OTC assists in path to startups

The program creates a partnership with the University, allowing the researcher to launch a startup and contract U labs for their companies.

by Jeff Hargarten

University of Minnesota researchers no longer have to launch startup companies entirely on their own steam.

A new Office for Technology Commercialization program will partner the University with faculty seeking to create a company based on the research they do for the school.

Before, the researchers had to be more careful about possible conflicts of interest induced by using school facilities and time for an independent venture funded by certain federal business grants.

But OTCâÄôs new program looks to eliminate those problems by teaming the researchers and their startup companies with the University.

âÄúIts intent is to remove some roadblocks that stand in the way of the creation of startups,âÄù said John Merritt, OTCâÄôs spokesman.

University faculty members are eligible for federal Small Business Innovation Research and Small Business Technology Transfer grants to fund research they want to commercialize. More than $12 million in SBIR and STTR grants have been awarded to companies using University research since 2007, according to the United States Small Business Administration data.

But grant recipients are required to spend 51 percent of their time working for the startup, which has to be formed by the time the money is awarded, said Betsy Lulfs, executive director of the Minnesota Science and Technology Authority. Thus, getting the grant led to possible conflicts with facultyâÄôs responsibilities to the University.

Under the new guidelines, the OTC will help the faculty member create the company, said Russ Straate, associate director of OTCâÄôs Venture Center. The faculty member will own 51 percent of the companyâÄôs shares, and the remainder will belong to the University, Straate said.

At that point, the company only exists on paper, and there wonâÄôt be any financial value to the shares until the company develops a product it can license. After that, the companyâÄôs shareholders, including the University, can make a profit.

âÄúWe try to create a win-win situation between the University and the company,âÄù Straate said.

A research agreement between the University and the company will allow the schoolâÄôs labs to be used for company projects, though the faculty member wonâÄôt receive compensation directly from the startup while using it for grant-funded research.

The new program is part of President Eric KalerâÄòs efforts to make the University âÄúmore entrepreneurial.âÄù

âÄúWe now, I think, have in place a reliable and rigorous process that will also allow people to be entrepreneurial while protecting the institution,âÄù Kaler said.

The new program is a âÄúcookbook approachâÄù to making it easier for faculty to commercialize their research, Straate said.

SBIR and STTR grants are highly competitive and fund anything the government deems a valuable investment, from medical research to software development, Lulfs said.

Nearly $2 billion is available annually through the programs, which are provided by 11 different federal agencies, she said, and any researcher wanting to create a startup can apply for these grants.

âÄúItâÄôs an absolutely wonderful way for a researcher to start a company,âÄù she said.