Making the Most of Tech Transfer Programs

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Plenty of strategic challenges lie ahead for American colleges and universities. From slipping enrollments and diminished publish funding streams to new pressures from competitors online and abroad, higher education institutions across the country are seeking new ways to serve students, engage alumni, and attract future applicants — all while remaining financially viable. The stress of this balancing act is particularly acute for many large public universities in the Midwest who must also fulfill the research obligations of their charters, along with other mandates of their state-ownership.

One way forward for these schools is to make the most of their technology transfer programs. Already widespread throughout much of the academic sector, these initiatives seek to commercialize promising ideas and inventions developed in the course of university research. Methods vary, but common approaches involve selling or licensing patents and other research-generated IP to interested corporations, or spinning off new offerings as independent startup ventures. Other popular commercialization vehicles include joint ventures, public-private partnerships, government-owned corporations, and the use of specialized outside brokerages.

Tech transfer programs, at least in theory, position institutions to capture financial upside from research their faculty, staff, or students already plan to conduct. However, the effectiveness of these commercialization efforts is a subject of ongoing debate. Some popular analysis, like that of The Brookings Institution in 2016, has found the overall performance of university commercialization programs to be underwhelming, with some transfer offices even proving to be a financial net-negative for their sponsoring institution.

There have been some bright spot, such as Northwestern University’s ten-figure royalty payout from the drugmaker Pfizer for the anti-seizure medication Lyrica, but these types of “unicorns” are just as scarce as they are in the private sector, if not moreso. The most recent Licensing Activity Survey conducted by the Association of University Technology Managers (AUTM) found that license revenue generated from commercialization programs totaled just short of $3 billion in FY2016, a figure that is growing sharply (17.5% over FY2015) but still represents less than one-third the annual research spend of Procter & Gamble, and barely registers on the budgets of most major universities.

So how might technology transfer offices continue to improve? In their report, the Brookings analysts found that many institutions are still heavily reliant on the sale and licensure of patents as a primary avenue of commercialization, an approach that is only effective in certain technology categories. By branching out and experimenting more with other market strategies, programs may find more success through competing in a broader range of areas, including computer software, where much of the tech sector’s economic growth has been concentrated in recent years.

Here at Earlybird, we have been focused on ways that tech transfer programs can quickly become more effective through better use of the abundant social capital in their university communities. It may sound simple, but like any business, relationships play an essential role in determining whether a venture will succeed or fail, especially early on. Colleges and universities, especially those with vibrant alumni networks, are uniquely equipped to find and engage the right people for virtually any sort of transfer approach.