Universities: Your New Best Friend

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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.

"Universities are now sitting on and have been sitting on a lot of good research that could form the basis of companies," says Tim Petersen, managing director of the Samuel Zell and Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michigan. "It's not just big research universities; it's any university that has some research going on. Over the past 5 or 10 years, a lot of universities have seen the light. They have something that could provide some financial support for the university."

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