International
US public research funds often lead to start-ups, study says
By Finfacts Team
Apr 11, 2006, 09:57

The study by Indiana University researchers reveals that cancer scientists, in addition to commercializing their research through licensing, are starting new businesses, which largely go unrecorded by existing innovation commercialization tracking systems.  In fact, more than one in four patenting National Cancer Institute (NCI) scientists within the researchers’ dataset has started a new firm. These scientist-launched start-ups are the sleeping giant of university commercialization.

“This study reinforces the critical role universities play in a country’s national innovation system, not just in the training of new scientists and accessing the best talent, but in the ease of developing and licensing technology and as a launching ground for new businesses,” said Carl Schramm, president and CEO of the Kauffman Foundation.

The study shows that the current reliance on publicly available modes for measuring the commercialization of university innovation – patents and Small Business Innovation Research (SBIR) grants, along with figures provided by university Technology Transfer Offices -- is failing to capture the true number of business start-ups in which scientists are engaged.

The economic implications of the study of approximately 1,600 NCI-funded research scientists underscores that the role universities play in the nation's innovation economy is much greater than currently understood. The study is particularly timely in relation to current federal efforts to shift funding from basic research to applied commercialization. As a result, many universities are scrambling to enhance their innovation transfer process or risk research funding cutbacks.

At present, only 20 percent of all basic research in the United States is performed by the private sector. Colleges and universities account for 60 percent of such research, with government accounting for the remaining amounts. Washington is the largest funder of basic research, paying for 57 percent of the total.

 “Federal investment in university research has a much bigger impact on the nation’s economy than previously thought,” said Lesa Mitchell, vice president of Advancing Innovation at the Kauffman Foundation.  “We are seeing much more commercialization coming out of universities that has not been measured.”

Titled The Knowledge Filter and Economic Growth: The Role of Scientist Entrepreneurship, the study was conducted by David B. Audretsch, director of the Entrepreneurship, Growth and Public Policy division at the Max Planck Institute of Economics and the Ameritech Chair of Economic Development, Indiana University, and Taylor Aldridge, Chief of Staff of the Institute.

In addition to revealing shortcomings in tracking the commercialization of NCI-funded university research, the study also identifies various factors that enhance the propensity of scientists to launch entrepreneurial start-ups vs. licensing.

While location of the university to a technology corridor such as Boston’s Route 128 or Silicon Valley contributes to the propensity of scientist entrepreneurship, the researchers found that having a good social network can more than compensate for not being located in a “hot spot”. Such social networks with other scientists or business executives often involve co-publishing of articles, co-patenting with other scientists, or being on the board of a company.

According to Audretsch and Aldridge, findings on the importance of social networks in commercialization start-ups provide guidance to universities on how to encourage and support scientist entrepreneurship.

Among the study’s additional findings:

• Scientists receiving funding from the NCI exhibit a robust propensity to commercialize their research. While patents are more prevalent, other modes, such as funding by the SBIR program, are rarely used.
• Scientists who utilize university Technology Transfer Offices (TTO) to commercialize their research through assigning all patents to their university TTO, account for 70 percent of NCI patenting scientists. Scientists who choose the entrepreneurial route to commercialize their research, in that they do not assign patents to their university TTO, comprise 30 percent of patenting NCI scientists.
• TTOs are found to be helpful for innovation commercialization involving licenses. There is less evidence suggesting that they promote scientist entrepreneurship.

The Knowledge Filter and Economic Growth: The Role of Scientist Entrepreneurship in PDF format.