Research Magazine 2006
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It has become more evident that identified products are not enough to generate interest; they [investors] want to acquire a company.

Marketplace of discovery

Helping professors commercialize their research holds vast economic potential

Sung You is an engineer, not an entrepreneur. So the thought of turning his cutting-edge laboratory work into a company gave him pause.

“I always believed my research had some commercialization potential,” said Professor You, the associate chair of UT Arlington’s Department of Mechanical and Aerospace Engineering. “But I’ve been working for many years in fundamental research, publishing and teaching, and I don’t have time to do much else.”

Nevertheless, with timely assistance Dr. You founded Vapro, a startup that develops technologies for future-generation microelectronics devices. Vapro’s products can cool the hot-running chips, keeping them from overheating and then failing.

These ahead-of-the-curve innovations were the easy part for You. It was everything else about initializing Vapro that seemed overwhelming. When commercializing their research, professors often face roadblocks unrelated to their expertise—legal matters, networking with potential investors, understanding customer needs, surviving the ebb and flow of the small business world.

Encumbered by full-time academic duties, commercialization can become a back-burner priority for these professors. Moving it to the front burner is challenging—and rewarding to society. That’s why universities like UT Arlington delight in technology transfer—literally, the transfer of a technology from an idea in the lab to a product in the marketplace.

In the case of Seung You, the University’s resources proved invaluable.

“I filed a patent through the University,” he said. “I’ve taken investors to the University, and the University handled all the intellectual property. To me, that was very important. Otherwise, I wouldn’t try [to start a company] because it’s a big hassle. I’m really lucky to have the right people working with me so I don’t have to fiddle with all that other stuff.”

Technology transfer and U.

Long before new technologies hit the market, they begin as projects in the lab. Because commercializing scientific research can invigorate a local economy, create businesses or research sectors and generate personal acclaim, professors are eager to move their research into the mainstream. Plus, technology transfer can validate a career’s worth of academic research.

“Without the application,” You says, “the engineering could be meaningless.”

Richard Leach, the University’s manager of intellectual property and technology transfer, helps UT Arlington’s scientists-turned-entrepreneurs by arranging rights through licensing to their intellectual property. But while opportunities exist, success is never as easy as making a few calls.

“One of the major reasons for helping establish startup companies is that existing companies or investors say, ‘We don’t want a technology, we want a product,’ ” Leach said. “It needs to be developed beyond the lab technology. … However, it has become more evident that identified products are not enough to generate interest; they want to acquire a company. They want a startup that’s been in business for a while and has products and a demonstrated market and can be acquired.”

Getting there means a breakthrough in the lab, then testing and retesting and sufficient fortitude to turn the idea into a company, find a market, survive startup and, finally, become profitable.

Along the way, questions arise. What is the best way to manage the rights to the idea and the technology? Who negotiates a license? Where does startup funding come from and who manages it?

The answers don’t come on a template.

 “Each company is different, so how you structure the license won’t always look the same, even with the same technology,” Leach said. “The main thing you have to work on is balance.”

Balance, as in finding what’s right for UT Arlington, the faculty members and the investors. While the goal is establishing a stable and profitable company, the bottom line isn’t always just the bottom line.

“The University itself has an interest beyond just commercialization and getting royalties,” he said.

“Our mission statement says that we’re here to help increase the quantity and quality of research. The startup is a means for the inventors to get value out of their intellectual property, but we see it as a company that can bring research back to the University. As students are trained within the new technology, there may be an opportunity for them to get hired by the startup as it grows. Then we’re talking economic development. That can mean continual cooperation through research agreements and our graduates being hired by companies.”

Because transferring innovations from UT Arlington to the marketplace is a priority, Leach shuns the “what happens here, stays here” approach. In fact, he’ll renegotiate a previous agreement if it helps a researcher with a startup company arrange investment. After all, what’s good for the researcher is good for the University, both short term and long term.

“Ultimately, we’re talking about the advancement of research opportunities and promoting research growth,” Leach said. “How a university deals with intellectual property helps attract top researchers. And it’s a major consideration for a research sponsor. One of the primary issues they’re concerned about is what happens to the intellectual property.”

Incubating businesses

Most major research universities have a technology transfer plan. UT Arlington’s features a partnership with the city and the Chamber of Commerce. The chamber’s Technology Initiative is designed to stimulate the local economy by forming a technology cluster in which technologies developed at UT Arlington are a driving force.

This initiative led to formation of the Arlington Technology Incubator (ATI), which focuses primarily on technology transfer in chemistry, engineering, computer science, nanotechnology and biology. The ATI bolsters fledgling businesses, serving as a one-stop shop with a network of angel investors, banks, accountants, marketers and other support services.

The idea of a business incubator hatched in upstate New York in the late 1950s, but the archetype operation turned Northern California into Silicon Valley in the 1970s. Incubators are now a trend wherever local economies seek out high-tech startups, and Arlington opened its incubator in April 2002 (in part, to keep pace with Austin’s very successful launch a few years earlier).

A $250,000 grant from the Economic Development Administration got the ATI up and running, and former Arlington Mayor Richard Greene was named its first director. The incubator existed only virtually until 2003, when a $1.4 million building-purchase grant enabled it to move into a 22,000-square-foot facility just east of the campus.

“Basically, we provide all the support that the new small business owners will need to start their companies and grow their organizations,” said ATI Director Sergio Bento. “One of the major advantages of having an incubator is that there’s someone who can advise these companies and help them get established, whether it’s getting funding, assisting the technology or running the company.”

Not every company in the ATI comes from the UT Arlington labs, but two of the three that have graduated from the ATI so far have direct ties to the University. The first was TissueGen, a biomedical research and development operation founded by former biomedical engineering Professor Kevin Nelson. The other, Imagecom, is run by Venkat Devarajan, an electrical engineering professor.

Bento figures two more companies, one focused on improved medical training and the other on digital imaging, are close to graduating. Vapro and 13 other startups hope to follow their lead.

“Some of these technologies are very new, but I think there are several companies that have a good shot,” he said. “The idea is to keep working with UT Arlington to form new companies and identify the researchers who have a good chance to develop new technologies that can move into the marketplace. We’re working very closely together, and people can expect some great things to happen. We can have a major impact in technology in the next few years.”

Such innovations require patience, a little luck and a lot of support. Every technology-turned-company isn’t guaranteed success, even with the incubator’s backing.

“Startup companies are so fragile that any small thing can have catastrophic consequences. It’s hard for people to understand that,” said Ron Elsenbaumer, UT Arlington’s vice president for research.

“Without the incubator, none of these companies would be able to exist because they wouldn’t have the opportunity to get started. Now, some will have the opportunity to see commercial success. You need that guidance, and you need that nurturing. … It’s a tough world, and you need every support mechanism you can find.”

Moving forward

Despite the challenges Dr. You faced in launching Vapro, he is guardedly optimistic about his young company’s future. Initial investments arrived in 2005—enough to hire key engineers and staff—and more money would develop its first marketable products.

“Everything appears to show that it’s strong enough to move forward,” You said. “I still feel it has potential. There’s still a lot to do, so I’m still watching over what might happen. It’s exciting, but at the same time it gives you more work to do.”

At least he doesn’t have to do all the work alone.

— Danny Woodward