University Spinouts: Opportunities and Challenges

I'd like to start off and ask each of my three panelists to take a moment to introduce themselves and briefly introduce their institution and then we can go on with some questions. Anne-Marie, would you like to start?

Anne-Marie Maman:

Sure. Thanks for inviting me, my name is Anne-Marie Maman, I'm the executive director of the Princeton Entrepreneurship Council here at Princeton University. And we are relatively new into entrepreneurship at Princeton so I think my part of the conversation will be as a new up and coming organization. We have a big name but we're a small school.

JP:

Terrific, thank you. Carlo, do you want to introduce yourself?

Carlo Yuvienco:

Sure. Carlo Yuvienco, I'm the inaugural director of the Ford Center Incubator which is a small biotechnology incubator located on Rockefeller University's campus in New York City. Rockefeller University itself is a fairly small but mighty organization, about 2,000 staff, researchers and faculty altogether, located in the heart of New York City. And the incubator, which is a fairly new establishment on the campus, is situated within one of the research buildings here, it's an entire floor that services 10 to 15 early stage biotechnology startups that, not just come from Rockefeller, but also from other parts of the city and elsewhere.

JP:

Terrific, thank you. Tim, take a second to introduce yourself.

Tim Joyce:

Yeah. Hello, good morning, everyone. Thank you, John, for the invitation, happy to be here and share thoughts with the audience. My name is Tim Joyce, I'm the senior director of licensing and technology at the University of Notre Dame's IDEA Center. I've been working in the classic technology transfer, the IDEA Center and a new venture into how we do technology commercialization and entrepreneurship support at the university. We work on technology coming from our research compendium as well as from our students and staff and some of our community vendors as well.

JP:

Terrific. And maybe each of you could just take a moment to talk about some of the different types of technologies that your university and institution is best known for or maybe is focusing on in the current marketplace. Anne-Marie, we'll start with you again.

AMM:

So, we, I think, are best known historically for our humanities which, when it comes to traditional startups, that's not necessarily where most of them come from, that we are very deep in the humanities. We have been growing our life sciences group so we have a brand new bioengineering initiative. Our molecular biology, chemistry, physics, all of that is pretty extraordinary, some of the technologies are coming out of there are pretty extraordinary. We're growing our school of engineering in general, our computer science department has been booming largely from student demand and now also with faculty that have been hired to meet that student demand.

JP:

Terrific, thank you. Tim, do you want to tell us a little bit about the areas that you're focusing on?

TJ:

Certainly. We at the IDEA Center support all of the faculty research that happens here on campus and that does include ... I've worked on startup companies, with startup companies and patents that are based on Shakespeare, believe it or not. So, we see everything even from our liberal arts, not a lot of disclosures and work there but this is something we've tried to engage and we've seen even our new schools in the liberal arts humanities look to engage. We have a lot of public health issues that we'd like to see advanced as well, the issues with global health and so we see that's a calling for the university and we do stuff there.

But of course, typical engineering and life sciences, there's a strategic framework the university has put out recently which will lead to unprecedented engagements in investment in health and engineering and science and engineering. So, we will go with that. We have some gene editing techs we've done in the past and, back in the day, I understand we licensed out the synthetic rubber. So, that's a past experience from the university looking for what's come in the future and supported in those hard tech spaces.

JP:

Terrific, thank you. And Carlo, tell us a little bit about the types of companies that you're seeing in your facility.

CY:

Sure. So, the Rockefeller University founded in 1901 has always focused on biomedical research and so, by virtue of that, a lot of what we see in the incubator is biomedical engineering, biomedical sciences, biotech and some pharmaceutical companies that are small. But then, if you look just across the street to our neighbors which, arguably, this incubator also serves as a resource, Memorial Sloan Kettering and Weill Cornell Medicine and New York Presbyterian Hospital as an extension of Weill Cornell Hospital for special surgery, they're all within one block and, in some cases, literally across the street from us here at the incubator and sourcing a lot of the innovation from there overlaps naturally with the university's mission in biomedical research.

So, we see a lot of cancer companies coming, oncology companies coming from Memorial Sloan Kettering, Weill Cornell but also medical device, orthopedics, pathology companies, digital diagnostics. So, a variety but typically we do cater, especially the design of our space, tends to cater to the biomedical sciences.

JP:

Terrific. So, a wide variety of different types of technologies and humanities in terms of the types of things that may be sourced through the universities. And obviously, I would assume that one of the things that we're seeing all universities being interested in is to have startup companies be formed out of their university. So, I guess one of the measures of success has been, not only getting things published by the various research professors, but actually taking those ideas and turning them into potentially commercializable companies by getting them to a stage in which they may be able to be spun out and stood up as a standalone entity.

Maybe talk a little bit about the different type of support that you're able to provide. If there was a technology and a group of professors or postdoc who wanted to start, how you might be able to support, how the university and your facilities might be able to help support them get started. So, maybe, Carlo, we'll start off with you this time.

CY:

Sure. So, the great thing about the technology transfer offices, I would say, not just at Rockefeller or even in my neighborhood in the Upper East Side of New York City, but really this New York City at large is that they have become more commercialization offices and less strict licensing offices over the last 10, 15 years in particular wherein certain offices create a variety of different accelerators that service different types of ideas and really try to promote the entrepreneurial spirit and mission of a lot of the trainees that come out of these labs that maybe it's not something that could be licensed to a Gilead but it's something that would make a nice early stage company.

Here at Rockefeller, the embodiment of that is obviously the incubator with its programming that's soon to come but then also the technology transfer office here by itself has a business development team that works hand in hand with a lot of the PIs as well as the trainees that are thinking entrepreneurially, that do want to kick the tires on whether an invention or disclosure has legs to feed a business. And so, that's a conversation that's had and sometimes that's really the first and, oftentimes, the gating factor. And so, thankfully, that conversation is happening across multiple institutions now in New York City and also elsewhere.

JP:

Terrific. Tim, maybe tell us a little bit about how Notre Dame is helping to support the entrepreneurs getting their businesses kicked off.

TJ:

Absolutely, yeah, John. I agree with Carlo there, I think we have seen this transition from classic just probably licensing to more commercialization support with the idea that there's benefits both for the faculty and to the community in developing that ecosystem and not waiting for somebody to come by as might've happened in the past but doing some more of that early stage company and de-risking work. So, support through classic patenting and IP management, of course, certainly, that's probably at the core of it. And then it's adding onto that some de-risking work, whether that de-risking work be a proof of concept or gap fund that helps to advance the technology into the commercial milestones that is often then not ROI or requiring a company, an equity transaction to happen. Maybe to be able to invest in that technology sooner with maybe not so much a strict ROI return but with the hope that, yes, we'll get closer to a commercialization event, I'm going to start a company formation and attract talent and other funding that then follows on.

That's certainly a support there. I'd also point out grant support, there's a lot of back and forth between that. Of course, we're talking about basic research but, if we can get translational grants and some of these other funds that we see the federal agencies supporting such as the whole TIP office that's standing up in the NSF and some of the PFI grants, a partnership for innovation grants that can help advance into the commercial where there are various students saying, "Hey, what's the commercial pathway in order for that funding?" That certainly is supporting faculty in that space, I think, is helpful in both ways to advance the research and do the things that universities are good for but also bring in that, okay, and what's the off ramp into the return to the public into the commercialization of that technology.

JP:

Tremendous, tremendous. Thank you very much. Anne-Marie?

AMM:

We have a number of different groups around campus that support faculty, grad student, postdocs and undergraduate spinouts as they're thinking about potentially spinning out. I'd say that we break down our support in a couple of different areas. One is funding, so funding that we give to faculty for IP acceleration, for doing some marketing studies, for doing some little studies that we can't pay for, they need to pay for as well as connecting to funders as well as connecting to grants as well as connecting to all different types of funding resources.

The other piece that we do a lot of is mentoring. So, our alumni community is very engaged, we love to engage them, they love to be engaged and they are all over the place in all different industries. So, when we can find the right connection between an alum working in a strategic space that a faculty is interested in, we often make those connections. That can be a flash mentoring, just let me introduce you for a conversation, sometimes it's a longer term mentoring. So, there's mentoring, there's also advising and we would do that, some of that ourselves talking about the differences between studying a company and working in an academic institution, very different, and bringing them up through some educational programming we do to explain to them some of the fundamentals of the startup business. So, networking, mentoring, advising, funding, I think those are the main areas that we help support them in.

JP:

Terrific. And Tim, your organization has a funding arm as well, correct, at Notre Dame?

TJ:

Yeah, we talked a little bit about the proof of concept or gap funding which is getting to be more and more widespread throughout a lot of universities but it's also about having a continuum of funding. So, capturing VC or having a closely held VC fund that is interested in a deal flow coming from a university, we've experimented in different ways with different fund structures but there's clearly a network of investors that you need to bring to the table in any regard that you're going to have to develop. That comes to talk about Anne-Marie's component here of bringing a network to play, there's a huge network that Princeton has, that Notre Dame has, that any university probably has whether it's regional or national, that there's probably somebody in that space and there's probably somebody wanting to invest in your startups or at least know about what startups there are.

Certainly, we've brought that network in different ways with a fund structure and also informally through just finding those folks who are just already in that space and having them with maybe an eye on investing or supporting, advising that company so that they can get investment.

JP:

Terrific. And Carlo, I know you've been involved in some of the regional incubator development programs in New York City like the old NYCEDC type programs and things like that over the years and how ... Maybe you could talk a little bit about how groups like that and the local ecosystem help support these early stage companies.

CY:

Yeah. I imagine, Tim and Anne-Marie, your offices as well, as you start to become a feeder for economic development as a mission, the conversation between an economic development agency that's municipal or regional and an academic institution starts to coalesce. So, certainly, that was the case with New York City's Economic Development Corporation, which is where I spent six years prior to my time here at Rockefeller, working solely on the biotechnology industry and shoring that up to be an emerging industry that could anchor alongside real estate and finance and insurance and fashion, the other industries that New York City is known for. And we're seeing the fruits of that and, certainly, there's more work to be done but it's a multi-component solution when it comes to economic development. Oftentimes, real estate is a component but it's also about the workforce, it's also about the talent. The idea is certainly, in a field like either tech or biotech, the ideas engine of academia is where we see a lot of substrate for that plan for biotech in New York City.

And then commensurate with that, and this is part of the reason why, as a new incubator at Rockefeller, honestly, it's a bit hard now to figure out what the right type of programming is because a lot of the programming has been stood up already through the efforts of the EDC and other players and the community here that offered the go-to panels on how to fundraise, how work with a CRO or a CDMO and, in some cases, the companies like, for example, Schrodinger that's here and has significant offices in New York City also plays a role in the community and provides awareness of how to best utilize computational biology methods and, obviously, their software is part of that equation.

And we see similar types of pitching in of various types of players to this grander mission of economic development, yourself included, John, which is how you and I know each other.

JP:

I've always found that to be one of the most enjoyable parts of the job is to help entrepreneurs visualize their path forward and hopefully achieve some of their goals and objectives. Because one of the ... Yeah, I'd like to talk a little bit about some of the challenges that these young entrepreneurs face just coming out of a university setting or maybe setting up the company for the first time. And I guess it always starts with money and needing money but I think there's a whole bunch of other things that they need and that's where that mentorship comes into play and just having some advisors that they can talk to. So, Anne-Marie, you want to talk about maybe one or two items that you see that those startups really need some support on?

AMM:

Sure. Funding is about the technology but it's also about the team and those are teams that faculty members are not typically experienced in building and those are not necessarily people that have been, historically, hanging around Princeton looking to partner with a faculty innovator. So, team building, for us, is a big challenge. Finding the right person to work with the faculty member and with the graduate student, postdoc. And maybe, in the beginning, it's a faculty, graduate student, faculty postdoc and, later on, they bring in an industry person that, if you're talking about going the VC route, you'll most likely need to have somebody that has credibility in raising funds and has done it before.

We also don't want to lose our faculty to becoming full-time CEOs, we love having them as faculty so we want to make sure that we keep them as faculty so we are incentivized to find them good co-founders whether that's early, early seed or a little bit later. So, for us, team building is something that ... Finding that network, shaking the bushes to find that right person which is a needle in a haystack because every startup is different, every chemistry in the startup is different and every path is different.

JP:

And they also have the challenge of not having enough money to pay for things so they have to be very creative in their approaches but that's a critical item. In the angel group that I'm a member of, we spend an awful lot of time really thinking about the team and whether that team can execute the plan. And if we don't feel comfortable with that, we walk away fairly quickly.

AMM:

Right. It's the jockey or the horse and it tends to land that it's the jockey. The jockey will be ... You want both but a good jockey can put a horse back on course.

JP:

Tim, do you want to maybe mention a couple of the challenges that you see from some of the startups that you're working with?

TJ:

Certainly I would echo Anne Marie's points here. I think the two things, when you're talking to a panel of people that work at universities, ideas aren't the problem, there's an abundance of those, there's an abundance of research, that's what we think we bring. The other necessary components are access to talented team members and access to capital and both are hard especially in different geographies. Northern Indiana, keeping people around here and building up a regional ecosystem is the challenge. So, if you're not in New York City, Boston or a coast and some other places that are there, this is what we're trying to do in South Bend at Notre Dame is build up that ecosystem so that there's a place for all of this wonderful research to land for somebody to carry it forward.

If there's talent out there, almost any university willing to have that person just take a large swath through their research and willing to say where do you want to go with this stuff, their vision, it's unending. So, finding those people that execute, just like angels are looking at foreign investors, same thing that the university side is looking on. The other challenges are just relationships and expectations, especially working with university founders, there's this idea that they should be doing it but that they're supposed to be full-time faculty, it's another duty there and they're pretty critical to the early stages of the company but making sure they're okay with what direction this is going to take and then letting this thing out of the nest, if you will, that can be challenging to a faculty member just to get that first steps and to give over control something that they've been working on for years.

So, just all of that expectation. And especially, since we know startups, even the best situations, a lot of them face failures and that's to be something that is expected and even treasured for what it brings to the environment. But that can be tough to go through with them and see happen in front of you but then still have them coming back to go, okay, that's not the end of everything, let's keep going here. Those are the challenges I've seen us deal with in the early stages.

JP:

Terrific. Carlo, do you have any other thoughts on some of those challenges?

CY:

Yeah, the challenges are endless really. But one thing I've observed is, especially now that ... Well, maybe not so much given the funding climate at this point in time regarding life sciences but let's say two, three years ago, there was a lot of excitement around starting a company as a trainee, a postdoc or a graduate student, newly minted graduate student. And I think that, for me, personally, I think it was concerning because entrepreneurship is a perilous journey as it should be. It comes with a ton of challenges and I think a lot of our trainees in New York City were taking it on unaware and so it was more of a trial by fire.

And so, for a lot of trainees, I do recommend them, unless they're sitting on something that's really requires them to focus on right now as a startup, to consider getting operational experience in some form or another and working outside of academia and ideally in the field that they're trying to pursue in terms of entrepreneurship because that makes the world of difference. From talking to investors like yourself, John, to negotiating and learning negotiation tactics from observing masters at that craft, that's something that you can do it and learn it on your own but you'll likely end up fumbling. And so, I'm a big proponent for folks getting operational experience and working with somebody that truly is working. Maybe it's already an early stage company but they're not in the hot seat of entrepreneur doing it all themselves.

JP:

I think you see that manifest itself in, oftentimes, how an earlier stage entrepreneur will describe the process to develop their product and way underestimating the time and the budget and the complexity and the iteration it's going to take to get there. So, having unreasonable expectations of how quickly it's going to be and how inexpensively it's going to be de-risked, oftentimes, is a fatal flaw that we see and is indicative of an entrepreneur who really hasn't had the experience and the iteration aspect of trial and error and understanding the process of getting vendors and other people to help advance your science at the pace you wish.

Things maybe work a little bit slower in academia and you don't just turn the switch on and it goes a lot faster in the commercial world. So, it's still a long, arduous process and the risk for those entities that don't have command and control of that budget and that process, it really paints a very unsophisticated look making it more difficult, I think, to proceed forward.

AMM:

What we also see is that, some of them, it's all about the technology and, really, it's all about being able to commercialize the technology, it's really about the market. Your technology has to meet that need that, if your technology isn't meeting the need in the market, it's not going to do what you say. So, we see that the less mature entrepreneurs, the ones that are first time trying fell in love with the technology, understandably because they've spent many, many years doing it but there's also that whole how are we going to get it to market, who's going to buy it, what's the competition, how are things, that piece is so important and sometimes, on an academic in an academic setting, tends not to get the same value or the same weight as the technology. And maybe that's all startups for technology founders but having that business match with the technology match really helps to be successful long term.

JP:

I think, certainly, with some of the amazing innovation that's going on at your academic institutions and others, it's really imperative for the entrepreneurs to think about where do they stand in the entrepreneurial continuum. So, are you slightly better than things that are out there or is this really like a game changer and I think that's a hard place for people to get to. Investors are doing a lot of diligence and taking a lot of care and want to de-risk things so, if they are going to make a bet, they want to make a really big bet and have a big opportunity as opposed to a slightly better version of the mousetrap, if you would.

So, maybe just one final question is how would you define, at your particular institutions, how would you define success? And maybe talk about either an example of a success or the things that you would like to see to measure the terrific work that your institutions are doing. Carlo, you want to start that one?

CY:

Yeah. I think if ... Currently, in my current remit, success for the purposes of the incubator, I think, if we can offer something, a home for startups, not just that exists right now and are looking for space but, frankly, if the facility that I run is able to make it all the more easier and lower that activation energy for a PI among these biomedical institutions to really pursue entrepreneurship and really take the conversation to the technology transfer offices and to really support an idea through creating a team around it, an operationally experienced team, that for me is a success. Bringing in clients that are venture backed and, obviously, it's part of the metrics here but, frankly, in economic development terms, when I was working for the city, it's always about the but for.

So, but for something, this program or this facility, this company would never have existed. So, I'm waiting to see when that happens and when I feel confident saying that, "Yeah, but for this facility, this wouldn't have happened," and that's what I would consider success.

JP:

Terrific. Tim?

TJ:

Yeah, I think it's techs commercialized. Technologies that harken back to a research program that are actually in the marketplace impacting lives. And so, there's metrics out there on lives impact, they have lives saved, specifically in health sciences I think you can talk about that. I think it's an absolute number or a number that you're trying to get high or another, there's rare neglected diseases out there, for example, which are rare and neglected. And so, there's a lower number there but I think it's, again, but for the research and the science, but for that investment and that's often ... It came into being and then, with a healthy ecosystem, you have the time and talent and funding to advance that into a marketable invention.

So, you're talking about seeing technologies and having these stories that we tell anecdotally about technologies being put into continuous ... Do you have enough time to talk about economic transformation of a region, regional growth? And that improves, not just the tech workers, not just the folks in that startup, but you will see that, we've seen it in a number of cities, small Midwestern cities throughout the country that have had a rebound. Gone are the days of the industrial path where you have one or two large players in town and your entire economic vitality lives on that person. But being able to make people entrepreneurs, they can build their own growth here and that improves everybody's economic output and it doesn't depend on one thing. So, seeing that regional growth is what would be successful and I think it stems from the development in investment and university based technologies.

JP:

Absolutely, that's a great thought, Anne-Marie, you want to close that out for us?

AMM:

For us it's really about impact and a net impact might be licensing to a large company, that impact might be publishing an article, that impact might be spinning out a company and moving into a space that's brand new and building a company. So, you can talk about the amount of dollars raised, [inaudible 00:30:56] that is less important, of course, it's important that things are flowing to support the impact and really it's about that impact. What you said, Tim, about the ecosystem, I would say that, because of entrepreneurship, Princeton has burst out of its orange bubble and is now flowing in New Jersey more than it used to. New Jersey is hopping these days with loads of funds flowing from all different pockets.

We are very close to New York but we are not New York so we are a little bit damned by being too close and not far enough but things are changing and that's an impact also that, I think, that we would count as a part of that entrepreneurial success on campus to create more around us, to support more around us, to bring more to us. So, I think, for us, it's really more about impact.

JP:

There are certainly smart entrepreneurs everywhere in the world, everywhere in the country and there's great academic institutions all over, both in the US and around the world, and supporting those ecosystems and helping them create innovative technologies that are going to help the world is a tremendous opportunity for us all. So, with that, I'd like to thank you all for spending a few minutes with us and sharing your thoughts and insights. I really appreciate it and I hope it's been enjoyable for both yourselves and the audience. Thank you very much.

AMM:

Thank you.

CY:

Thank you.

TJ:

Nice job.

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