The University of Minnesota on Monday formally launched a program to help its researchers start businesses and build a bridge between grant funding and outside investment.
The university's Venture Center developed the program, called Discovery Launchpad, as a response to what many innovators in educational institutions call the "valley of death" — the time between when funds run out on a research program and investors learn about it and pitch in funds.
"There's a lot of cases where the federally funded research dries up and yet a technology or innovation is still not evolved enough to be licensed to an existing company or to attract investors to take it the next mile," said Russ Straate, associate director of the Venture Center. "I think this will help reduce any of those that might have fallen into that trap."
Discovery Launchpad is set up to help university researchers for as long as two years, providing mentors and other support as they commercialize their work. The program started quietly at the U last summer and has attracted eight companies that are being formed by students.
With the formal announcement, "we hope that we'll see more researchers and inventors here at the university excited to launch startups because there's a more formal resource to help them understand what to do and how to go about doing it," Straate said.
University researchers who join the program will initially learn from advisers how to develop a work plan. The U then will provide the company with office space and bring in businesspeople from around the school and the state to teach them about running a business. For the moment, the U has recruited five external advisers, people with experience in both large and small firms.
Jacob Johnson of Innovosource, a Minnetonka-based consulting firm that connects companies and university researchers, said the U's new program also should help researchers focus on the best market opportunities for their innovations.
"It sets them up for success by aiming the research at a good application, bringing insights in from the outside and helping identify what the problems are," Johnson said. "That way, it increases the likelihood they'll be spending resources on moving the startup in a positive direction."
In recent years, some private companies have set up funds to help university researchers keep working on their ideas after their original funding, usually grants from governments or charities, runs out. For those firms, this so-called "proof-of-concept" investment carries risks but can produce a bigger upside by positioning them with a stake in a startup ahead of other early-stage investors.
Some universities also created "gap funds" — sometimes from alumni donations or the reinvestment of royalties from previous startups — to help students pay for testing and development to get ideas through the proof-of-concept stage. The U does not have such a fund.
In developing Discovery Launchpad, Straate said the Venture Center studied technology commercialization programs at Big Ten schools and other large research universities to determine what it was doing right and what gaps it needed to fill.
"It was definitely time for us to do something like this," he said.
Since the Venture Center was started in 2006, it has helped launch 142 companies, many of which provide a royalty stream to the U for innovations that began in its labs.