Report on the White House Lab-to-Market Summit

English: South façade of the White House, the ...

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On May 20, 2013 a group of national experts in technology transfer convened in Washington, DC to discuss how to improve the nation’s effectiveness at bringing federally-funded research to market. Neil Kane was honored to be an invited guest at this Summit. A summary of the meeting was the topic of this month’s blog post on Tech Cocktail. A full copy of the report can be found on the home page for this blog www.beliefwithoutevidence.com in the Flash Widget in the lower right hand corner…you can download the report there.

Licensing Technologies from Universities

A common way for startups to get going is by taking technology invented at a university (or federal laboratory or similar public institution) and “transferring” it to the commercial sector by creating a startup company whose main mission is to develop the technology and turn it into a viable business. Frequently the university inventors of the technology are also founders of the startup company.

I’ve met many people pursing this path of forming companies, especially those people who were with me in the National Science Foundation’s Innovation Corps program. There were 21 teams in our class at Stanford University, and those that will now be starting companies, which is most of them, will need to license technology from their associated universities.

Deutsch: Thomas Edison mit Glühbirne

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I’ve been through this process many times. Like all things, one gets better at it with experience. But the first time I had to license technology I felt very vulnerable because I had no idea what I was doing, nor what my expectations should be, whereas the university had decades of experience, hundreds of transactions to reference and lots of data they could use. Here are some guidelines that may be helpful if you’re doing this for the first time.

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Culture Clash: Scientists vs. Entrepreneurs

Much of the work that I have done involves transferring technologies out of academia or federal laboratories. The framework for academic spinoffs is that typically there are technical co-founder(s) who are the subject matter experts in the technology. But investors have declared the days of “professors as CEOs” to be over. So often there is a business person who is also at the table at the founding of the company to handle the business matters and to provide a steady hand as the company takes off. I’ve been that business person at least six times. Through those experiences I’ve come to learn that the way career scientists think are very different from the way entrepreneurs think even when they share the objective of wanting their startup to succeed. Call these differences in perspective, or cultural issues, if you will, between the motivations of academics and entrepreneurs.

Culture

Academics make their reputations based on what they know. They don’t “profit” from this knowledge until they publish it and can explain to others how to reproduce their work. Only then is their professional reputation enhanced and their research validated. Publication success is often a key factor in deciding whether an academic wins research grants or is offered tenure. For many academics, the recognition they gain by advancing knowledge in their field is sufficient motivation. But they will not see a meaningful financial reward for their work unless it is commercialized, usually by founding a successful business.

Business people and entrepreneurs have very different incentives and perspectives than academics (see Table 1). They don’t profit from their work until they create something that has commercial value, which often comes from exploiting privileged information. The best entrepreneurs I know are not concerned about getting credit for their ideas; the financial payoff is reward enough. The typical behavior of an academic — “Let’s publish!” — is the exact opposite of what one would want if the same technology were developed inside a company.

Table 1: Scientists and Entrepreneurs have different motivations, incentives and expectations. Copyright 2011 Illinois Partners Executive Services, LLC.

The pursuit of money by business people if often repugnant to dyed-in-the-wool academics, Continue reading