US-based National Council of Entrepreneurial Tech Transfer’s (NCET2) 7th Annual University Startups Showcase and Conference took place last month in Washington DC, and Global University Venturing (GUV) was there as the event’s media partner.
Attended by universities, start-ups, venture capital firms, and a number of corporations, the conference aims to assist universities’ entrepreneurs transfer their ideas and start-ups into greater commercial success.
US government programmes to aid research-based start-ups
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grant programmes at the US National Institutes of Health (NIH) were covered in depth.
NIH disclosed an annual program budget of $632m for SBIR and $85m for STTR. NIH’s STTR goals aim to encourage scientific innovation and tech transfer through cooperative research carried out between research universities and start-ups, and looks to grant $150,000 in phase I and more than $1m in phase II.
The National Science Foundation (NSF) said it was looking to support high-risk, high-payback innovations with a high commercial potential. It wields an $18m STTR budget ($152m for SBIR), and prefers to base its risk around a team or revenue as opposed to on the technology or market. It’s looking to attract biotech, electronics, nanotech, and edutech firms, and promotes strong ties to universities with subcontracts to universities a must for STTR investment.
The US Department of Defense (DoD) has $1bn for SBIR, and $120m for STTR. As opposed to the NSF and NIH, which award grants, the DoD looks to arrange contracts, with the award size for both its SBIR and STTR set at $150,000 for phase I and $1m for phase II.
Boosting start-ups and entrepreneurs
Evolving from conversations and roundtables that took place last year with universities and accelerators which highlighted the need for a dedicated forum that could be used to build connections between academia and entrepreneurs is Startup University. The project, led by the US Small Business Administration (SBA), aims to provide meaningful connections between universities and the “startup ecosystem” through an online platform.
Startup University allowed users to submit ideas and initiatives to the site which aimed to increase commercialisation and entrepreneurial activity at universities. These were then reviewed and voted on by other users over the course of a month.
The top initiatives put forward by the community included:
• West Virginia University (WVU): Linking Innovation Industry and Commercialisation (LIINC). The project aims to connect faculties with the private sector marketplace, and has introduced 186 firms to 382 WVU faculty students since launching in 2011, increasing the likelihood of SBIR and STTR deals.
• Babson College Butler Venture Accelerator Program (BVAP). Students in the programme are rewarded with additional resources when they hit specific milestones. In 2011/12, BVAP served 258 start-ups, 12% of which reached its “Launch & Grow” level.
• Texas State’s RampCorp. Aimed at female entrepreneurs, RampCorp provided women with coaching from experienced investors and inventors, and access to potential opportunities through networking.
A report into Startup University is due out later this month. Alongside the Startup University presentation was Formation8, a venture capital firm that aims to identify entrepreneurs and start-ups, and introduce them to the Asian markets. The firm has just raised $448m for its first fund, Formation 8 Partners Fund I.
The National Academy of Inventors (NAI) also presented the case on how they are encouraging inventors with patents, enhancing the visibility of academic technology, educating innovative students, and encouraging the disclosure of intellectual property. The organisation has grown rapidly, and is now partnered with over 60 US and international universities, compared to less than 10 in 2010, and with around 2,000 individual academics.
The University/Corporate relations
When Brian Darmody, associate vice-president for research and economic development at the University of Maryland, discussed how universities engaged corporations, he described it as a “dating game”.
He gave what he called a “two minute MOOC” (massive open online course) into understanding higher education administration, highlighting where senior academic officers loyalties lie and pointing out that corporations must do more to woo faculty deans as it is they who control the resources.
Wayne Johnson, assistant vice president for corporate relations at the California Institute of Technology (CalTech), elaborated further, detailing the history of tech transfer in the US and the inner operations of a tech transfer office. He also detailed CalTech’s three steps of “partnership continuum” of shared tactics, shared ideas, and shared aspirations.
A dominant theme throughout the event, both on and off the platform, was the issue of how to handle intellectual property (IP). It is a tricky balance to strike. On one hand, investors need to see flexibility and suitable incentives to ensure that their money is going into the right hands. However, on the other, some demands on IP can lead to stifling further research and development, thus proving counterproductive to the aims of both the investor and the innovator.
This topic was covered in GUV’s Global 1000 panel. The panel, as well as other attendees, seem to agree that there was no conclusive way to get this balance right. Rather, both investors and IP holders need to treat each case as unique, with different approaches necessary dependent on the parties involved.
State of venture investing
John Taylor, head of research at the US-based trade body National Venture Capital Association (NVCA), gave an update on the current state of venture capital in the US. He drew attention to the fact that the number of VCs had peaked, dropping from 1,035 active firms in 2000 to 526 in 2011. Despite nearly half the firms disappearing, the capital managed by all firms had only dropped slightly, falling from $224bn to $197bn.
He said that the “industry is in a new size band, but it is very much open for business”, and showed data that demonstrated what he described as a “healthy number” of first time fundings for 2010, 2011, and 2012. There had also been a rise in seed and early venture deals. Steadily rising from around 30% of all venture deals in 2003, early and seed deals occupied 50% of all deals in 2012. Alongside the growth of early and seed deals were more deals being done with corporate venture units, which has been rising year-on-year since 2009, engaging with 15.2% of deals, although the NVCA is changing its methodology to include more corporate venturing deals in its figures, which it expects to lead to a “spike” in reported activity.
Initial public offerings (IPOs) still remain key to the venture market, but Taylor said the importance of acquisitions has become apparent in recent years. The number of IPOs was down from 2011 into 2012, but the total IPO valuation was $122.3bn, the highest since 1986 after the flotation of social network Facebook last year. The IHS Global Insight Study in 2010 suggested VC activity provided 11.9m US jobs, had sales of $3 trillion, and dominated sectors such as biotech and software.
Overall, Taylor said that in 2013, the combination of less money being raised by VCs, attractive start-ups, and uncertain exit markets meant a greater need for capital efficiency.
Box:
NCET2 Startup Map
In an effort to increase pressure on government to see how universitie
s are fuelling the economy and creating jobs, NCET2 provided an update on its Startup Map. The mission is a simple one, to create a centralised database that shows the economic impact of startups have and will have in order to shape policy that will accelerate their development.
Launched in late 2011, the map now has data from over 3,000 companies and 180 universities. The map continues to be developed, and can be found here.
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The event directly introduced Global 1000 companies to entrepreneurs, universities, and startups through networking and a series of presentations were the firms demonstrated what the ideal investment opportunities for them would be. The companies included:
• 3M
• ABB Technology Venture
• AMD
• British Petroleum
• Colgate-Palmolive
• Dow Chemical Company
• Huawei Technologies
• IBM
• Intel Capital
• Johnson & Johnson
• Microsoft
• Pfizer
• Procter & Gamble
• Samsung
• Sanofi
• Siemens
• Sony
• Verizon Communications
