Interview with Orin Herskowitz in Trusted Peer Entrepreneurship
The below interview appeared in TrustedPeer on Sept. 7, 2019.
Editor's Note: Orin Herskowitz responded to questions on tech transfer submitted by Philip Bouchard, Executive Director of TrustedPeer Entrepreneurship Advisory.
Questions and highlights:
- What is the role of the tech transfer office in the university innovation and entrepreneurship ecosystem?
- Is the process of licensing to a large company different than what happens with a startup?
- Special license terms designed for startups
- Do universities help the startup, beyond solely licensing them the necessary IP?
- Why do universities care about startups, and has this changed in recent years?
- What are some specific strategies that Columbia Technology Ventures has employed to help Columbia startups launch and grow?
- Standardized licensing approaches for Columbia faculty startups
To start off, can you explain what university tech transfer offices do? What is the role of the tech transfer office in the university innovation and entrepreneurship ecosystem?
The vast majority of the science that happens at universities is basic research, typically funded by the National Institutes of Health (NIH), National Science Foundation (NSF), and other federal agencies. This research often leads to ideas that could be the seed of a new therapeutic, medical device, cybersecurity approach, industrial robot, semiconductor, etc.
Nearly every major research university and hospital in the U.S. and in much of the rest of the world has a tech transfer office, whose job it is to help these nascent but potentially transformative inventions get into the hands of a commercial party outside the university (hence the “transfer” in “tech transfer”) and bring these exciting new products to the market.
At most institutions, the researchers end up generating a new invention for roughly every $2M in research funding received. For instance, with Columbia’s $800M in external research funding, our office Columbia Technology Ventures, received submissions for 430 inventions from Columbia’s brilliant faculty researchers last year alone.
- Typically, about a third of these are what I call “wet life sciences”: therapeutics; diagnostics; stem cell-based inventions; tissue engineering; etc.
- Another third are “dry life sciences”: DNA sequencing; surgical tools; medical robotics; bioelectronics; imaging modalities; CRISPR and other gene editing tools; computational biology.
- The remaining third cover the physical sciences: industrial automation; audio and video processing; “big data”; natural language processing; semiconductors; advanced materials; cybersecurity; and other software and hardware inventions.
Our office works closely with the researchers, outside experts, and patent attorneys to determine which of these inventions has both the commercial potential and also is the type of intellectual property (IP) that can be protected rigorously enough to allow it to be commercialized. This typically means filing a patent (Columbia files roughly 200 each year), but could be copyrightable content or software, or even just specialized know-how.
We then market the inventions to commercial parties such as the Fortune 1000, small- and medium-sized entities, and venture capitalists and their startups. If we find an interested party, the IP is then “transferred” via a license agreement to that company. The license agreement is quite detailed, with obligations on both the university and the company about what will happen in the years ahead. For instance, the company will have to meet diligence milestones to ensure that the technology is heading to market quickly, and will have to share revenues back with the university from sales if the technology is successful.
Is the process of licensing to a large company different than what happens with a startup?
In each of the last few years, more than 1,000 startups were founded over innovations emerging from U.S. research institutions and medical centers, according to the Association of University Technology Managers. Historically, academic startups have led to some of today’s most successful and well-known companies and products: Google, Akamai, Genentech, Duolingo, and more. This chart shows many of these companies.
Startups naturally have different priorities and concerns, when compared to big licensees like Pfizer, Google, and Dow. Unlike large companies, startups need to preserve as much capital as possible for growing the company and advancing the technology.
Therefore, in most cases, universities have special license terms designed for startups. For instance, at Columbia, startups based on our technologies pay almost no cash to take the license and over the first years of development. We do this intentionally, so that the company can put their cash towards moving our technology to market as effectively and quickly as possible. Instead of these upfront and annual fees, universities will receive a small amount of equity in the startup and, where appropriate, royalties on sales, so that our revenue comes primarily if and when the company is successful. These agreements also often outline the role the university will play in the startup itself: whether the university will take on a board seat; what rights the university will have in the decision making; and what rights the university will have in future funding rounds.
Do universities help the startup, beyond solely licensing them the necessary IP?
For so-called “tough tech” startups (meaning those that are based on deep science, and which will take many years and vast funding to survive), coming up with the initial invention is only the first step in a very long and perilous journey.
To become a product or service that benefits society, these startups will need many resources: small amounts of validation capital to prove that the underlying basic research will work in a commercial setting; mentorship and coaching from experienced entrepreneurs and industry veterans who understand the relevant industry; education in how to determine ‘product / market fit’, launch the company, manage employees, etc; avenues for hiring experienced venture-backable entrepreneurs, strong technical hires, and other staff; inexpensive and flexible office and lab space where the company can start and grow; strong service providers such as attorneys who have experience working with early-stage science-based startups; connections to venture capitalists, seed funds, and angel investors who can provide launch and growth capital; and much more.
How many of these resources are provided varies from institution to institution, of course, there isn’t only one way of working with startups. At Columbia and many of our peer institutions, the University has been steadily increasing the kinds of support that we provide to our startups, whether those emerge from the research labs via tech transfer, or from undergraduates or masters students (in which case, the universities typically have no ownership claim).
Providing these startup services seems like a departure from the role that universities have historically played: educating students and performing basic research. Why do universities care about startups, and has this changed in recent years?
It is certainly true that providing these support services for university startups isn’t easy and requires a real commitment of resources by the institution! However, increasingly over the years, many universities (including Columbia) see this as important to the university’s overall mission.
First and most importantly, many of these startups are laser-focused on bringing world-changing inventions to the market that will save or improve human lives. But selfishly, a significant number of faculty and students may make their decisions about which institutions to join based on the university’s ability to help them make their entrepreneurial dreams a reality. These days, we often get brought into recruitment discussions for key faculty hires, who want to know that the university is both willing and able to support the launch of their startups.
Universities are also highly interdependent with the communities where they are located, and hence often have an economic development mission to create startups that will create good jobs and strong economics in their local regions. Universities may also get encouragement from their mayors, governors, and even the Federal government to support their own startups. In recent years, even the Federal basic research grants from the NIH and NSF often ask about commercialization and startup strategies during the grant application phase!
What are some specific strategies that Columbia Technology Ventures has employed to help Columbia startups launch and grow?
Columbia has been hugely supportive in this area, and is always trying out new initiatives to do even more! In doing so, we work really closely with our collaborators from across the university, including Richard Witten’s team at Columbia Entrepreneurship (see TrustedPeer interview with Richard Witten), plus the entrepreneurship centers at Columbia’s Business, Engineering, and Public Policy schools, as well as at the Columbia University Irving Medical Center.
Some of these ideas we borrowed from other institutions; some we came up with on our own or with our peers. And since we are always trying to strengthen the tech transfer ecosystem overall, anything we’ve learned from our initiatives we always make available back to the community so it can be used elsewhere.
Some examples of new initiatives from recent years include the following:
- Columbia has 7 virtual technology accelerators, some run just by Columbia, others jointly with other local institutions, listed below. We wrote an article in the Journal of the National Academy of Inventors on our learnings so far from running the accelerators below, the article can be found here. These 7 technology accelerators are the Columbia Biomedical Accelerator (BioMedX), the Columbia Translational Therapeutics Resource (TRx), Accelerating Cancer Therapeutics (ACT), PowerBridgeNY, the Columbia | IBM Blockchain Accelerator, the NYC Media Lab Combine, and a new one launching in Cybersecurity this Fall. Many of these accelerators use the Lean LaunchPad methodology as developed by the great Steve Blank (see TrustedPeer interview with Steve Blank). These accelerators which have collectively received 700 applications, ran bootcamps for 247 teams, issued over 140 cash awards totaling over $12M, and seen 40+ commercial launches by accelerator teams who went on to raise over $116M since formation.
Building on these learnings, Columbia has launched the Columbia Lab-to-Market Accelerator Network (L2M) that connects and supports Columbia’s existing industry-specific technology accelerator programs. L2M has developed and provides a shared infrastructure, such that individual programs can take advantage of a common set of timelines, processes, mentor networks, marketing platforms, event management approaches, and other best practices, which allows the individual accelerators to better focus on industry-specific needs.
- CTV’s Executive in Residence (XIR) Program connects Columbia inventors and technologies with seasoned industry executives, venture capitalists, and serial entrepreneurs. By doing so, we hope to leverage the deep domain expertise of these individuals to help accelerate the path of these promising technologies towards market success. XIRs are encouraged to develop close ties with our inventors, entrepreneurs, and technology transfer team in order to help Columbia further develop these technologies. More about our Executives in Residence (XIR) program, including a list of current and past XIRs, can be found here - http://techventures.columbia.edu/about-ctv/ctv-executives-residence. A Nature Biotechnology article on our XIR program and those of some of our peers can be found here (http://www.nature.com/bioent/2015/150701/pdf/bioe.2015.8.pdf).
- In 2016, Columbia (along with Yale and a number of our peer institutions) launched an initiative called the Academic Venture Exchange (AVX), which merged the EIR networks from the Ivies plus MIT, Stanford, U Chicago, and Wash U. AVX now has over 600 entrepreneurs in the database, has made over 3,200 connections between these entrepreneurs and over 260 university startups, which have resulted in 18 new companies formed with an AVX CEO and another 54 matches pending.
Building on our learnings from this process, PowerBridgeNY (joint between Columbia, NYU, and CUNY) has created a similar venture, the Cleantech Venture Exchange (CVX), which does the same thing but across New York State’s institutions and focused on clean energy. We will be launching a similar initiative in cybersecurity alongside NYU, Cornell Tech, and CUNY.
- As mentioned above, Columbia switched to using standardized licensing approaches for all of our faculty startups, with very low upfront fees, fixed equity percentages, low or no early-year milestones, and deferred past patent expenses. The goal is to treat all faculty startups equally, in order to streamline the licensing process and reduce any animosity associated with the startup creation process. The approach has been very well received by both entrepreneurs and the venture community, and has contributed to an increase from ~5 IP-backed startups per year (back in 2008) to 20 to 30 startups per year in recent years.
- Every one of our new inventions gets a standardized write-up by one of our 35 CTV Fellows, graduate student interns who work up to 10 hours per week each for our office. As part of their work, the Fellows create marketing materials for each invention, which are then sent out via email marketing campaigns (~200 per year) to companies identified as potentially interested, with the open, click, response, and deal rates tracked. We also use this material to populate the invention search portion of our website, http://innovation.columbia.edu/explore. The Fellows are also available to help our startups create their pitch decks and marketing materials, using a standard template we created based on feedback from venture investors.
- Three times per year, CTV sends out a list of our most promising emerging startups that are in search of venture financing. This list goes to over 400 venture capital and seed investors in our network, all of whom have opted to receive deal flow opportunities from Columbia. This email outreach has led to both robust diligence with Columbia startups as well as a significant number of financings.
- Multiple times each year, Columbia hosts startup pitch days for emerging companies, to which we invite our network of early-stage venture and seed investors. These events are typically done in collaboration with other commercially-focused institutions, including local universities such as CUNY, Cornell Tech, NYU, Rockefeller, Memorial Sloan Kettering, and others, as well as some of our regional peers (recent years, Penn & Harvard; next year, MIT). For example, this past October, Columbia and Harvard collaborated to host a combined Pitch Day in NYC for 30 of our startups, including 15 from physical sciences and 15 from life sciences. The event was attended by over 100 of the country’s premier VC firms, including Lightspeed Venture Partners, ARCH, In-Q-Tel, NEA, Orbimed, Deerfield, Alexandria, IP Group, Osage, Kairos, Apple Tree, and many more. The teams that pitched were given significant training in advance of the event, both of the creation of their marketing materials and in how to give a compelling 10-minute pitch. Videos from the event are available here: https://pitch-day.splashthat.com/.