In an important piece of research recently released, two smart analysts have put numbers to what many of us active in economic development in New York State have long been saying: there exists a deep, fundamental mismatch between the stylistic preferences of regionally based venture-capital firms and the kinds of innovation emerging from the state’s university R&D community.
The study by Judy Albers and Tom Moebus – both well known and respected players in the statewide innovation ecosystem – employs data from NVCA and other sources to nail the case that while the amount of venture capital under management in New York City is rising, it is specializing heavily in digital technologies (IT, software, media) and focusing on capital-efficient “quick hits,” often at the expansion phase, with high potential for fast liquidity and outsized returns. Almost none of that potential is available upstate, and consequently almost no regionally managed capital goes there.
The authors show that while the VC industry in California and Massachusetts is more eclectic in its tastes, only a very small share of that money comes to New York to begin with, and exceptionally little makes its way upstate. That leaves ventures in what Albers and Moebus call the hard sciences (subdivided into the engineering technologies and life sciences) a long, hard slog with few early-stage investors (and almost no seed investors) either based here or deploying money anywhere in the state.
For some time, I’ve been arguing that there’s nothing in the typical university’s portfolio of commercialization activities that necessarily needs to be dependent on government grant support. In fact, universities are free to ask private donors to fund anything from the basic operations of the tech transfer office to the costs of running a proof-of-concept or commercialization center.
That universities have typically not asked for such support, but rather have waited for a motivated donor to drop it in their lap unbidden, is a function of opportunity cost. Every time a university president makes an “ask” of this kind, that’s one less donor who can be asked for a dormitory, a professorship, or a financial aid fund. To date, few presidents have been able to convince themselves that that are donors who will consider funding commercialization activities who would not otherwise be giving to more conventional entries on the “table of needs.”
Now (my thanks to Cameron Ford at the University of Central Florida’s Center for Entrepreneurship and Innovation for pointing this out to me) we have a real, live example of a university capital campaign that actually prominently features such requests: the $125 million Innovate Carolina campaign launched last month by UNC Chapel Hill. The campaign is modest in size, but daring in what it includes. After the break, you can read or download from Scribd the eight-page “case statement” for the campaign.
Recently, probably partly in response to the flap over Bayh-Dole launched by the Kauffman Foundation, the White House issued an RFI (Request for Information) on the commercialization of university-based research.
Many institutional offices around the nation have put effort into their replies, and since they will take care to promote their own efforts and programs, I decided to write my own response, treating the RFI more as an RFC (Request for Comment) so I could write a discursive treatment rather than a mere catalog of programs I find meritorious.
You can read my response to the RFI in pdf form here or in text form after the break. Please feel free to comment below, or to send me email.