Recent Research:Start-ups Pose Hurdles to University Tech Transfer

Since passage of the Bayh-Dole Act of 1980, universities across the country have established transfer technology offices to assist in commercializing academic inventions. Efforts to transfer university inventions to the market continue to be a difficult proposition, with less than a third of disclosed inventions resulting in license. Start-ups garner only one in eight licenses.

In University Invention, Entrepreneurship, and Start-Ups, authors Celestine Chukumba and Richard Jensen develop and test a multi-stage game to examine the factors leading to university start-up formation. The economists posit that start-ups occur when development costs remain low due to venture capital contribution, inventor involvement and fewer opportunity costs than in an established firm. The model considers start-ups likely when the technology transfer office determines a high cost of finding a licensee. In these cases, the office shelves the disclosed inventions leaving inventors to pursue start-ups on their own.

Using existing data and multivariate regression, the authors find:

• Older technology transfer offices successfully sign more licenses in general.
• Higher quality engineering faculty led to more licensing in general and start-ups, particularly.
• Start-ups are more likely from universities in states with larger levels of venture capital.
• Start-ups increase when the stock market value experiences an upswing.
• The size of tech transfer offices has no effect on start-ups, although larger offices sign more licenses overall.
• Universities with higher licensing royalties have fewer start-ups but more licenses. University start-ups decline with higher interest rates and higher rates of return for venture capital.
• High levels of industrial research funding and the presence of a medical school at a university have no impact on start-ups.

In the working paper circulated by the National Bureau of Economics Research, Chukumba and Jensen conclude that university innovations may be too nascent to attract venture capital, build new start-up companies, and lead to commercially viable products.

University Invention, Entrepreneurship, and Start-Ups is available at http://www.nber.org/papers/w11475. This paper and more than 1,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at http://www.tbedresourcecenter.org/.