What can the US Government do to Increase Innovation around University Research?

March 27, 2011

Our focus at DFJ Mercury is early stage innovation – a lot of it is University research commercialization but we also invest in clinician MD’s with new ideas, companies out of regional incubators, and inventors working outside of the university environment (like their garage) as long as they have a transformational technology that can be the basis for a big company.  We spend a lot of time in the university research environment working with researchers, students and technology transfer groups in universities primarily in the Midwest and Texas. So, as you might expect, we strongly believe that innovation drives economic growth and national wealth and are pleased that the current administration and Department of Commerce is so fired up about Innovation and Entrepreneurship.

My prior post about Startup America was mixed review.  Some of the initiatives will have a positive impact on high value innovation but some (like the SBIC program or America Invents) are, we think, less likely to do so in their current form, at least for university research based innovation.  Rather than just give my opinion on what will work, I wanted to suggest initiatives that the Federal government could lead that would really impact innovation (and job creation in this country).  So, here’s my list of ideas for increasing university research related innovation and commercialization:

  • Tie performance of university offices of technology transfer (OTT’s) to Federal Grants. Push universities to continually improve and benchmark OTT performance by having an OTT adjustment (bonus points) to any federal grant going to the university.  My take is that the OTT often has to fight for resources in the University because it is secondary to the “academic mission”.  Lets elevate getting innovation out to improve our economy and our lives an important feature of the academic mission.  Doing this would require centrally grading the university OTT’s performance.  Cost to implement: Low.
  • Drive useful market and entrepreneurial knowledge into the University in order to get University researchers to think 5 years out. I know that many researchers are hungry for research problem statements that have market relevance.  Most engineering and applied science researchers absolutely WANT TO HAVE THEIR INVENTIONS IMPACT PEOPLE’S LIVES and, 95% of the time, the way to do that is commercialization.  Pushing more market awareness into the university could double or triple the amount of comercializable research. I have witnessed the funding agencies attempt to do this over the years but they’ve only created checkbox committees that does not proactively affect the path of the research.    Cost to implement: Low.
  • Increase the efficacy of SBIRs. If it were a VC fund, the SBIR program would be the largest hard sciences venture fund on the planet but the awards are largely done by academics, based on academic merit.  I would like to see a central SBIR administration that sets up conditions or pre-screens companies for commercial viability. There are lots of ways to do this.  Cost to implement: Low.
  • Create theme-based commercialization centers with professional, entrepreneurial management. We go from university to university and there are categories of technologies that we see over and over.  How does the OTT know that there are 50 competitors at the same stage out there?  They just don’t have the resources.  Maybe a national center for, say, personalized medicine in cancer, could be a nexus for all of the investors interested in that area and all of the university researchers looking to commercialize.  Maybe it could be staffed with management experienced in both the domain and in early stage commercialization with some funds to do not only proof-of-concept experiments but experiments that show superiority of a particular approach.  Such a center could also look for combinations of technologies from different sources and work closely with all the investors interested in that space in a way that multiple university OTTs never could.  Operations for this kind of center could be mostly virtual (put all the management in one place but the university researchers and startups would remain local to the originating university, or not, as the market dictates).  Cost to implement: moderate, maybe $10-20 million to operate each center for ten years.

I plan to post more detailed discussion of each of these ideas in later blogs.

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