SSTI Digest

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.

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.

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:

Energy giant BP has announced that the University of California at Berkeley, in partnership with the University of Illinois Urbana-Champaign (UIUC) and Lawrence Berkeley National Laboratory, will receive a total of $500 million to host a research center dedicated to developing biofuel technologies. The Energy Biosciences Institute (EBI) will conduct both basic and applied biological research relevant to energy. BP and the university plan to launch research programs this summer.

 

California Gov. Arnold Schwarzenegger has announced that his proposed budget for 2007-08 will include a $95 million initiative to support new and existing facilities for high-tech research. The California Research and Innovation Initiative would provide funding to several university-based projects around the state hosting clean energy, biotechnology, and nanotechnology research and commercialization activities. Gov. Schwarzenegger explained that his initiative would build upon the state’s academic resources and large pool of scientists and engineers to ensure California’s continued leadership in high-tech innovation.

 

In late October, Gov. Arnold Schwarzenegger signed an executive order designed to stimulate the growth and utilization of broadband networks throughout the state of California. Some the major components of this initiative include:

Two states had measures on the ballot to address energy conservation and encourage alternative energy production and technology. While Washington's measure passed, California's failed.

 

Washington's Initiative 937 will result in targets for energy conservation and use of renewable energy resources for all electric utility companies that serve more than 25,000 customers in the state. Electric companies will required to provide 3 percent of total electricity to its retail customers from renewable resources by 2012, with that percentage eventually increasing to 15 percent of total electricity distribution by 2020.  Renewable resources include wind farms, solar panels and geothermal plants. This initiative passed 52 percent to 48 percent.

 

In a time of tightening budgets and funding shortfalls, many institutions are searching for innovative sources of capital to finance their investment needs. Financial Innovations for Accelerating Medical Solutions, a recent report from the Milken Institute, provides some insight on inventive ways to raise capital for the biotechnology industry. 

 

Milken convened two workshops in the fall of 2005, one in Santa Monica and one in New York City, of various stakeholders in the drug development process. These workshops included patent brokers and intellectual property lawyers, private equity investors and analysts, insurance consultants, biotechnology entrepreneurs, academics, and members of foundations. The report decries the lack of venture capital for early-stage product investments, especially between the preclinical and clinical stages of development.

 

Six main recommendations are provided to reduce credit risk, attract investors, and accelerate commercialization in a broad range of disease areas:

William Carney is the new president and CEO of the Inland Empire Economic Partnership, a private, nonprofit regional economic development organization in southern California. Carney replaces Paul Hiller, who left earlier this month to take a similar job in Boise, Idaho.