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1 copyright pending Slide 1 I A Technology Transfer and Commercialization Partnerships Diane Palmintera, President Innovation Associates Presented to The Presidents Council of Advisors on Science and Technology 15 August 2007 Copyright pending Innovation Associates Inc The statements and recommendations herein are solely those of the presenter and do not represent those of any other individual, institution or agency.

2 copyright pending Slide 2 Federal Policies to Stimulate University Technology Transfer I A The Bayh-Dole Act of 1980 accelerated university technology transfer by establishing a uniform federal invention policy that permitted universities to retain title to inventions developed through federally funded research. At least 158 U.S. universities* conduct technology transfer activities including filing patents, trademarks and copyrights, and executing licenses. Most also provide some support to launch startups. *(Represents the number of firms responding to the 2005 AUTM Licensing Survey.) Technology Transfer & Commercialization Partnerships

3 copyright pending Slide 3 Universities are a source of licensed innovations and business startups. Based on the latest AUTM Licensing Survey TM : I A Since FY 1998 (to FY 2005), 3,641 new products based on academic inventions have been introduced to the market. In FY 2005, universities executed 4,201 licenses and options. Since FY 1980 universities and research institutions have launched 5,171 new companies; and in FY 2005 alone, 400 startups were launched. Technology Transfer & Commercialization Partnerships

4 copyright pending Slide 4 In the past two decades, technology transfer and commercialization activities in universities have sky- rocketed. I A From FY , universities have more than quadrupled the total number of active licenses, and almost doubled the number of licenses executed each year. From FY , universities have more than doubled the number of startups launched each year. Technology Transfer & Commercialization Partnerships

5 copyright pending Slide 5 I A Source: AUTM Licensing Survey, FY 1996, FY 1997, FY 1998, FY 1999, FY 2000, FY 2001, FY 2002, FY 2003, FY 2004, FY 2005; Innovation Associates.. Note: Licenses Executed represents the number of total licenses/options executed during the specified year as reported by the institution in response to the AUTM Licensing Survey. The number of institutions reporting to the AUTM Licensing Survey varies each year; N equals the total number of institutions reporting for the specified year. The number of institutions reporting to the AUTM Licensing Survey varies for each year: 1996 N=131, 1997 N=132, 1998 N=132, 1999 N=139, 2000 N=142, 2001 N=142, 2002 N=156, 2003 N=165, 2004 N=164, 2005 N=158.. Technology Transfer & Commercialization Partnerships

6 copyright pending Slide 6 I A Technology Transfer & Commercialization Partnerships Source: AUTM Licensing Survey, FY 1996, FY 1997, FY 1998, FY 1999, FY 2000, FY 2001, FY 2002, FY 2003, FY 2004, FY 2005; Innovation Associates. Note: Startups Launched represents the number of startup companies formed during the specified year that were dependent upon the licensing of the institutions technology, as reported by the institution in response to the AUTM Licensing Survey. The number of institutions reporting to the AUTM Licensing Survey varies each year; N equals the total number of institutions reporting for the specified year.

7 copyright pending Slide 7 Technology Transfer & Commercialization Partnerships U.S. Startups Averaged over Five Years (FY )* I A MIT stands out from the others – it launched an average of 24 startups per year. The top 10 U.S. universities were: 1)Massachusetts Institute of Technology 2)University of California 3)California Institute of Technology 4)Georgia Institute of Technology 5)Stanford University 6)University of Michigan 7)University of Illinois, Chicago, Urbana 8)University of Pennsylvania 9)University of Southern California 10)University of Minnesota *(AUTM; Innovation Associates)

8 copyright pending Slide 8 Technology Transfer & Commercialization Partnerships We get a different picture when we take into account research expenditures. I A In FY 2005, the top 10 U.S. universities executing licenses, relative to research expenditures were* 1) Iowa State University 2) Brigham Young University 3) Duquesne University 4) North Carolina State University 5) University of Oregon 6) University of Toledo 7) New Jersey Institute of Technology 8) Western Kentucky University 9) Stevens Institute of Technology 10) Montana State University *(AUTM; Innovation Associates)

9 copyright pending Slide 9 Technology Transfer & Commercialization Partnerships I A In FY 2005, the top 10 U.S. universities launching startups, relative to research expenditures were 1) Brigham Young University 2) Stevens Institute of Technology 3) University of North Carolina at Charlotte 4) University of Texas, Arlington 5) Duquesne University 6) University of Akron 7) University of Toledo 8) Catholic University 9) Creighton University 10) Arizona State University *(AUTM; Innovation Associates)

10 copyright pending Slide 10 Successful technology transfer outcomes are built on substantial, excellent and strategically focused research. I A R&D expenditures at U.S. universities have increased dramatically – expenditures in FY 2004 were five times higher than in FY 1984.* Federal government has been the main source of funding, representing 64% of university research expenditures in FY 2004.* HHS funded a little more than half of all research expenditures.* *(NSF/Division of Science Resources Statistics) Technology Transfer & Commercialization Partnerships

11 copyright pending Slide 11 I A Life sciences represented 60% of all research expenditures to U.S. universities, and its share has grown steadily.* About 5% of research expenditures in U.S. universities came from industry. Until FY 2005, industries share of university research expenditures had declined for several consecutive years; in FY 2005, the share was about the same as in FY 1983.** *(NSF/Division of Science Resources Statistics); **(NSF InfoBrief, NSF , January 2007). Technology Transfer & Commercialization Partnerships

12 copyright pending Slide 12 I A Technology transfer outcomes (except license income) correlate significantly with research expenditures at U.S. universities. Logically, U.S. patents represent the highest correlation. Cumulative active licenses and licenses executed also highly correlate with research expenditures. Startups positively correlate with research expenditures. Technology Transfer & Commercialization Partnerships

13 copyright pending Slide 13 I A Source: AUTM Licensing Survey; Innovation Associates. Note: Pearson correlations (r =) of technology transfer outcomes with FY 2005 research expenditures. Outcomes are reported by U.S. universities and colleges responding to the FY 2005 AUTM Licensing Survey. Technology Transfer & Commercialization Partnerships Technology Transfer Outcomes U.S. Universities FY 2005 Correlation To Research Expenditures Licenses & Options Executed (N=151).779 Cumulative Active Licenses (N=150).804 Startups Launched (N=147).667 U.S. Patents Issued (N=150).846 Patent Applications (N=150).733 License Income (N=150).196 Table 1

14 copyright pending Slide 14 I A Many universities successful in technology transfer (T2) have identified and targeted core research strengths, and developed strategic plans to build and leverage those strengths. This is particularly important for universities that have more modest research expenditures. Universities such as Brigham Young U., U. of Akron (polymers), Rensselaer Polytechnic Institute (engineering), and Alfred U. (ceramics) have been successful in T2 despite modest budgets. Technology Transfer & Commercialization Partnerships

15 copyright pending Slide 15 Multiple internal and external factors affect the universitys success in technology transfer. I A Leadership from the university President is often seen in universities successful in technology transfer. Moreover, hiring and reward systems impact outcomes as well as support for an entrepreneurial culture. Universities that understand and are responsive to differences in corporate missions, timeframes and communication styles are more likely to have successful research collaborations and T2 outcomes. Technology Transfer & Commercialization Partnerships

16 copyright pending Slide 16 I A Building on-going relationships with corporations can facilitate licensing activities, sometimes years later. Building positive relationships with corporations can involve promoting flexible and responsive research collaborations, participation on advisory committees and in entrepreneurial activities, providing product development/ improvement services and facilities, etc. Technology Transfer & Commercialization Partnerships

17 copyright pending Slide 17 Entrepreneurial-engaged universities provide or facilitate access to a range of services. I A Universities successful in commercializing technologies and launching startups understand that engineers and scientists make poor business people and address this weakness. Entrepreneurial-engaged universities provide, or facilitate access to sources of risk capital, management capacity building, incubation and networking. They also connect these activities to startups being launched by technology transfer offices. Technology Transfer & Commercialization Partnerships

18 copyright pending Slide 18 I A Successful technology transfer offices often have close linkages to private seed/venture capital firms. Successful offices facilitate linkages between researchers and these firms, early in the process. Entrepreneurial universities sponsor or encourage linkages to enterprise forums or springboards that screen, mentor and showcase promising academic entrepreneurs to potential investors. Technology Transfer & Commercialization Partnerships

19 copyright pending Slide 19 I A An increasing number of U.S. universities have seed capital funds that invest in university-based entrepreneurs. Effective funds not only provide capital but also build management capacity. Some universities also have commercialization funds designed to advance research to near-market stages. Incubators and research parks provide platforms for other entrepreneurial services. Technology Transfer & Commercialization Partnerships

20 copyright pending Slide 20 I A Entrepreneurs-in-residence and mentors provide invaluable input and guidance. Business plan competitions are popular mechanisms to mentor and showcase university entrepreneurs to potential investors. Networking opportunities may be the most important element – they facilitate invaluable interaction between entrepreneurs, service providers, and potential investors, partners and customers. Technology Transfer & Commercialization Partnerships

21 copyright pending Slide 21 Corporate and Foundation Partners I A Foundations play an important role by funding Innovation Centers and entrepreneurial activities in some universities and regions. (Pittsburgh, St. Louis, and others.) Successful entrepreneurs as well as major corporations have become major funding sources for centers on entrepreneurship and new/enhanced S&T programs. (MIT, BYU, ISU, RPI, and others.) Technology Transfer & Commercialization Partnerships

22 copyright pending Slide 22 I A Corporations primary support is sponsored research, but that support is waning in some universities. This may be caused, in part, by institutions tightening the technology transfer reins. Other seemingly unrelated industry services such as extension services build credibility and trust that may have long-term payoffs including increased technology transfer outcomes. Corporate involvement can have a down-side by exerting too much influence over the direction of some institutions research. Technology Transfer & Commercialization Partnerships

23 copyright pending Slide 23 Community and State Partners I A By providing funding for R&D Centers, particularly industry- university centers, some states have effectively leveraged federal funds. (NYSTARs CAT program is a good example.) Communities often provide funding, zoning, etc. to support incubators, and states play a larger role in supporting research parks in and around universities. Technology Transfer & Commercialization Partnerships

24 copyright pending Slide 24 Technology Transfer & Commercialization Partnerships I A In some states, fund-of-funds and other funds and incentives focus on increasing seed capital and filling early-stage capital gaps. Angel funds can supplement other forms of funding but often do not provide critical business mentoring/substitution needed. State governors and legislatures have become increasingly interested in leveraging academic institutions for economic development purposes. In some cases, this has influenced the focus of the institutions commercialization activities.

25 copyright pending Slide 25 The Federal Government as a Partner I A The federal governments primary role involves funding a full range of research in universities. This research feeds the technology transfer pipeline and has a direct impact on the extent and type of commercial outcomes. The federal government traditionally has been reluctant to support the commercialization side of research despite its rising expectations regarding commercialization outcomes. This is true for SBIR/STTR and other programs. Technology Transfer & Commercialization Partnerships

26 copyright pending Slide 26 Technology Transfer & Commercialization Partnerships I A This funding reluctance also holds true for softer research-related activities such as partnerships and initiatives in which outcomes are not easily quantified. Some federal programs are outmoded and could more effectively support technology transfer and entrepreneurial development. (NSF EPSCoR and SBA SBDCs are two examples.) Some federal programs that have provided useful services have been eliminated, cut or annually threatened. (OTA, ATP, MEP)

27 copyright pending Slide 27 Outstanding Issues & Factors that Impede Commercialization I A Valley-of-Death gaps: technology maturation, acceleration, and adaptation early-stage capital business/management capacity in S&T startups Conflicting goals between corporations and universities Wide gap in technology transfer capacity among different regions and institutions – institutions such as HBCUs are left out Technology Transfer & Commercialization Partnerships

28 copyright pending Slide 28 What is Needed I A Provide greater support and flexibility for commercialization in federal programs such as SBIR/STTR Implement initiatives that promote experimentation and pilots to address various valley-of-death gaps Increase federal incentives to promote regional approaches to innovation and technology transfer Technology Transfer & Commercialization Partnerships

29 copyright pending Slide 29 I A Implement mentoring programs in technology transfer and entrepreneurial development that transfer knowledge from top universities to emerging universities Develop entrepreneurial mentoring programs that tap successful entrepreneurs to act as entrepreneurs-in-residence and provide ad- hoc advisory services Technology Transfer & Commercialization Partnerships

30 copyright pending Slide 30 I A Create incentives to stimulate early-stage capital investments, particularly in areas that now have little access to such capital Educate academic institutions, state legislatures, corporations, and others regarding technology transfer Develop better metrics to guide institutions and policy makers Collect, evaluate and disseminate best practices Technology Transfer & Commercialization Partnerships

31 copyright pending Slide 31 I A Enhance linkages between federal agencies and university technology transfer to increase transitioning opportunities Broaden the view of innovation and give greater recognition to a wide range of institutions that contribute to innovation and the transfer of knowledge Promote better linkages between institutions that provide different levels and types of innovation-related value Technology Transfer & Commercialization Partnerships

32 copyright pending Slide 32 I A Technology Transfer and Commercialization Partnerships Funded by NSF/PFI, this report highlights lessons, recommendations, and cases on emerging academic institutions. (Coming in September 2007) Accelerating Economic Development Through University Technology Transfer and Commercialization This report focuses on the best practices of nine nationally-known research universities. It explores their technology transfer and related entrepreneurial activities, and community and state infrastructure. Download From IAs Website: Technology Transfer & Commercialization Partnerships

33 copyright pending Slide 33 I A Partners on a Mission: Federal Laboratory Practices Contributing to Economic Development Funded by DOC/OTA, this report shows innovative federal laboratory practices that support technology transfer and promote economic development. Developing High-Tech Communities: San Diego This exhaustive study on San Diego demonstrates how one community quickly converted its threatened economy into one of the nations most robust, high-tech economies. Funded by SBA/Office of Advocacy. Download From IAs Website: Technology Transfer & Commercialization Partnerships

34 copyright pending Slide 34 I A INNOVATION ASSOCIATES Providing Services to Federal Government, States, Communities, Universities and Private Sector Web:

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