In the March 5, 2007 Issue:

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Maine Considers Value, Impact of Public R&D Investments
Over the last 10 years, the State of Maine has invested more than $296 million into R&D – an impressive figure for a state with an average population over the decade of just over 1.3 million people. In approving a mid-decade injection of funds, the state’s legislature skeptically or wisely asked the executive branch to periodically conduct independent assessments of whether or not the investment is worthwhile.

Few states do that – for R&D investments or anything else, for that matter. As a result, the Maine Comprehensive Research and Development Evaluation 2006 may serve as a model for other states to build their own assessments.

In Maine’s case, the analysis is framed to address five questions, answering each in the affirmative but substantiated with dozens of statistics, comparisons with other states, and closing with a handful of recommendations.

Maine’s $296 million of investments were distributed among the state’s academic, nonprofit research, and private industrial research communities in proportions not met by many states. While academia received half of the pool, private nonprofit research institutions received 27.7 percent and the private sector received the 22.5 percent balance.

Part of the Maine report’s value for the larger TBED community is the way success is measured – with controls or comparisons allowing readers to see progress in fundamental or structural ways. For instance, while many states’ programs will report job figures for grantees or their client companies, the evaluation asserts:

“The private sector recipients of the state’s investments are reporting higher job growth (6.8 percent) than the average Maine economy (0.5 percent) and much higher average wages ($38,825), strongly suggesting that they are contributing to this improvement in Maine’s overall economic situation.”

The report also points to areas of concern to guide future TBED policy decisions for Maine:

“There is, however, a serious mismatch between the investment in R&D and the resulting performance. The state has invested roughly 49.87 percent of new R&D in the universities in the past 10 years, bringing the universities up over 160 percent – to 20 percent of the total R&D performed in the state. Conversely, while the state has invested 22.5 percent in industry R&D through private sector-focused programs, industry now performs 53.8 percent of the state’s R&D, down 30 percent. Maine’s nonprofit sector has grown 211 percent from 1995–2003, while nonprofit research in the United States has gone up only 89 percent. The net effect of the state’s investment has been to increase the academic and nonprofit share, while decreasing industry’s share substantially.”

The report’s recommendations are equally specific but broadly valuable and, without the advantage of similar analyses, seem equally or even more applicable for others. The recommendations include:

Maine's Comprehensive Research and Development Evaluation 2006 is available at: http://www.maineinnovation.com/studies_reports/default.asp

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Useful Stats
2005 AUTM Survey Results by State
The Association of University Technology Managers (AUTM) recently released the results of its fiscal year 2005 licensing survey. The survey, conducted annually by the nonprofit AUTM, provides quantitative information about licensing activities at U.S. and Canada universities, hospitals and research institutions. This year's format is slightly different, however. The 15th annual survey presents data accompanied by success stories and allows respondents to remain anonymous. Appendices also list institutions by the year their technology transfer activities began. The goal, AUTM states in its overview, is to see the number of survey respondents grow and encourage thoughtful discussion.

Among highlights in the 2005 U.S. Licensing Survey Summary, U.S. academic centers responding to the survey had more than $42 billion in R&D expenditures during FY 2005. The summary also notes:

The 2005 Canadian Licensing Survey Summary reveals the 36 responding Canadian institutions received more than $52 million (CAN) in licensing income. These institutions also had more than $42 million (CAN) in total R&D expenditures, filed 685 new patent applications, and received 1,433 invention disclosures.

SSTI has prepared a summary table of selected U.S. data from the 2005 survey. The table reflects state totals for the 181 responding institutions for which data was available, as provided by AUTM, including one university that asked to have its name withheld (identified as "anonymous" in the table). Categories include licensing FTE, research expenditures, number of licenses or options executed, cumulative active licenses, startups N.A., U.S. patents issued, new patent applications, and licensing income. The table is available at: http://www.ssti.org/Digest/Tables/030507t.htm

The 2005 U.S. Licensing Survey Summary is available as a PDF at http://autm.net/pdfs/US_LS_05Final.pdf.

The 2005 Canadian Licensing Survey Summary may be downloaded as a PDF at http://autm.net/pdfs/05_CanadaFINAL.pdf.

Full reports for 2005 and earlier editions of the survey, as well as printed copies of the summaries, also are available by visiting AUTM at www.autm.net.

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Fed Considers Connection between Universities, Economic Growth
It won’t come to any surprise to Digest readers that there’s a connection between universities and economic prosperity. In addition to educating students and advancing science and technological innovation, the localized economic impact of institutions, alone, provides a buffer to economic swings for many mid-sized and smaller cities and college towns. How best to incorporate universities into regional tech-based economic development strategies without compromising core missions is an art not every community has mastered. The issue has captured the attention of the Federal Reserve. The Federal Reserve Bank of Kansas City has long championed rural economic growth through entrepreneurship and innovation, witnessed most readily through the Main Street Economist.

In October and November of 2006, the Federal Banks of Chicago and Cleveland each hosted two-day conversations about the rich, diverse roles universities play in regional development, and how these institutions can nurture industry clusters.

The conferences featured several models of development that take into account the full range of university contributions. In Chicago, Richard Lester of the Massachusetts Institute of Technology and the MIT Industrial Performance Center Local Innovation Systems Project, outlined four dimensions to local development: creating new industries, industry transplanting, diversifying old industries into related new industries, and upgrading mature industries. Universities can play a vital role in each of these dimensions, Lester explained, and they do so through four different types of activities. Institutions create new knowledge and technologies that are commercialized or otherwise passed into the public sphere, they educate and provide a skilled workforce, they provide a public space for interaction and networking, and universities can lend their assistance to solve particular problems faced by the business community. Lester’s view ingrains the university in the dynamics of regional development far more than the traditional model of degree-granting and technology transfer.

In Cleveland, Donald Smith, vice president of the Mellon Pitt Carnegie Corporation, reinforced the idea that universities must embrace a broader view of their role in regional development. Although important, university tech transfer on its own cannot drive economic growth. Local talent is the key element in growing and attracting industries, and universities are the most important means for creating a talented workforce and entrepreneurial community. In order to maximize their benefit to the community, institutions should pursue a balanced approach to economic outreach, one that includes technology transfer, strong academic programs and executive training, attraction of companies, tech parks and incubators, and targeted cluster initiatives.

Several presenters were on hand in both Chicago and Cleveland to provide examples of university involvement in regional growth. Sean Safford, associate professor at the University of Chicago Graduate School of Business, spoke in Chicago about a study conducted through the MIT Local Innovation Systems Project which analyzed the role of institutions of higher education in transforming mature and declining industries in Akron, Ohio, and in Rochester, N.Y. The study concluded that universities are most effective in such regions when they focus their efforts on providing forums and space for industry interaction than when they attempt to focus university research on specific types of technology.

Michael Luger, director of the Center for Competitive Economies at the University of North Carolina-Chapel Hill, described his center’s effort to develop a series of metrics to evaluate university success in exerting a positive role on business and policy decision-making. These metrics include the ability to attract federal and state funding, to produce publications and conference speeches, and the ability to attract increased attention to the region to improve its reputation as a center for industry.

Richard Mattoon, senior economist and economic advisor at the Federal Bank of Chicago, summarized the Chicago proceedings by observing that, although no set of best practices exists to shape university policy, there is now a broad consensus that institutions should pursue a balanced approach that goes beyond a focus on technology commercialization. Universities must understand the whole range of roles they fulfill in their communities and tailor their economic development policies to the needs of the region.

Read Richard Mattoon’s summary of the Chicago conference at: http://www.chicagofed.org/publications/fedletter/cflaugust2006_229.pdf

Many of the presentations and papers from the Federal Bank of Cleveland Conference are available at: http://www.clevelandfed.org/Research/EdConf2006/index.cfm

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Can Smaller Cities Compete with the Country’s Most Successful VC Markets?
According to the latest stats on venture capital investments, half of all U.S. VC investment during the last quarter of 2006 supported companies in two small areas of the country: Silicon Valley and New England (primarily the Boston metro area). With the exception of only a handful of other large metro areas and, since the origin of the modern venture capital industry some 25 years ago, most other cities have struggled to attract the attention of venture capitalists. This struggle can be especially difficult for the nation’s secondary cities – cities that do not rank among the 40 largest metropolitan statistical areas. According to the Initiative for a Competitive Inner City (ICIC), these cities receive only 13 percent of all venture capital deals and only 20 percent of total investment dollars. Though these cities account for approximately half of the U.S. population and U.S. business establishments, they have not experienced a proportional benefit from the venture capital revolution.

A recent study published by the Federal Bank of Boston argues that secondary cities can adopt certain strategies to successfully lure venture investment to their region. Authors Carole Carlson and Prabal Chakrabarti examine the venture market in the secondary cities of New England to identify factors that have led to success outside of the Boston-Route 128 area. New England represents a particularly important region for study, since six of the top 10 secondary venture markets are located in Massachusetts, Connecticut and Rhode Island. The authors interviewed executives from 17 regional and national firms comprising more than one-half of the top 10 investors in secondary markets and 53 companies in these markets that recently had secured venture funding.

Carlson and Chakrabarti conclude that there are six factors that contribute to a thriving secondary venture market. Smaller cities with significant venture capital investment often possess clusters that focus on particular industries. These clusters grow because of formal and informal linkages between individuals and business, which can attract the attention of venture firms. These communities often have local angel investors that provide vital early investment for new companies, and, over time, can offer a proven local track record for investment. Successful secondary cities also tend to have direct access to larger venture markets, either through highways or direct flights.

Possible strategies for secondary cities include:

The 10 highest-performing secondary cities in the U.S. (ranked by number of private equity deals per city) are (1) Boulder, Colo., (2) Salt Lake City, (3) Westborough, Mass., (4) Ann Arbor, Mich., (5) Norwalk, Conn., (6) Providence, R.I., (7) Southborough, Mass., (8) Stamford, Conn., (9) Melbourne, Fla., and (10) New Haven, Conn.

Source: Initiative for a Competitive Inner City.

Read “Venture Capital in New England Secondary Cities” at: http://www.bos.frb.org/commdev/necd/2007/issue1/venturecap.pdf

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Recommended Rules of Engagement for University Tech Transfer
It is the opening day of AUTM’s 2007 annual conference in San Francisco, the largest gathering ever of individuals from around the world interested in university technology transfer. Academe’s role in helping to commercialize technology has been under attack during the past few years by multinationals complaining institutions are too difficult to work with, by those who think Bayh-Dole needs to be tweaked and by others within academia who believe the university’s fundamental mission and culture is compromised by increased partnerships with industry.

It is then quite timely that a small roundtable of some of America’s most successful universities at turning their faculty and student research into revenue streams for the institutions released a brief white paper outlining nine guiding principles or ideals for all university technology transfer offices to consider while pursing their common goal of helping the private sector to commercialize academic research results.

In the Public Interest: Nine Points to Consider in Licensing University Technology is penned collectively by technology transfer administrators at the California Institute of Technology; Cornell University; Harvard University; Massachusetts Institute of Technology; Stanford University; the University of California; the University of Illinois, Chicago; the University of Illinois, Urbana-Champaign; the University of Washington; the Wisconsin Alumni Research Foundation; Yale University; and the Association of American Medical Colleges.

Press accounts have referred to the points reverentially, in superlative terms. Commandments, at least one paper called them. Whether or not they deserve such lofty monikers, the nine principles (see below) are merely suggested as guides or shared values, not cardinal rules, the authors note. Each licensing opportunity “is subject to unique influences that render ‘cookie-cutter’ solutions insufficient,” the paper begins.

Nonetheless, the nine points warrant consideration by the larger TBED community, not just university tech transfer agents, if, for nothing else, to encourage discussion. They are:

  1. Universities should reserve the right to practice licensed inventions and to allow other nonprofit and governmental organizations to do so.
  2. Exclusive licenses should be structured in a manner that encourages technology development and use.
  3. Strive to minimize the licensing of “future improvements."
  4. Universities should anticipate and help to manage technology transfer related conflicts of interest.
  5. Ensure broad access to research tools.
  6. Enforcement action should be carefully considered.
  7. Be mindful of export regulations.
  8. Be mindful of the implications of working with patent aggregators. And,
  9. Consider including provisions that address unmet needs, such as those of neglected patient populations or geographic areas, giving particular attention to improved therapeutics, diagnostics and agricultural technologies for the developing world.

The 17-page white paper, In the Public Interest: Nine Points to Consider in Licensing University Technology, is available as a PDF at: http://news-service.stanford.edu/news/2007/march7/gifs/whitepaper.pdf

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Prizes Making Comeback to Spur Innovation
A gala held last weekend at Google headquarters in California officially kicked off a $50 million fundraising campaign for the X Prize Foundation, which provides funds for the development of new prizes. The prizes are designed to support breakthroughs for specific challenges in medicine, energy production and consumption, education, and transportation.

Big-money, high-profile awards have been used to encourage innovation for centuries, but a new array of these prizes is rapidly advancing entrepreneurship opportunities and philanthropic causes.

Some of the awards announced in the past six months include:

Some contend this recent spurt in awards is the result of the successful Anasari X Prize, which awarded $10 million in 2004 to the team that could build a vehicle and fly it to space twice in a two-week period. The winning entry cost aircraftmaker Burt Rutan $26 million to design and build. Rutan has since formed a firm named the Spaceship Company to manufacture additional vehicles. The 26 teams that entered the original competition are estimated to have spent a combined $100 million on R&D to win the $10 million prize.

The recent spate of announcements indicates that high-profile prizes through open competition may become a more common vehicle for advancing scientific progress. The website for the X Prize Foundation is www.xprize.org.

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Feeling out of the loop? Here's how to get in the loop...
Membership in SSTI allows access to the most extensive network of current and past practitioners, academics and policymakers who are attempting to speed commercialization and encourage innovation.

Joining SSTI places your organization with today’s TBED leaders. SSTI connects you to active members in 46 states, Puerto Rico and Canada, enabling you to share experiences and best practices with your peers from across the continent.

Additionally, members receive a discount to SSTI's annual conference – a great opportunity to discover the latest thinking from leaders in the TBED field. One of this week's Digest articles, "Fed Considers Connection to Universities, Economic Growth," draws on the comments of Sean Safford, a speaker at the 2006 conference, and Don Smith, an active SSTI member and previous conference speaker. The premier professional development event of the year, SSTI’s annual conference provides the opportunity to meet more than 300 of the nation’s greatest thinkers and practitioners for building tech-based economies.

SSTI's 2007 conference will be held on October 18-19, 2007, in Baltimore. Keep checking www.ssti.org/conference07.htm for more information.

For a list of current members, please see our membership directory.

People

Thomas Drury has been named CEO of the South Jersey Technology Park at Rowan University.

Chris Engle, former vice president of Angelou Economics, has joined New Economy Strategies as chief project officer and principal.

BioStrategy Partners (BioSP) selected Dr. Karen Hanson as its new executive director, replacing Carolyn D'Arville, who stepped down to devote more time to young BioSP companies.

Dean Lewis was named interim president and CEO of the Science Center. Lewis replaces Pradip Banerjee, who left in January.

Aris Melissaratos is the new special adviser to the president for enterprise development at the Johns Hopkins University. The position was created for Melissaratos following his departure as secretary of the Maryland Department of Business and Economic Development.

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