Building an EffectiveU i it T h l University Technology

CommercializationOrganization

Jack Brittain, PhDPierre Lassonde Presidential Chair

P f f M tProfessor of ManagementUniversity of Utah

Jack Brittain 1

Commercialization Activity FlowCollege A

College B

Center I

College CCenter II

Disclosures

Licenses to Existing 

CompaniesCollege D

College E

Center IIIDisclosures& Patents

College F

College G

Center IV

Licenses to Start‐up 

CompaniesCollege G

College H

Center V

Papers Patents ProductsJack Brittain 2

Papers Patents Products

700

Disclosures

600

700

CalTech

400

500

Disclosuressclos

ures

MIT

300 Predicted DisclosuresTop 50 PredictedGoalum

ber o

f Dis

1 disclosure/$1 million

100

200 Nu

0 $0 $200 $400 $600 $800 $1,000 $1,200

Millions of Federal Research Dollars

Jack Brittain 3

Millions of Federal Research Dollars(scatter plot is 80 selected reference institutions, including top 50, 2009 AUTM)

Input –Outputs(averages are red, goals are green; middle horizontal is “good,” top and bottom of red is below average)

Startup Goal 5/$100 million

Startup Goal 10% of Disclosures

Licenses Goal 35/$100 million

Licenses Goal 37.5% of Disclosures

Jack Brittain 4

Commercialization Effectiveness*250.000

High Disclosure/High Disclosure/Low Conversionon

ClevelandClinic

150.000

200.000

Mayo

High Disclosure/High Conversion

Low Conversion

/ $100 Milli

l Research

100.000

150.000

Cal Tech

yClinic

sclosures /

in Fed

era

50.000

CMU

MIT Low Disclosure/Low Disclosure/

Di

0.0000.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00

/High Conversion

Low Disclosure/Low Conversion

Jack Brittain 5

Start‐ups / $100 million in Federal Research* Association of University Technology Managers (AUTM) Annual Surveys, 2007-2011

Typical University ChallengesTypical University Challenges• Disclosure rate is low. Why?

– Operational issues? ProbablyOperational issues? Probably.– Culture issues? Probably.

• Conversion rate is low, licenses and startups. Why?– External engagement? Internal focus in office?90% of why the revenue numbers are average– 90% of why the revenue numbers are average.

• Start‐ups rate is partly disclosure rate issue– Faculty engagement matters, problem is likely more y g g , p ythan just disclosure problem

– Program coordination matters: align efforts

Jack Brittain 6

Technology Value Curve

Spinoff Value

Where Universities

• Prototyping • IncorporationL / b it

Spinoff ValueGeneration

Where Universities Traditionally Add Value

• Logo/website• Corporate Secretary• CFO Solutions• Umbrella InsuranceM k t h

MARKET EXPANSION

COMMERCIALLAUNCHPROTOTYPEPROOF OF 

CONCEPTIDEA

• Market research• Grants programs

EXPANSIONLAUNCHCONCEPT

Commercialization Stage

Jack Brittain 7

Spinoff Development

Phase 4Market

Phase 3Operating

Phase 2Business

Phase 1Formation

Spinoff Value Generation

Phase 5Long Term

Entry• Marketing/Sales

• StrategicP hi

• Customers Testing Product

• Investors• Key Managers

• Business Model

• Product Validation

• Product

• Legal Formation• Technology License

• Product Development GrowthPartnerships

• New Products  & New IP in Development

• Key Managers• Board of Directors

• Bank Credit

• Product development grants

• Angel & Seed Investors

Development• Logo, web• Product development grants

PROTOTYPECOMMERCIAL

LAUNCHMARKET

EXPANSION

Commercialization Stage

LAUNCH EXPANSION

Jack Brittain 8

Small Light Fast Small-Light-Fast Money

• Small amounts with immediatemilestones (4 months or less) money chases success as milestones accumulate

Li h l ti d d i i t ti• Light regulation and administration little administrative overhead in making awards University recommends, accountability is portfolio resultsUniversity recommends, accountability is portfolio results

• Fast decisions sustain technology development momentum, facilitate continuity of effort

Jack Brittain 9

y

Spinoff Development

Phase 4Market

Phase 3Operating

Phase 2Business

Phase 1Formation

Spinoff Value Generation

$1,000,000 InvestmentAngels & Seed Funds e g Kick Start

Phase 5Long Term

Entry• Marketing/Sales

• StrategicP hi

• Customers Testing Product

• Investors• Key Managers

• Business Plan• Product Validation

• Product development

• Legal Formation• Technology License

• Product Development

Up to $1.2 MillionFederal SBIR/STTR

Angels & Seed Funds, e.g. Kick StartTotal PotentialStartup Funding$2,455,000

($1 445 000 isGrowthPartnerships• New Products &IP in development

• Key Managers• Board of Directors

• Bank Credit

development grants

• Angel & Seed Investors

Development• Logo, web• Product development grants $25,000 Foundation

T h l C i li i

$50,000 ExternalTechnology DevelopmentGrants (4 times)

($1,445,000 isGrant Funding)

PROTOTYPE

p

COMMERCIALLAUNCH

MARKETEXPANSION

$5,000Micro Grant

Technology CommercializationGrant (2 times)

Commercialization Stage

LAUNCH EXPANSION

Jack Brittain 10

Utah Experience:Grants Facilitated InvestmentGrants Facilitated Investment

$600,000,000

$400,000,000

$500,000,000

$300,000,000

$100,000,000

$200,000,000

$02005 2006 2007 2008 2009 2010 2011 2012

Jack Brittain 11

Cumulative Grants Funding Cumulative Investment Funding

Utah Experience:R t I t tReturn on Investment

$1 400 000 000

$1,600,000,000

$1 000 000 000

$1,200,000,000

$1,400,000,000

$600 000 000

$800,000,000

$1,000,000,000

$200 000 000

$400,000,000

$600,000,000

$0

$200,000,000

2005 2006 2007 2008 2009 2010 2011 2012

Jack Brittain 12

Cumulative Grants Funding Cumulative Investment Funding Value Private Companies

ResultsResults• Spanning Valley of Death• Spanning Valley of Death

• The Gully of Inconvenience

Le era e in estor dollars• Leverage investor dollars• Community engagement

• Entrepreneurs In Residence• Commercialization Advisory Boardand Company Collaborationsand Company Collaborations

• University participates in equity upside

Jack Brittain 13

Universities and theInnovation Ecosystem

“Universities do not get enough credit for the fact that as players in our innovation ecosystem, they’re willing to gamble on cash-strapped startups. At the end of the day, who else is offering to pick up the tab? … Warts and all, universities remain willing to pay patent costs to support expensive and increasingly sophisticated IP strategies for startups who will likely

b bl t th b k ”never be able to pay them back.”- Melba Kurman, Triple Helix Blog, 25 Feb 2011

Jack Brittain 14

Financial ReturnsCollege A

College B

Center I

Licenses to Existing 

IndustryResearch

College C

gCompanies

Disclosures

Research

College D

College E

Center IIDisclosures& Patents License

IncomeRoyaltyIncome

College F

College G

Licenses to Start‐up 

CompaniesEquity

R tCollege G

College H Center III

Companies Returns

Jack Brittain 15

Enriches ResearchEnriches Research• Translation processgenerates questionsgenerates questions

• Creates new fundingopportunities– Commercial sponsors tend

to be repeat customers– Less than Federal, but can be

stable and grow steadilystable and grow steadily

• Work with faculty whowant to be involved

– Does not matter if faculty opt out– Faculty success generates interest

Jack Brittain 16

Total Mission Integration

• Educational programs > 2600 students Defining educational experience Defining educational experience Huge positive for faculty

• Donor gifts over $80 milliong $ Lassonde Center/Institute Sorenson Discovery Center A l hi $1 illi Annual sponsorships over $1 million

• University Venture Fund manages $18.5 million in Fund I manages $18.5 million in Fund I Fund II target is $50 million

Jack Brittain 17

Utah Transformed OperationUtah Transformed Operation• 2004 “Technology Prevention Organization”• Throwing technologies over the wallThrowing technologies over the wall“hoping the coyotes will raise them”

• Bottom half of TTOs, ranked 96th

• 2008 Tied MIT #1 AUTM survey for 

2008 Sugar Bowl Trophy

number of technology spinoffs• 2009 and 2010 #1 • 2011 #2, MIT #1

• FY 2006 to present:• FY 2006 to present:• 1,117 disclosures, 456 executed agreements• 388 new inventors• 256 issued patents• 142 start‐up companies• over $200 million licensing and royalty revenues

Fortress Ruins

Jack Brittain 18

$ g y y• over $300 million commercial‐sponsored research

Tech Ventures Team/ProcessGlenn Prestwich

Presidential ProfessorPresidential Special Assistant

Entrepreneurial Faculty ScholarsSeed Funds• KickStartRon Weiss, MD

retired ARUP CEO

>$100 million

Software Dev CenterMedical AcceleratorEnergy Comm Center

>$1.2 million revenue

l d/ d lTroy D’Ambrosio

• UpStart• Lineagen• Vendice• Navigen

d d

retired ARUP CEOFaculty Outreach≈420 faculty

15% total faculty 5‐8 faculty case load

Energy Comm. CenterVenture Bench

Doug Lloyd/David DolanSerial Entrepreneurs

Entrepreneur in Residence

ySeasoned Entrepreneur

Raised Capital > $600 millionDirector of Education Programs

• Founder Fund• UVF

> 2600 students > 100 business people

Bryan Ritchie, Director and Associate VP25 fulltime professionals + 30 student interns

Technology Commercialization/Commercial ResearchResearch

Commercialization

$300 millionfederal research

300 “Inventions” 120 Potential Licenses30 Potential Companies

Jack Brittain 19

Company

Utah Inventors, Startups, & Revenue

Revenues

$70,000,000

$80,000,000

$90,000,000

140

160

180

Faculty Inventors

$20 000 000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

60

80

100

120

140

$0

$10,000,000

$20,000,000

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

FY 2011

0

20

40

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011Repeat Inventors New Inventors

20

25Start-ups

Commercial Research Commercial Clinical Research LicensingRepeat Inventors New Inventors

0

5

10

15

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2

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197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011

Research and Innovation

Innovation is the“Research is the

Dr. Geoffrey Nicholsoninventor of the Post‐It™:

Innovation is the transformation of knowledge 

into money.”

Research is the transformation of money 

into knowledge.

As innovators, universities are unique in their dedication to reinvesting innovation returns in

knowledge creation and dissemination

Jack Brittain 21

knowledge creation and dissemination.

Supporting Research ImpactSupporting Research Impact• Leverage/OPM

– Grants– Donors– Effort

• Fund Critical Paths• Fund Critical Paths– Monitor milestones– Do not fund “no results”– Post performance funding:

money chases success

• Outcomes depend on shots on goalp g– control strangles speed and momentum– place small bets with immediate milestones

C it l f ti i b t tJack Brittain 22

• Capital formation is about outcomes

Changes Utah Madeg• Total Mission Integration

– Integrated student programs enhance University, engage facultyg p g y, g g y– Industry sponsored research largest contribution to resources

• Cost recovery to investment model– Cost recovery is inevitably a failure– Investment logic produced tangible economic returns over long term– Changed the nature of our work to the positiveg p

• Programs mitigate early stage risk– Provide leverage for investorsg– Platform for community engagement– Encouraged capital formation

Jack Brittain 23

Path to ExcellencePath to Excellence

1. Reinvent: Prepare to succeed (8‐12 months)) O i l i ia) Operational revisionsb) Faculty and departmental outreach

2 Motivate: Faculty engagement (month 12+)2. Motivate: Faculty engagement (month 12+)a) Launch entrepreneurial faculty scholarsb) Leadership engagement President to Deansb) Leadership engagement, President to Deans

3. Lead: implement coordination for all innovation and entrepreneurship activities (ongoing)p p ( g g)a) Depends on trust of motiveb) Ongoing investments in program innovation

Jack Brittain 24