The whole world talks about the joys and sorrows of creating startup companies from university-based research which produces stunning new technologies. The overwhelming bulk of articles, blog posts, VC tweets, pundits’ pronouncements and deans’ proclamations illuminate the latest soon-to-be-huge startup springing from the great technology that our research universities produce.
That’s a good thing because it sometimes creates wealth and produces products which benefit society. Sure, the risks are staggering, but the potential benefits are the stuff of legend, so a few brave souls will jump into the maelstrom. The Venture Capital process (currently deeply stressed) was created to provide capital, process and expertise to enable those occasional winners. It’s a terrific process run by some really smart people, and I have personally benefitted from it repeatedly.
But the whole world is missing the real story.
Ten percent of the (good) inventions from our universities are sufficiently novel and robust that they are candidates for the VC process. A high percentage of those are new drugs and biomedical devices. They may one day become large, scalable companies either acquired for hundreds of millions of dollars or maybe even taken public to much fanfare. Richly deserved, for those few companies represent a tiny fraction of the inventions financed with our federal tax dollars.
They are the Tip of the Iceberg, glinting in the sunlight…
So what lies under those murky waters?
The answer is a massive amount of game changing technology which also deserves to be discovered, advanced, tested, improved, and eventually be put to work for the good of society in some way. But, because there is no equivalent of the VC process to do all that heavy lifting and risky investment, that potential treasure trove just lies out of sight, out of reach below the surface. Rarely, a small chunk of that valuable “ice” will break off and float to the surface and get licensed by the university to a company which will then incorporate it into their product development process, or perhaps build an entirely new product or business around it. But very rarely. The rest of it just floats around in the ocean of good ideas and slowly melts away.
The cognoscenti among you know that all research universities have dedicated staffs of hard working people whose job it is to “sell” those technologies and their pending patents to corporations in the form of licenses. The problem most people don’t understand (including the universities) is that – down at the bottom of the intellectual property food chain – raw IP doesn’t have much value to corporations. They won’t buy it.
The waters beneath that glistening tip are cold, dark, impenetrable. Without a structure which is well defined and provides the same level of process, expertise and capital, along with demand identification and validation that VCs help provide to “Tip” companies, the Iceberg just continues to float along, benefitting no one and presenting obstacles to those trying to navigate the early innovation waters.
Too bad there’s no such thing as Innovation Capital to unlock the power of the Iceberg.
Or is there?