OTC News Archive

Perry wants more spinouts from TX universities

Laura Hipp, Austin Business Journal
February 15, 2008

Gov. Rick Perry has outlined a plan for Texas universities to churn out startup companies faster and with less red tape.

In the fall, Perry and state officials met with university leaders to outline several goals he wanted to reach within a year, including:

  • standard intellectual property contracts across university systems;
  • more collaboration between campuses; and,
  • having one person at each university as a contact for business people and investors.

“Our technology transfer as a state is not nearly as successful as we’d like it to be,” says Secretary of State Phil Wilson. “I think we’re just fair, and we should be great.”

The proposal serves as a blueprint for university systems to adopt, but administrators are not required to act.

Universities feel pressure to start companies but the process is difficult to rush, says Gary Pankonien, executive vice president of Emergent Technologies Inc., which invests in university technologies statewide and consults with schools to commercialize promising research.

“This stuff just doesn’t pop out,” says Pankonien, who supports Perry’s efforts.

Pushing technology and research to the marketplace has been a longtime priority for Perry, who advocated the creation of the Emerging Technology Fund, which began investing tax dollars in startups in 2005. Recently, his staff has studied creating a commercialization institute that would coordinate efforts by state universities from one place.

Texas universities chafe at comparisons to similar commercialization efforts at California campuses or the Massachusetts Institute of Technology.

In 2006, the University of California system produced 39 startups and received 270 patents, according to the Association of University Technology Managers. MIT reported 23 startups and 121 patents.

At the University of Texas there were seven startups and 36 patents granted during that same period, and at Texas A&M University there was one startup and 32 patents.

“All of our universities are creating spinouts,” says Austin entrepreneur Bill Morrow, presiding officer of the Texas Emerging Technology Committee. “It’s just in some cases we’re spinning out three or four a year where—given the research and the research dollars that are being spent—we probably should be spinning out 30 or 40 a year. It’s once again just closing that gap.”

The research dollars and size of university systems skews those numbers, UT officials say.

Between 2003 and 2006, the number of patents issued for UT research rose 53% to 43 patents, according to the Texas Higher Education Coordinating Board. In the same four fiscal years, 26 startups were created.

The Office of Commercialization Technology at The University of Texas at Austin sees itself as a matchmaker between investors, entrepreneurs and professors. Director Neil Iscoe says the venture capital needed to get technologies and research to market has not always been readily available in Texas.

As the investment climate has improved, so have commercialization efforts, he says.

“Our goal is to commercialize research for the benefit of society,” Iscoe says. “If you do all that right, the money will come too.”

Arjuna Sanga, associate vice chancellor at the UT System Office of Research and Technology Transfer, helped create the department in 2005 to coordinate all UT campuses.

Sanga says campuses are working together more frequently. His office gives awards and grants for successful commercialization efforts to spur interest.

One of the biggest success stories out of UT is Molecular Imprints Inc., a nanotechnology company.

Professors Grant Wilson and S.V. Sreenivasan created a way to make smaller features on computer chips. The technology spawned Molecular Imprints, which works with manufacturers to make chips that hold more information at a lower cost. In seven years, the company has grown to 85 employees and raised $60 million.

CEO Mark Melliar-Smith says any state efforts to put university research to use is needed—as long as commercialization is encouraged through incentives, not sanctions.

Phil Wilson says rules and contracts vary within school systems, and entrepreneurs can be shuffled between campuses before finding the best person.

Universities must make access to research easier for entrepreneurs, he adds.

From the University of Texas to Texas Tech University, legal contracts should follow six basic templates for licensing technology, Wilson says.

Contracts can vary “quite a bit” between universities, says Robert Shaddox, chairman of the intellectual property practice at Winstead PC. He has worked with companies seeking university technology at UT and other American universities.

A handful of standard contracts at all Texas systems could save money and time because “they won’t have to negotiate every deal from the beginning,” Shaddox says.

California universities have deals that evolved and grew “fairly standardized,” he says. “Texas is not as far along as they are.”

Campuses must make staffing and funding of commercialization offices a priority, Wilson says.

Business and academia move at different paces, Pankonien says.

Professors have a limited amount of time to work on commercializing a product on top of other duties, says Pankonien, who sees more professors migrating to commercialization as successes grow.

“The awareness right now is what’s magic,” he says.

[ ABJ ]