For resource-hungry entrepreneurs, the explosion of university-based business-development programs comes as sweet relief in tight economic times. From Ann Arbor to Chapel Hill, find out what's out there for you -- and why colleges are in such a giving mood.
Kathy Zelenock needed venture capital for her start-up, e-Cognita Technologies Inc., which makes transaction-management software for the mortgage industry. She found it at the University of Michigan.
When Darryl Brown came up with the idea of selling a coating and seasoning mix he created for chicken, pork, and seafood, he needed legal advice on setting up his new company, Tasty Delite International Ltd. He got it from the University of Chicago.
Howard Leventhal was thrilled to learn about a new technology that could help deter illegal copying of digital files. It was an obvious fit for his young company, BitzMart Inc., whose software helps sell video, music, and other media products over the Web. Leventhal licensed the technology from its developer, the University of Miami, and with the help of a company called Utek Corp., he didn't have to spend a dime of start-up capital to do so.
What's going on here? Universities a friend to business? What ever happened to all those tweed-jacket-and-blue-jean-garbed professors who liked nothing more than to thumb their noses at the money-grubbing business set? Sure, business schools have long had a habit of reaching out to companies, but that attitude hasn't necessarily been shared by the rest of academia. The cultural divide between those who like to theorize and those who like to do has always made it hard for college profs to become close collaborators with business execs, and vice versa.
Today that relationship is undergoing a fundamental change, as universities begin to understand just how much they stand to gain from closer ties to the business community, and companies realize just how rich the opportunities can be on college campuses. Among those who stand to gain the most from the glasnost are small entrepreneurial companies. Their work is often at the forefront of new industries and technologies, so it is often the most attractive to a university. And such businesses generally need the most help. "It's become OK for universities to work with the entrepreneurial community and not have that look like they're selling out," says Robert Sullivan, dean of the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. "They're not ashamed anymore. That's a huge change."
ACADEMIC-LEE: University of Kentucky president Lee T. Todd Jr. has put the school's resources at the disposal of company builders.
The exciting result: the desire to work with business partners has spread from the traditional B-school venue to schools of law, engineering, and medicine, spawning an intriguing array of new programs and resources. New matchmaking services are springing up to help connect private businesses with the right school or faculty member. And there are even new funding opportunities, such as vouchers, to help business executives take full advantage of what colleges have to offer.
"I'm seeing what I like to call the engagement of entrepreneurs with the university and the university acting more like an entrepreneurial enterprise, reaching out," says Ray Smilor, president of Beyster Institute, based in La Jolla, Calif., and a former business-school professor at the University of Texas at Austin. "For entrepreneurs outside the university, I think they're finding the university far more receptive to their coming in."
One way to capture the magnitude of the change is to look at the kind of people who are joining the academic world. Consider Lee T. Todd Jr., who has been president of the University of Kentucky for just over a year. In his previous life, Todd started, ran, and eventually sold two high-tech businesses based in the Bluegrass State: Projectron Inc., a projection cathode-ray tube maker, and software company DataBeam Corp. When he was a company owner, part of his goal was to create good jobs in Kentucky. Now he's trying to do the same thing as president of the state's largest public university, in effect redefining its mission.
As Todd sees it, the university has a responsibility to drive economic development, especially at a time when traditional manufacturing jobs are disappearing or moving overseas. So Todd is taking steps big and small to encourage company building in Kentucky. They include beefing up the university's research capabilities, not just to boost the school's academic stature but to fuel a future generation of high-tech start-ups as well. The university is expanding its existing technology research park and is aiming to help the city of Lexington turn an old Woolworth's building into an incubator. For the first time, the school has put part of its endowment into venture-capital funds, investing $3 million in two regionally oriented funds. With a $2-million alumni gift, the business school is setting up an entrepreneurship center. Todd himself is advising the newly formed campus E-club, composed of would-be entrepreneurs among students and faculty.
Talk with a dozen university presidents, deans, and professors across the country, and it will become clear that there are several reasons a school like the University of Kentucky has decided to so wholeheartedly embrace the private sector. The first is the already-mentioned realization that they can be powerful engines of economic development, a role that state and local governments are increasingly demanding that public universities play. In Michigan, for example, a new "life sciences corridor" enlists the University of Michigan, Michigan State University, and Wayne State University in a collaborative effort to support emerging biotech businesses -- just one of many similar programs around the country.
Some private universities, too, are stressing partnerships with business as a way of strengthening community ties. At Rensselaer Polytechnic Institute, a relatively new president, Shirley Ann Jackson, emphasizes the school's responsibility to help boost the less-than-booming economy of the surrounding Troy, N.Y., region. Making the community stronger makes the university stronger, and vice versa, says Jackson. So, among other things, she's infusing entrepreneurship courses into the technology-based curriculum and expanding the school's 22-year-old incubator. "More and more universities understand that they perform a community-development role," says Simon Balint, manager of operations at the incubator. "That hasn't always been the case."
Then there's the allure of technology commercialization, made so visible during the Silicon Valley heyday. In 1980 the Bayh-Dole Act gave universities intellectual-property rights to the results of on-campus research done with federal funding. Since then, licensing that technology, a process usually known as technology transfer, has become a growing source of revenues for schools. Surveys that the Association of University Technology Managers has done of its members show that total university revenues from technology licensing in the United States and Canada shot up from $186 million in 1991 to $1.3 billion in 2000.
Some schools have benefited more than others. Just three institutions -- the University of California system, Columbia University, and Dartmouth College -- accounted for $467 million of that $1.3 billion. (Dartmouth, for instance, produced a new deicing method, using electrolysis, that has aerospace and automotive applications.) But even a small slice of that billion-dollar pie is tempting.
