University Spin-Outs

Dan Rosen + Associates > Angel Investing > University Spin-Outs

I am a big fan of high-tech companies. People that know me (and my co-investors) know that I like companies that are “changing the world” or “creating new industries” through technology innovation. And they know that I believe that research universities spawn great technologies and deserve public support. Universities do a terrific and efficient job of educating students, organizing research projects, getting and managing grants, and investigating science in a way that can make meaningful contributions to society.

I do not believe, however, that universities can do a good job of creating companies from the technologies that they create. This is a fundamentally different skill set than most (if not all) universities have as a core competence. It has been well demonstrated (e.g. Josh Lerner’s book, The Boulevard of Broken Dreams) that most governmental organizations don’t do well in creating or nurturing entrepreneurial businesses.

I do, however, believe that it is a fundamentally good idea to help start companies from university technologies. While the universities play a key role in making this happen, I am disturbed by a trend that seems to be emerging of universities establishing internal angel funds to spin out companies. It is a good idea to give very limited amounts of money and a great deal of support to key university faculty or grad students to help them understand if their technology makes sense to commercialize. Many universities already have small funds that give grants toward this end – something like $25-50,000 to help bridge the gap between pure research and a product or to pair business school students with engineers. But setting up multi-million dollar funds to compete with existing angels and VCs is a really bad idea.

It is really hard to take a new technology, build a company around it, and bring products based on that technology to market. This is something that VCs and, increasingly, angel investors have done successfully for many years.

History is littered with examples. How many states in the US and countries worldwide have decided to create “clusters” for specific technologies so that they could participate in the explosive growth of a new industry? Very few have been successful. Incubators have come and gone, wasting a lot of public money.

I believe that, instead of spending precious resources on trying to take companies from the “research stage” to the “company stage” it is a much wiser course for research universities to work with established financing sources for early-stage companies, like active angel groups. And for governments to help sponsor that collaboration by setting a public policy that incents angels who are willing to put their own money on the line to help create a company.

Many states have now established tax incentives along these lines. The Angel Capital Association has a summary of these activities. (http://www.angelcapitalassociation.org/public-policy/state-policy-kit/ ) This makes much more sense to me than asking universities to replace or augment Angels or VCs.

Posted By
May 20, 2011
Tags:
0
36

If you liked this post then you may like:

Related Posts

36 comments on “University Spin-Outs”

  1. You can certainly see your enthusiasm in the work you write. The world hopes for more passionate writers such as you who aren at afraid to say how they believe. All the time go after your heart.

  4. You are my inhalation, I possess few blogs and often run out from brand . Actions lie louder than words. by Carolyn Wells.

  5. Thanks again for the blog article.Really looking forward to read more. Really Cool.

  6. Wow! Thank you! I permanently needed to write on my website something like that. Can I implement a fragment of your post to my site?

  8. Thank you a bunch for sharing this with all people you really recognize what you are talking approximately!

    Bookmarked. Kindly additionally consult with my web site =).
    We may have a link trade agreement among us

  10. I feel this is among the such a lot vital information for me.
    And i’m satisfied studying your article. However wanna commentary on some common things, The website style is perfect, the articles is in point
    of fact great : D. Excellent task, cheers

  12. Hello this is somewhat of off topic but I was wanting to know
    if blogs use WYSIWYG editors or if you have to manually code with HTML.
    I’m starting a blog soon but have no coding experience so I wanted to get guidance from someone with experience.

    Any help would be enormously appreciated!

  14. That is really fascinating, You are an overly professional blogger.
    I’ve joined your feed and look forward to in the hunt for
    extra of your fantastic post. Additionally, I’ve shared your site in my social networks

  15. Thank you for sharing superb informations. Your
    site is so cool. I’m impressed by the details that you have on this
    web site. It reveals how nicely you understand this subject.

    Bookmarked this web page, will come back for more articles.
    You, my pal, ROCK! I found just the information I already searched all over the place and simply could not
    come across. What a perfect website.

  17. After looking into a few of the blog posts on your web page, I seriously appreciate your way of blogging.
    I saved as a favorite it to my bookmark webpage list and will
    be checking back soon. Please check out my website as well and tell me how you feel.

  19. Definitely consider that which you said. Your favourite justification seemed to be
    at the web the simplest thing to be aware of.
    I say to you, I definitely get annoyed even as other people think
    about worries that they just do not recognise about. You managed to hit the nail upon the highest
    and also outlined out the whole thing without having side-effects
    , people can take a signal. Will likely be again to
    get more. Thank you

  20. Simply want to say your article is as astonishing.

    The clarity in your post is just nice and i could assume you are an expert on this subject.
    Fine with your permission let me to grab your feed to keep updated with forthcoming post.
    Thanks a million and please keep up the rewarding work.

  21. Unquestionably imagine that that you said. Your favourite justification appeared
    to be on the web the simplest thing to take note of.
    I say to you, I certainly get irked whilst folks consider worries that they plainly
    don’t recognise about. You controlled to hit the nail upon the
    top as neatly as defined out the whole thing without having side effect ,
    people could take a signal. Will likely be again to get more.
    Thank you

  27. Valuable Website I have been reading out a few of your posts and i can state pretty nice stuff. I will definitely bookmark your blog.

  30. Outstanding post however , I was wondering if you could write a litte more on this subject? I ad be very grateful if you could elaborate a little bit further. Cheers!

  34. Hey! Quick question that’s completely off topic. Do you know
    how to make your site mobile friendly? My site looks weird when browsing from my iphone 4.
    I’m trying to find a theme or plugin that
    might be able to resolve this problem. If you have any recommendations, please share.
    Appreciate it! re, Kathi,

Leave a Reply

Your email address will not be published.

©2021 Dan Rosen and Associates. All rights reserved.
Top