Tech Transfer Needs an Overhaul

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Does tech transfer work? I asked this question at a startup event last year at Photonics West, and my question sparked a large debate with the panel. This question is relevant to the many people who want to bring biophotonics technologies out of the confines of a university hospital but are not sure how to go about it.

Many universities are investing a lot of time and money in putting together a tech transfer program, a mechanism to help turn the technologies developed in their academic labs into viable commercial entities that create value for society, such as with better health outcomes and more jobs.

On its face, it seems like a reasonable mechanism. The university translates ideas from its academic labs to businesses that can spread the technology and scale it up. The company benefits from the university environment and a highly skilled labor pool that knows the technology inside and out, and can make it work.

But, the devil is in the details.

Universities are nonprofit institutions on paper, but in reality they function like large corporations interested in maximizing their revenues. For a very early-stage company, one that has just been founded, being married to a university comes with some baggage, which may not be in the best interests of the business.

Consider what happens when such a company is formed within a university. It starts when someone in a principal investigator’s (PI) lab makes an amazing discovery. The PI approaches the tech transfer office about filing a provisional patent. There is a great deal of excitement. This idea is amazing, and soon someone suggests starting a business around it. The PI finds a CEO, or becomes the CEO.

The mission of the fledgling company is to commercialize the intellectual property. But this is partially owned by the university, so the business has to negotiate a licensing agreement — exclusivity, royalties, and the like.

For a just-founded company, this is a very tricky negotiation. University lawyers are involved, and the company is not really in a position to know if it’s getting a good deal or not. It’s very difficult to walk away. The university has a lab full of engineers connected to a hospital full of doctors.

But being married to a single university at the outset is not good business strategy — the best way to validate your idea is to have multiple doctors (customers) at multiple universities using your prototype in parallel.

By working too closely with the university, you are likely opting for short-term comfort over long-term success. In contrast, if you shop around, you’re more likely to find a better deal. And if you are to succeed, you can’t afford anything but the best deal.

Many seasoned entrepreneurs recognize this predicament and shy away from it as much as possible. Seasoned investors also understand this.

Many of our potential early investors asked if my company was affiliated with a university. Whenever we said no, there was always a sigh of relief. I was quite amazed at how many early-stage investors refuse on principle to invest if a university is involved.

So what does that mean for the university and the entrepreneur? Does tech transfer work at all? For the early-stage entrepreneur, I personally think it makes more sense to separate from the university and learn to operate independently. When we started MobileODT, we spent considerable time in cafes, and that worked for us.

I still believe that tech transfer can work, but only when the company is not at its very early stages, and preferably when it has a product on the market that is already generating revenues. The business is then in a position to walk away from negotiations that are not in its best interest, which paradoxically makes success more likely.

For the university, it makes much more sense to license intellectual property to a company that has existing sales channels actually earning revenue. At this stage, the negotiations are much more evenhanded. Both sides are in a better position to come out winners, and the technology can be disseminated.

I believe universities should re-examine their relationship with industry, particularly in today’s challenging funding landscape. It may make more sense to have different policies for established businesses, startups, and ideas born in their labs. They should take into consideration that it’s not a zero-sum game and institute policies and tactics that will make businesses thrive.

David LevitzMeet the author

David Levitz is the chief technical officer of MobileODT. He co-founded the company in Tel Aviv, Israel, in 2012. He also co-chairs the Optics and Biophotonics in Low-Resource Settings conference at SPIE’s Photonics West meetings; email: [email protected].

The views expressed in Biopinion are solely those of the author and do not necessarily represent those of Photonics Media. To submit a Biopinion, send a few sentences outlining the proposed topic to [email protected]. Accepted submissions will be reviewed and edited for clarity, accuracy, length, and conformity to Photonics Media style.

Published: April 2018
David LevitzMobileODTTech TransferBioOpinionBiophotonics

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