Region hits $300 million in R&D

Dr. Shaker

In the last decade, when Carlos Santiago was chancellor of UW-Milwaukee (UWM), he opined many times that a region needs to do at least $300 million in academic research and development to be considered a major R&D player. It seemed like a mission impossible.

Well, we have arrived. In 2010, institutions in the M7 region of southeastern Wisconsin collectively exceeded $300 million. Here’s the breakdown:

  • Medical College of Wisconsin (MCW): $192 million
  • UWM: $71 million
  • Marquette University: $14 million
  • Blood Center of SE Wisconsin: $17 million
  • Milwaukee School of Engineering: $4 million
  • UW-Parkside and UW-Whitewater at a couple of million a year.

The totals for MCW, UWM and Marquette are new highs, and that momentum creates great promise for the creation of innovation-based businesses and the high-end jobs they create. Big time congratulations to the leaders of those institutions for pushing the research agenda!

The M7 total for academic R&D is now respectable in relation to the $1 billion at UW-Madison, one of the world’s research powerhouses. The combined $1.3 billion in Wisconsin R&D constitutes an industry of its own. Employment in university labs across the state has been estimated at 35,000 jobs, a total that exceeds may other economic sectors in the state.

Also on the positive side, this is one area where the state does well on getting back its fair share of federal dollars. In most other areas of federal spending, we are a donor to other states.

And, good new3s, there is much more to be gained in terms of economic impact and prosperity in the M7 region. The biggest economic impact goes beyond patents and license revenue. It should eventually come from commercial spin-outs from what’s discovered in academic labs.Therein, though, lies a major disconnect.

We don’t get early enough startup ventures from intellectual property developed on campus. That’s true here, in Madison and on most campuses in the country. We’ve got to figure it out. Part of the problem is not enough entrepreneurs armed. Another is not enough early stage capital. We need more of both.

Our campuses are almost all broadening their entrepreneurial programs, offering more majors, minors, business plan contests and programs. The plenty of entrepreneurs are out there already – deal flow in the region is strong — and we are creating more of them each year.

There are plenty of funds in the region. We just spend them on a multitude of projects that don’t create jobs. The funds need redirection. The state has helped with the Act255 tax credits (25%) for startup investments, but more matching funds would be a boost.

Invariably, the researcher with the good idea is not the one to take it to market. Super angels who have money and know-how are the best answer. They can grab a new technology, figure out where it fits in the marketplace, develop a business plan that makes sense, recruit the management team, raise the money and help land the all-important ingredient – customers.

That’s what happened recently with Aurora Spectral Technologies, which spun out of UWM. Super angel Jeff Rusinow and seasoned entrepreneur Tom Mozer were hooked up with researcher Valerica Raicu to bring a better protein microscope to market.

It’s happening right now at the Medical College with Somna Therapeutics. Super angel Tom Shannon and his partner Jeff Harris have teamed with CEO Nick Maris and Dr. Reza Shaker, the inventor, to bring to market a non-invasive device for the control of acid reflux.

Those two launches show we know how to do technology transfer from our campuses. We have the model.

The region made a run at a similar model in the last decade through an organization called TechStar, created by five universities and partly funded by state government. It pulled 15 companies out of the universities in just a few short years.

One of them, born at MCW, was Prodesse. It developed a test for swing flu and became a big success with a $72 million cash-out in 2009. It alone recouped all the initial investments in TechStar. Some of the other startups are still in business.

TechStar’s demise in 2006 was caused by a lack of long-term support and vision at the state and regional levels. Let’s not make that mistake again.

Both the MCW and UWM have revved up their technology transfer shops. MCW President John Raymonds and UWM Chancellor Mike Lovell want to see ventures like Aurora and Somna replicated many times over. They are recruiting faculty who with an entrepreneurial bent.

They know that startups have made Stanford one of the most highly endowed institutions in the world. Its graduates (sometimes drop-outs) become wealthy entrepreneurs and then generous donors. It’s a virtuous circle.
With long term, high level commitment, the M7 region can follow that path and become a whole lot better at getting a bigger return on its $300 million in R&D investment.

The burden for spin-outs rests not alone on the universities, though they could help on the funding side through their foundations. It also rests on business leaders. Shannon and Rusinow have shown the way. Each has invested in a dozen or more startups with the proceeds from their successful startups and exits.

Can’t we clone them in one of our university labs?

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