rate of 42% (ratio of 1.5 patent approvals for every 3.6 patent applications). This apparent low success ratio has created a perception that the university technology transfer process is inefficient when cited against a forty year average historic success rate of 65% at the US Patent and Trademark Office (Landes, Posner, 2003). However, when one disagCollective Genius: Innovation, Entrepreneurship, andwe the Commercialization of University Research gregates the AUTM data find that university technology transfer offices actually outperform the private sector in this field. The following table highlights that if you compare Patents Issued against US

technology transfer process is inefficient when cited against a forty year average historic success rate of 65% at the US Patent and Trademark Office (Landes, Posner, 2003). However, when one disaggregates the AUTM data we find that university technology transfer offices actually outperform the private sector in this field. The following table highlights that if you compare Patents Issued against US Non-Provisional Applications, then the actual true comparable is an approval rate of 77% for TTO’s. Our primary premise is that you cannot create market demand; the best you can accomplish is to create sufficient awareness that leads to market demand for your product, process or service. Therefore the key to successful technology transfer is sensitivity to market driven needs and the key to market sensitivity is through knowledgeable management within industry; ergo universities need to be able to align more closely/frequently with innovative and entrepreneurial enterprises. NSERC's Policy on intellectual property supports the premise that every effort should be made to exploit the results of NSERC-funded research in Canada, for the benefit of Canadians. For most projects, a copy of the final and signed research agreement between the industrial partner and the university is reviewed to ensure that it conforms to the NSERC IP Policy. Applications are evaluated on the following criteria: • Scientific merit: The project must be scientifically sound, technically feasible, and promise either to generate new knowledge or to apply existing knowledge in an innovative manner. • Research competence: The applicant and the research team together must have all the expertise required to address the defined objectives competently and to complete the project successfully. Academic expertise may be complemented with the know-how residing in the company. • Industrial relevance: The proposal must identify how the work will benefit the company and demonstrate that exploitation of the project results will benefit the Canadian economy within a reasonable time frame. • Private-sector support: The industrial partner must contribute an appropriate amount from its own resources to the project, consistent with the risks and rewards involved, and be in a position to exploit successful research results. • Contribution to the training of highly qualified personnel: The proposal must include a student training component and should indicate how the knowledge and experience gained by graduate students, postdoctoral fellows, research assistants or others, including company personnel, are relevant to the advancement of the field, to developing practical applications of knowledge, or to strengthening the industrial research base. The number of undergraduate and graduate students trained is expected to be commensurate with the size of the project. • Benefit to Canada: As well as the economic benefit to Canada described under the Industrial Relevance criterion above, the proposal should outline any additional economic, social, and environmental benefits that could be realized in Canada. Running Header: RFI Response – National Economic Council - Federal Register / Vol.75, No. 52 • University commitment and infrastructure: For large or complex Collective Genius: Innovation, Entrepreneurship, and the Commercialization of University Research proposals (greater than $200,000 per year), the proposal must dem-201 onstrate adequate university support for the project by detailing the specific commitments of the university regarding the provision of

Running Header: RFI Response â&#x20AC;&#x201C; National Economic Council Federal Register / Vol.75, No. 52 â&#x20AC;˘ University commitment and infrastructure: For large or complex proposals (greater than $200,000 per year), the proposal must demonstrate adequate university support for the project by detailing the specific commitments of the university regarding the provision of financial support, equipment, and/or facilities.

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