UW-Madison expands statewide impact via WARF

The expansion of the mission of WARF could harness a powerful jet engine to the economy of Wisconsin.
At a time when political, academic and business leaders are desperate for ways to revitalize and reinvent the U.S. economy, the Wisconsin Alumni Research Foundation, one of the world’s leading technology transfer organizations, has the smarts and financial muscle to take a leadership role in statewide job creation.
Good jobs should be the ultimate payoff for the citizens of the state in return for the billions of dollars they have paid in taxes to make UW – Madison one of the greatest research institutions in the world.
The foundation’s main contributions over its 86-year history have been patents and licenses for amazing scientific and engineering advances at UW – Madison. That’s great, and the royalties have allowed for the creation of a $1.8 billion portfolio to support is continuing work. So are the innovations themselves – 1000 technologies that include Vitamin D therapies for osteoporosis, stem cell therapies, Coumadin and nano-materials.
But there is a great disconnect between those that portfolio and range of innovations and the general welfare of Wisconsinites. Dane County, the home of our flagship university, sees the direct payoff; its jobless rate is usually very low (now about 5%) and average wages are high. Other parts of the state are suffering from unemployment rates twice that high, and average wages have slid to Alabama levels.
In the face of that disparity, the leaders of WARF have taken some initial steps toward spreading its impact across the state:

• The creation of WiSys, a subsidiary that helps innovators on 24 other UW campuses take their ideas to commercial success. It is handling about nine disclosures of intellectual property a year from those campuses. As a benchmark, WARF processed 350 disclosures on the Madison campus last year and handled 205 patent applications. UW – Milwaukee has processed 40 disclosures in 2011 through its new research foundation and eight license agreements.
• Investment in startup companies. Seven have been started with WiSys help, about one per year. WARF has begun to make investments in startups; its portfolio of such investments was $21 million by mid-2010. It holds equity in 40 Madison spin-offs. UW-Milwaukee has four recent spinouts from its IP. At the head of the class nationally is Stanford, reputed to have spun out 5000 new companies.
• Outreach to the Marshfield Clinic, Aurora Health Care and BayCare Clinic to create the Wisconsin Medical Entrepreneurial Foundation. That network initiative will accelerate technology transfer from those organizations.
• Creation of Wisconsin Small Company Advancement Program (WISCAP), to help small companies with technologies for new products. This initiative pays for faculty time for company projects.

These statewide initiatives set a new pattern. They are in their early stages, but offer promise for job creation in areas of the state that can really use the help. The jobs numbers are small at this early stage, but will compound over the years.
The possibilities for WARF’s involvement beyond its spectacular work on the Madison campus are enormous. WARF’s investment portfolio is invested all over the world, including $267 million in international equities. Why not more here?
What’s interesting about WARF’s investment management is that, unlike the State of Wisconsin Investment Board, it has no “prudent man” rules for protecting pensioners. It has more latitude. The foundation, for instance, has invested $181 million in private equities.
As a state, Wisconsin has always done a poor job of bringing in venture capital. WARF’s $21 million in startup investments shows what can be done to reverse that strategic deficiency. Its seed investments helped attract another $835 million in outside investments for the lucky companies.
The governor and legislature are working to create a $100 million early stage fund that would be spread across the state. It is a bipartisan effort, a rare occurrence these days. WARF would be a welcome partner in that strategic break-through.
WARF has plowed back more than $1 billion into making UW – Madison a flagship research university, capped off by a large investment in the fabulous Wisconsin Institutes for Discovery. WARF put $44 million back into UW – Madison last year, support that gets even more important as governors and legislators of both parties make disproportionate slashes in university budgets.
To our perpetual benefit, graduates and innovations from UW – Madison ripple across the state. Direct investments across the state could do even more.
Such an infusion of dollars and expertise would give new meaning to the Wisconsin Idea that the boundaries of the university are the boundaries of the state. That term was coined 100 years ago and is being celebrated this year.
To get right to the point, the other 71 counties in the state need more help from UW – Madison. Such an investment strategy would make economic and political sense for leaders of the university and WARF and for the state’s citizens.

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