Technology Transfer
Program moves faculty research intocommercial realm.
By Rick Robinson
Once academia regarded it with misgivings. Now, because of it, researchers and universities are receiving substantial financial support, and new jobs and businesses are being created.
"It" is technology transfer — bringing university research to the commercial realm. Each year U.S. colleges and universities emphasize it more.
photo by Stanley Leary
Dr. David Ku, a professor of mechanical engineering at Tech, sees a significant role for
his carbon-based biomaterial invention in orthopedic and other medical restoration
work. His company is Restore Therapeutics.
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A major player in Georgia's technology-transfer effort is the Advanced Technology Development Center (ATDC). Each year, under the Faculty Research Commercialization Program, ATDC gives grants that help faculty from Georgia's six top research schools — Clark-Atlanta University, Emory University, Georgia State University, Georgia Institute of Technology, Medical College of Georgia and University of Georgia — move their research into the marketplace.
The one-year grants of the Faculty Research Commercialization Program (FRCP) are relatively modest, ranging from $30,000 to $100,000. But such targeted funding can have a dramatic effect on a researcher's prospects of producing a marketable invention.
Dr. William Ribarsky, a senior research scientist with Georgia Tech's College of Computing, says his 1998 FRCP grant let him convert existing terrain-visualization software to PCs — in time to take advantage of rapid growth in the 3-D video capability of PCs.
"When you get money like this at opportune times, you really can develop some capabilities that you couldn't otherwise," Ribarsky says.
Licensing Versus Startups
Over the past seven years, some 45 FRCP-funded projects have resulted
in brisk business between Georgia universities and private enterprise —
a welcome change from earlier times, says Wayne Hodges, director of
ATDC.
Hodges recalls that until FRCP started in 1992, there was little interaction between faculty members and ATDC. What was needed, he says, was "a mechanism to encourage faculty members to look at commercialization opportunities. . . . And once they had something, the FRCP provided money to use for proof of concept."
Technology transfer generally takes one of two roads: technology licensing or start- up companies. From the university standpoint, each approach has its strong points. Technology licensing usually involves an agreement with an existing corporation; for both university and researcher, such a deal is easier, and some return is assured. With a start-up company, there is more risk, but high potential rewards.
In the FRCP's early days, the issue of technology licensing versus creating start-up companies was not critical, Hodges says. "We weren't as concerned about whether it was licensed or whether a new company was started — we were interested in encouraging the concept of commercialization."
But that is changing.
A Trend Toward Startups
To date, the majority of FRCP-funded, tech-transfer successes have
involved technology licensing. Such licensing agreements are, of course,
very welcome to schools in Georgia and elsewhere. In fact, U.S. colleges
and universities received $365 million in licensing revenue in 1996,
according to the Association of University Technology Managers.
But seven FRCP projects have thus far resulted in actual start-up companies, with two more projects showing immediate promise. Officials in Georgia academia and government like those numbers and are eager to see them climb.
A major motivating factor is the potential economic impact of startups. In the past, Hodges explains, universities tended simply to license technology and then measure their success by revenue dollars received. Increasingly, many schools — and the states that help fund them — are looking at success more in economic development terms.
"The states have discovered that they've got this huge economic driver in the form of universities, and they want to take advantage of that," Hodges says. At the same time, many university research budgets are expanding as corporations downsize their applied research staffs and outsource such work to the schools, he adds.
For universities, the start-up company route is admittedly riskier and more difficult to make successful, but the potential rewards are much greater, says Dr. Charles Liotta, Georgia Tech's Vice Provost for Research and Dean of Graduate Studies. "When you license something, you get a certain number of dollars as reward. But when Georgia Tech takes equity in a start-up company, and then that company becomes large and profitable down the road, Georgia Tech will profit from it, and so will the economy."
Liotta believes a state university has a responsibility to foster the state economy. "Universities in general, and Georgia Tech in particular, have come to feel very strongly that they are part of the local community — that they have taken from the local community and they want to give back," he says.
Business Plan Required
Last year, for the first time, the FRCP program encouraged its grant
recipients to be entrepreneurial, and several were offered a degree of
business advice or assistance.
This virtual scene from Vietnam is part of a software package that can
help treat war veterans suffering trauma from the conflict. The software was
designed by Dr. Larry Hodges, a professor in the College of Computing at Georgia
Tech, and Dr. Barbara Rothbaum, a professor of psychiatry at the Emory University
School of Medicine. They started a company called Virtually Better.
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"We want to serve as a 'venture catalyst,' " says Hodges. "In addition to licensing opportunities, we now look much more seriously at potential company startups. This approach will further support ATDC's mission of formation and growth of advanced technology startups."
For 1999, the FRCP program has teamed each grant recipient with a business advisor — possibly an industry partner, but in most cases a group from a university business school. The partner will develop a business plan and do market research for the fledgling company. "Now, we are more fully leveraging not only the technical expertise in the University System, but also the talent inherent in the business schools," Hodges says.
Barry Rosenberg, director of technology licensing for Georgia Tech, cautions that universities have to think carefully about where and how they place their support.
"It needs to be recognized that not every technology is suitable for a startup," he says. "It has to be an appropriate technology." Wayne Hodges agrees, explaining that a thorough assessment process, examining a technology's market potential and risks versus returns, is a critical element in the decision to nurture a startup.
Georgia universities continue to offer extensive funding sources to aid technology licensing efforts, such as the Georgia Tech Research Corp. and the technology licensing offices of the other five Georgia Research Alliance universities, Hodges says.
A New Way of Thinking
Part of the task of increasing research commercialization lies in
addressing how academic culture regards it. While academia has accepted
the concept of universities getting income from technology transfer, the
idea of researchers holding equity in their own companies is among the
unresolved issues involving entrepreneurial research grants. Groups at
Georgia Tech are now re-examining the school's conflict- of-interest
policy, which currently bars researchers who own equity in a company
from doing research for that company as an employee of the university.
One concern is that research could be skewed by those who stand to make money from it. For entrepreneurial research to work, many believe that universities must put mechanisms in place to make sure that research is held sacred on every level, Hodges says.
Unquestionably, pressure will continue to mount for states and universities to encourage research commercialization. Among the recipients of the $365 million that universities received from patent licensing in 1996, there were some big winners, according to the Association of University Technology Managers. Some 40 percent of the money went to the three leaders: the University of California system with $63.2 million; Stanford with $43.8 million, and Columbia with $40.6 million. While such sums do not defray the billions universities spend on research, they're substantial enough that no school wants to walk away from them.
"The ivory tower concept in the U.S. has diminished rapidly since 1982," says technology-licensing director Rosenberg. He explains that many, if not most, university-developed inventions derive from federally funded research. In 1982 Congress changed the rules for such research, giving universities rights to their inventions (while the federal government retained royalty-free use of the technology).
"That freed up the relationship between government and industry," he says. "Before 1982, I understand that very little government-funded technology moved into industry."
In 1996, Georgia Tech ranked 33rd in tech-transfer income out of 131 institutions surveyed that year by the Association of University Technology Managers. Rosenberg observes that many universities ranked above Tech have medical schools and derived most of their income from life sciences technologies. Agricultural inventions also perform well for some research universities, he adds.
A Quickening Pace
The pace of Georgia startup success stories is increasing. In the
past two years, four FRCP-aided start-up companies have come out of
Georgia Tech, and at Emory the FRCP has fostered a startup and helped an
existing company expand.
One company that helped shape the FRCP's current direction is Virtually Better, formed by Dr. Larry F. Hodges, a professor in the College of Computing at Georgia Tech, and by Dr. Barbara Rothbaum, a professor of psychiatry at the Emory University School of Medicine. Recipients of a 1997 FRCP grant, Hodges and Rothbaum received business assistance from three executive MBA Emory students who committed to Virtually Better via a field study coursework requirement. (The virtual reality research that led to the company is a joint project between Tech and Emory, and both schools hold an equity position in the new firm.)
Enzymatic Deinking Technologies (EDT), in Norcross, Ga., is an FRCP-aided company founded in 1994. Based on technology developed by Dr. Karl-Erik Eriksson of the University of Georgia, EDT now employs 20 people who work in research and development, manufacturing, marketing, sales and technical service, says CEO Jim Tausche, who co-founded the company along with Eriksson and Jan Yang. The company's business is now much broader than the enzymatic deinking application that started it, Tausche says.
Dr. David N. Ku received a $49,000 FRCP grant in fiscal 1998 that helped him kick off his new company, Restore Therapeutics, which markets a patented new biomaterial. Ku, who holds a medical degree from Emory University and a doctorate in aerospace engineering from Georgia Tech, sees a significant role for his carbon-based biomaterial invention in orthopedic and other medical restoration work. As director of the vascular laboratory at Emory as well as a professor of mechanical engineering at Tech, Ku also foresees a role for his invention in heart surgery.
"The grant came at an opportune time," Ku says. "It helped us deal with staffing changes ... and helped us produce the biomaterial in a much more efficient way, with new molds and equipment. We have been able to show excellent bio- compatibility using these funds."
For Dr. John D. Muzzy, a chemical engineering professor at Tech, his 1998 $40,000 FRCP grant was important in starting a new company called Georgia Composites. The business markets a mat-like recycled material made of glass-reinforced polypropylene carpet waste. It can replace expensive "virgin" polypropylene in various fields, including automotive parts.
Simply having the grant in hand "gave us a lot more credibility," Muzzy says, when his group approached industry with his invention. "People who we met thought, 'Well, they've gone through this approval process — they must really have something.' "
Moreover, the grant money "really helped us adapt the technology as we started working with commercial equipment," he says.
Georgia Composites now has a marketing office at the ATDC building on the Georgia Tech campus, and the company has partnered with the Astechnologies Co. of Roswell, Ga., to produce the new product.
Recently, seven researchers — three from Emory, two from Georgia Tech and two from the University of Georgia — were awarded 1999 FRCP grants totaling $325,000. Each researcher has a business advisor, and hopes are high.
"If we can find additional funding, we want to increase substantially the number of projects we're funding," says Hodges, director of ATDC. "I believe there is real opportunity for growth in this program - because it will help realize the state's economic development goals."
For more information, you may contact Wayne Hodges, Advanced Technology Development Center, Georgia Institute of Technology, Atlanta, GA 30332-0390. (Telephone: 404/894-5217) (E-mail: wayne.hodges@edi.gatech.edu)
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