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Promoting innovation in academia: from universities to startups and beyond

by Sarah Van Houten | August 25, 2022

Every year, life science technologies developed at universities are spun off into hundreds of startup companies. However, these startups are concentrated in a few regions across the country, and they often fail to succeed. But this entrepreneurial ecosystem presents a good opportunity for both businesses and academia. With both industry and the academic community working together, innovative ideas generated at universities could potentially lead to more successful startups and a better workforce.

How many schools have produced startups?

From 1996 to 2019, approximately 16,000 startups were created based on academic research. However, many of those startups come from a small number of schools and universities located in one of three areas: Boston, San Diego, and San Francisco Bay Area. Despite this entrepreneurial ecosystem being so concentrated, universities and companies outside these areas have many incentives for supporting innovation in academia. Universities can achieve recognition, funding, and an increase in student attendance, while startups can take advantage of university facilities and tap into potential talents. By working together, universities and companies can promote a thriving, competitive biotech industry in which startups can flourish and avoid the “walking dead” phenomenon.

The academic entrepreneurial ecosystem

A startup created based on academic research probably looks something like this: the primary investigator (a professor, AKA technology lead), and graduate students or postdoctoral researchers. Such startups often also have an industry mentor that provides expertise on the world of business that the startup founders likely don’t have experience with.

A university’s technology transfer office will often provide information on whether new technologies or discoveries are novel enough to be patented and if the discovery has commercial value. The technology transfer office typically covers the patent filing cost, which typically is between $10,000-$20,000.

Since the technology is likely patented through the university, the inventors require permission from the university to use and produce products with the patent (even though their names are on the patent). This is where university-run incubators join the party. Incubators provide mentorship and resources needed for market analysis and further commercialization. 

After receiving positive feedback from the market analysis, startups need to secure funding. This can be done in a number of ways, such as federal funding in the form of grants, having a large company license the technology, angel investors, and venture capital.

Once the startup has secured funding, the technology can continue to develop and move toward commercialization. The startup needs to continue to grow and ensure future investments by keeping up to date with how the market changes over time. A strong team with the necessary resources can build a successful business (i.e., go public or be bought by a larger company).

Money, money, moooney – money!

Once a startup has transitioned into a more established company, it can still depend on its university for resources. At the same time, the university can leverage the company for recognition and attracting potential grants. Maintaining the connection between industry and universities can provide multiple benefits for both entities.

Incentives for universities

A 2021 corporate recruiters’ survey found there is a growing demand for graduate students with a variety of skills. The growing demand isn’t just for scientists and engineers, but for master of business administration (MBA) students as well. 

Entrepreneurship is in growing demand. Skills like learning, motivation, leadership, and communication are highly sought after, with at least 81% of corporate respondents stating they specifically look for these skills. Having an understanding of business can also accelerate a students’ career — more than half of company recruiters look for graduate students with an understanding of business for their upper-level positions. Desirable candidates have a diverse set of skills that can be learned through not only science and engineering (research and development) but also business and entrepreneurship (communication, leadership, and business knowledge).

Incentives for industry

Companies often utilize universities’ resources, not only for things like research facilities, but also students. For example, companies often sponsor science and engineering students’ senior design projects. In 2021, BetaBlue, a developmental stage biopharmaceutical company, sponsored the winning senior design expo at Florida International University. The team created a wearable device to stimulate the vagus nerve to help treat patients with schizophrenia. During the project, the company collaborated with students to complete a prototype that they can access for future development. 

Collaborations like these not only provide potential recruitment opportunities, they also allow companies to utilize ideas from these projects to potentially create a market-ready product.

Business vs. Academia

Merging industry and academia becomes difficult when it comes to intelligential property (IP) rights. Typically, companies want an exclusive license to the IP because they do not want the license to be sold to a competitor. Universities want a nonexclusive license to hold onto the IP for further research purposes or to sell the license to other businesses for continued revenue. 

In some instances, especially when looking at startups, investors will want to know how much of the IP is owned by the university and can be deterred if all of the IP is owned by the university. However, if the company and university can come to an agreement on how to handle the IP issue, the company will still have access to resources at the university, while the university can still use the ideas for continued research purposes and recognition – meeting both party’s needs.

Promoting creativity and entrepreneurship in engineering

With the benefits of promoting entrepreneurship in academia, there are many universities that have taken advantage of the local resources around them to create startups and graduate students that have a drive to innovate and solve real world problems. While some universities have more resources available than others, there are some ways to promote innovation and entrepreneurship that do not require all of the resources afforded to the big cluster areas.

Startups in academia

When a university looks to maximize investments in university-licensing startups it is important to have a culture and system that encourages innovation and acquisition of the company. An acquisition will result in the most revenue for the university and the stakeholders of the startup. It is also important for universities to have a clear understanding of where their market stands and how they fit in with the big players like Boston, San Diego, and San Francisco Bay area. Instead, universities outside this area should focus on outstanding, specialized departments. 

For example, Orange County, California has one of the largest growing startups in eye care. Orange County is just south of Biotech Bay but has been able to foster a large number of startups focused on eye care. In 2013, the University of California at Irvine opened the new $39 million Gavin Herbert Eye Institute — Herbert being the founder and chairman of optical giant Allergan — further growing the research and startups coming from Orange County. Orange County found a niche in eye care and does not try to out-compete the Bay Area in other scientific fields.

The University of St. Louis has also begun to cultivate an environment for students and professors to pursue innovation and entrepreneurship. With funding from the state, they were able to build a niche bioscience environment with state-of-the-art resources. The influx of resources allows the technology transfer office to take a proactive approach when starting a business or patenting information with students. CaeliVascular has been able to take advantage of these new resources by becoming a niche startup in catheters to treat deep vein thrombosis and pulmonary embolism.

Implementing entrepreneurship in academia

How can universities better promote entrepreneurship? One thing that could be changed is to offer engineering students, undergraduate and Ph.D. students an entrepreneurship elective or concentration, or connecting them with a startup through the school. Universities could also implement better connections between their technology transfer offices and students. Seminars and lectures would open the door for more students to seek advice from the university if they know those resources are available. More required hands-on projects for engineering students would also be beneficial. Some of the most successful engineering schools that produce biotechnology startups are the ones that have hands-on learning from the start and hold design competitions or entrepreneurial competitions throughout their program. Lastly, improved connections with local startup incubators could help fund the untapped potential in academia. 

So what?

As more schools produce new patents and startups, the academic entrepreneurial scene is changing and growing each year. More universities are adapting to this environment, providing students with invaluable problem-solving skills that can help them succeed in any career path. Only time will tell what kind of innovations will come out of this growing entrepreneurial scene.