Date: Apr 29, 2014 Author: Deanna Pogorelc Source: MedCityNews (
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Researcher-using-a-multi-pipet-35766563Academic researchers, by nature, pursue scientifically interesting discoveries that could have a long-term impact. Meanwhile, investors and companies are interested in technologies that fill a very clear and immediate need in a market.
That difference in perspective is one thing that makes translating discoveries at academic institutions into viable products so challenging, as I learned at the Association of University Technology Managers‘ partnering forum in Cleveland last week.
But it's an important process — U.S. universities spun out more than 700 startups in 2012 with technologies developed in their institutions. At the forum, two startup executives joined two university technology transfer managers on a panel to discuss their successes and hang-ups in turning ideas into businesses.
Nael Osman, president and CEO of Diagnosoft, said the different goals of the academic and business worlds can make it very challenging for an inventor to become an entrepreneur. And he would know -- during his PhD program he co-invented the rapid MRI analysis technology at the core of the company, and through a series of fortunate and unfortunate events he eventually became CEO. He said that inventors and entrepreneurs require different skill sets and ways of thinking that make it challenging for an inventor to lead a company spun out with his technology, his "baby."
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But having an inventor as a spokesperson and champion for the technology early in the formation of a new company can be very valuable, commented Kevin Mendelsohn, vice president of finance and corporate development at CardioInsight Technologies.
"As you fundraise you need that expert who can answer that question and has the passion for the technology," he said. CardioInsight, which developed a noninvasive way to map the electrical activity of the heart, licensed its technology from Case Western University and Washington University.
CWRU's executive director of technology management, Michael Haag, said the company is a good example of what he's found to be the most successful way of spinning off companies.
"The PhD founder/inventor had two graduate students who were graduating at the same time, and they became employee numbers one and two at the company," he explained. "Our most successful companies are when the faculty member stays at the university doing their day job but the graduate student can be placed at the company. That provides a conduit for the faculty to feel comfortable that there's someone inside the business who understands what they're talking about, but it also allows the company to make a clean break."
Some other lessons on company formation shared by the panelists:
Time is money. "The IP portfolio has a lifetime and it has a value that decreases over time," Mendelsohn said. "I think the company has to be able to monetize that as quickly as possible."
Every bit of translational capital helps. Haag noted that CWRU's schools of medicine and engineering have realized that seeding opportunities with small bits of translational dollars -- $25,000 or $50,000 -- can go a long way. "When we go into partnership meetings with a prototype or data, our chances of success are much greater," he said.
In a startup, leadership may need to evolve. The people who are necessary to start a company and raise initial angel money aren't always the same people needed to raise the next institutional round, Paul Carter, business development director of the Office of Technology Management at Washington University, pointed out.
The licensing agreement may need to evolve as well. "As a company, it's unfair to expect that the license agreement when it's initially constructed is the final version," Mendelsohn said. "I think that has to be understood as a process and an evolving document that's going to change over time, and some of the rights and the terms are going to change as the company grows."
