Nearly fifteen years after state taxpayers began investing billions of dollars to reinvigorate the University of Connecticut, school and state officials say they have the infrastructure and intellectual capacity in place to become a major player in the technology transfer scene.
And the school and state are moving aggressively to convince outside investors to get on board.
The end goal is for the school to commercialize more of its research — that is take ideas out of the lab and turn them into marketable products, services or therapeutic treatments.
That, in turn, will generate a return to state taxpayers, create jobs, and establish a down payment on future research.
Tucked away in modern 5,000 to 10,000 square-foot labs with the latest equipment, startups and researchers at several UConn campuses are developing a range of innovations — from therapeutic treatments for osteoarthritis, Alzheimer’s disease and cancer, to biofuels from genetically altered plants and a process for improving the efficiency of drug discovery.
But tech transfer is not an easy business model. Successful universities such as Stanford and MIT took decades to build their commercialization programs. And while UConn’s research is diverse, the school has a large concentration in bioscience, an industry whose research often takes longer to come to market. It’s also a capital intensive sector.
That’s an issue because obtaining financing for startup companies in Connecticut is a challenge.
And about 84 percent of technology transfer programs don’t keep enough of the income they generate to offset the costs of running the programs.
“In many cases, technology transfer programs are money losing propositions in themselves,” said Ashley Stevens, president of the Association of University Technology Managers. “But they provide other impacts that can have a much bigger effect on a state’s economic development as a whole.”
For example, they lead to collaborations between private companies and academic researchers. They also result in spin-out companies, like Avon-based Renzulli Learning, that create jobs in-state.
The five-year-old company has developed an online program for elementary and high school students that matches their individual interests and learning styles with online resources.
The company has gone from reaching about 1,000 students in several states to about 500,000 students in 44 states and 12 foreign countries. That exponential growth occurred only after UConn professors Sally Reis and Joseph Renzulli, who spent 30 years developing the program, turned to UConn’s R&D Corp., a for-profit subsidiary of the UConn Foundation that initiates new business start-ups based on technologies developed by faculty and staff.
The R&D Corp. helped Renzulli Learning raise capital and introduced it to Mike Daversa, a successful education software entrepreneur, who saw potential in using their research electronically.
Daversa, now the company’s president, said he quickly changed Renzulli from a workbook provider to an online/software provider, allowing it to access a much larger audience.
The company brought in almost $6 million in 2009 and now employs about 38 people. It turned its first profit last year.
Universities have always been major sources of science and technology innovation, but there is increasing pressure to turn ideas into practical uses that create new businesses and jobs. “Silicon Valley” and the “North Carolina Triangle” have become model examples. In Connecticut, Yale University and its Science Park is the benchmark.
UConn has raised its profile over the last decade as a research institution. The school is still in the second phase of a $2.3 billion campus upgrade, which has led to the construction of modern buildings that have attracted researchers from around the world.
As a result, annual research funding has increased steadily, reaching $210 million in 2009, up from $194 million a year earlier.
That’s important because research drives tech transfer and innovation. Schools expect one patent issued per $2 million in research funding.
In 2008, the school generated 23 patents, ranking it No. 1 out of 15 institutions with similar research expenditures, like Temple University and the universities of Louisville and Delaware, according to an AUTM survey.
The school also averages about 85 active licenses annually.
However, UConn is still a new comer to tech transfer and is behind the eight-ball in licensing revenue, bringing in about $1.1 million a year. In comparison Northwestern University brought in $824 million in 2008.
“We haven’t had our one big hit yet. That’s the holy grail,” said Rita Zangari, interim director of the Office of Technology Commercialization. “We’d love to have a Dell or Google, but we’d also be happy with a steady stream of strong niche technology companies.”
Zangari noted that patent revenue can often be a product of a single blockbuster technology.
UConn’s tech transfer program has its roots in the 1980s but was completely remolded and revamped last decade. There are several major components and they all fall under the umbrella of the Office of Technology Commercialization, which employs about 11 people who oversee the entire program.
Among the programs is the Technology Incubation Program, or TIP, which allows new companies that have a technology linkage or relationship with the university, the ability to locate on campus and access resources that may be otherwise too costly. TIP offers lab and office facilities, business support, access to faculty experts and specialized equipment. Currently, 15 companies are housed in TIP facilities at the Storrs, Avery Point and Farmington campuses.
One of those is Agrivida, an agricultural biotech company focused on creating renewable, biomass-based alternative fuels.
The company, which is based in Medford, Mass., was launched out of the Massachusetts Institute of Technology, but moved its research operations to UConn because it needed a greenhouse for its genetically modified plants.
Hector Lucero, a scientist with the company, said the incubator allows Agrivida to tap UConn’s agricultural brain power and access to research resources. “The company is also absorbing UConn graduates, helping to keep young scientific talent in the state,” Lucero added.
TIP companies, which pay rent to the school, typically stay on campus for two to five years, and then graduate to their own facility or are bought out by a larger company.
The Center for Science and Technology Commercialization manages the commercial application of the discoveries, inventions and technologies developed at the school. Each year, the center averages 91 disclosures, 30 patents, and over a dozen new licenses. And the Tech-Knowledge Portal provides an access point where companies and entrepreneurs can come for support.
But the biggest potential money maker for the school is the R&D Corp., which takes equity stakes in the companies it helps develop and also receives revenue from licenses.
The corporation helps scientists build business plans, raise capital and recruit entrepreneurs for business management.
The portfolio consists of eight companies in various industries including bioscience, clean energy and medical devices.
“As a portfolio, we have a lot of different companies in a lot of different industries so I think we have a good chance of having some successes,” said Mark Van Allen, head of the R&D Corp. “But we know not every company is going to be successful.”
In March, the R&D Corp. sold its stake in a company which will provide a “significant payout to the school over time,” Van Allen said. Terms of the deal and the company aren’t being disclosed yet.
As UConn continues to develop its program, it will be in the shadow of Yale, said Stevens of AUTM, which has developed an impressive track record in tech transfer, and is typically in the top quarter of new and active licenses.
Stevens said UConn needs to continue to build its reputation and better mold collaboration between the public and private sectors.
The biggest challenge, however, may be getting financing for startup companies. It’s a particular problem in Connecticut, which has traditionally lacked a strong seed investor base.
“A key element in ensuring the growth of the tech transfer program is making sure there is capital available for businesses to develop their technology,” said Frank Milone, who is co-president of Connecticut Venture Group’s Hartford Chapter. “The challenge that Connecticut continues to face is that we don’t have enough early stage investment.”
Venture capitalists are increasingly shying away from early stage companies, creating a major funding gap.
Connecticut Innovations, the state’s technology investing and innovation arm, invested $152 million from 1995 through 2008. It is generally considered a successful fund, but its resources are limited and likely need to be tripled to have a greater impact, Van Allen said.
Joan McDonald, commissioner of the Connecticut Department of Economic and Community Development, agrees that the state needs to expand its startup funding base, and that it’s actively doing so.
In the last legislative session, for example, lawmakers passed a bill that establishes tax credits for angel investors, or wealthy individuals that invest in a single startup company.
