The Promise of Academic Tech Transfer in Economic Development,
Part II

April 2007

By Danny Klingler, Junior Project Manager

AngelouEconomics

In today’s increasingly competitive global economy, innovation is emerging as a critical component to the long-term economic growth of nations and regions alike. As competition for scarce investment increases, transcending boundaries to an unprecedented extent, the difficulty of recruiting companies and promoting job creation increases proportionally. Traditional cost-based approaches are leading to a “race to the bottom” for many communities – a cost cutting, incentives maximizing contest with fewer winners and many losers. Innovation offers an alternative to traditional economic development – one rooted not in direct competition for relocating companies but in the cultivation of job growth from within the community. It is therefore becoming the only truly sustainable means to economic prosperity in today’s global environment.

Technology transfer offers one important avenue for innovation based economic development. The process of channeling university discoveries and research into commercially viable products and successful companies, tech transfer has grown tremendously over the past two and a half decades, and is undertaken by virtually every major university today (see “The Promise of Academic Tech Transfer in Economic Development, Part I”). The tremendous potential of tech transfer as a local and regional economic development tool is based on three factors: First, and most importantly, each portfolio of technologies owned at a local university is automatically tied to the local community; whereas the odds of winning the site selection process and recruiting a given company from outside the community are low at best, with technology transfer the local community is the favorite from the outset and the most likely candidate for any spin-off companies. University portfolios are thus location specific assets that, in a sense, are the community’s property to leverage or lose. Second, tech transfer portfolios are renewable assets; unlike available land or labor which are finite, university offices of technology transfer continue to churn out discoveries and patents year after year – typically in increasing numbers. This replenishing effect leaves economic developers with a constant stream of new technologies, each of which represents a potential new business. Thirdly, university technologies are costless assets from the standpoint of the economic developer, in the sense that they are funded primarily at the federal and state levels, and do not have to be maintained through membership dues or local E.D. budgets.

For these three primary reasons, technology transfer is a vital resource for communities and one that must be given careful attention by the economic developer. But how is the E.D. practitioner to get involved in supporting tech transfer? What specifically can be done to nurture this resource and facilitate the conversion of technologies into new jobs and increased prosperity for the community?

This question is not easily answered, for the realm of innovation is not the typical realm of the economic developer. Traditional recruitment and expansion based approaches to economic development are strongly ingrained in the field, and the metrics, tools, and funding mechanisms in place to support E.D. remain geared toward those approaches. Nevertheless, there remains a need in the world of technology transfer for the assistance and support of those with economic development expertise. University offices of technology transfer or commercialization (“OTTs” or “OTCs”) are charged with getting intellectual property protected and licensed, regardless where it goes; though there is often a preference for licensing technologies regionally or within the state, particularly for public land grant institutions with economic development as part of their institutional mission, the OTT mandate is simply to get technologies licensed so that they can generate revenue. It falls to the economic developer to ensure, wherever possible, that local technologies stay local rather than creating economic opportunity for a community 500 miles away.

In addition, staff at OTTs deal primarily with issues surrounding intellectual property protection, patenting processes, and complex licensing agreements; they inhabit the realm of science and law more than economic development. This gap can be filled by the E.D. practitioner, who better understands site selection, clustering, local assets, and the needs of major employers. Recent restructuring activities at universities indicate a desire to fill this gap – to provide a linkage between technology transfer and local economic growth – as more institutions are using economic development titles for key staff (for example the University of North Carolina), or creating economic development arms that work together with OTTs (for example the Georgia Advanced Technology Development Center at Georgia Tech).

But the question remains – what can EDOs and ED professionals do practically to leverage tech transfer as an asset? The following strategies are a start:

• Stay current with available university technologies. The economic developer should maintain awareness and basic understanding of the technologies available for commercialization within the community. This can be accomplished by establishing regular meetings or communications with OTT staff to discuss the current portfolio.

• Promote technologies and OTT output on website. EDOs should include available technologies and statistics on licensing, patents, and research activities in organizational web materials. Technologies can be marketed in this way to potential investors, while tech transfer statistics can serve as a valuable promotional tool.

• Align university research with target industries. In order to maximize chances for commercializing technologies locally, university research and patents should be aligned with existing and targeted industry clusters. Economic developers should work with their institutions to bolster departments and research budgets related to target industries.

• Leverage local business school students to assess the market for technologies. Work with local institutions to establish a program leveraging MBA students to conduct market analyses on the commercial viability of available technologies. This provides a cost efficient means to assess market potential, and has been implemented by groups such as the Massachusetts Technology Transfer Center (MATT).

• Lobby for an organization dedicated to state and regional commercialization. Where no such organization exists, lobby state government for policies that would fund the formation of an organization focused on converting tech transfer into economic development. Entities such as CONNECT in San Diego and MATT in Massachusetts work specifically to facilitate the transfer of intellectual property into companies and jobs.

• Connect startups to available office/lab space. Economic developers have the best sense of what facilities are available in the community that would suit the needs of startup tech companies. They should therefore help establish this connection by working with OTT staff, establishing a database of available facilities, etc.

• Advocate for the creation of a “first-in” fund. Work with both the public and private sectors to establish a first-money-in fund to help entrepreneurs with pre-angel investments that bring technologies to a higher level of commercial viability. The Georgia Research Alliance, for example, provides first-in grants and loans to startups to help fund preliminary studies where capital would be otherwise unavailable.

• Sponsor co-branded networking events with OTTs. Co-sponsor informal social events with offices of technology transfer to link available technologies with potential investors and entrepreneurs. Such events provide an opportunity for critical linkages to form between OTT activities and those with the means to convert them into economic prosperity.

• Lobby for greater university economic development responsibilities. Economic development practitioners should lobby state officials to establish a connection between university funding, and university contributions to economic development. This would lead to a greater emphasis at OTTs on local economic development, and less focus on institutional revenues.

• Work to have technologies evaluated by industry experts. Assessing technologies in university portfolios for commercial potential is a crucial step in bringing them to market. EDOs should work with OTTs to establish a mechanism whereby technologies are regularly evaluated in consultation with industry experts.

• Create incentives for local tech transfer licensing. Work with institutions and their OTTs to provide built-in incentives in licensing agreements for local commercialization. Where possible, licenses should be structured to provide favorable royalty arrangements to companies located in the community.