An article in the June 27 New York Times Sunday Business section ("The Idea Incubator Goes to Campus") highlighted a proposal I wrote for the Obama administration's 2011 federal budget designed to accelerate the movement of innovative research from university campuses to the marketplace. The National Science Foundation (NSF) budget proposal calls for $12 million a year to establish several university proof-of-concept programs -- "Innovation Ecosystems"--in the hope that ultimately academic institutions everywhere can better assist their faculty and students to become successful entrepreneurs.
This initiative isn't about directing more public money to researchers and academics, no matter how valuable that may be. Its goal is to help academics maximize their payback to the American people by creating companies that provide the kind of highly skilled, well-paid jobs that make it possible for Americans to own homes, pay college tuitions and save for retirement.
According to the Times article, some business innovation observers question whether such programs can be effective. They suggest that the successful convergence of innovative university researchers and smart investors is something that primarily can occur through happy accidents of economic and institutional geography.
When I wrote the proposal, with the support of other experts, I was able to draw on real results -- at the University of Southern California and elsewhere -- that show it is indeed possible to deliberately create an ecosystem of innovation that supports entrepreneurs as they move their ideas from campus to market. Two of the proof-of-concept programs discussed in the Times article have generated more than 35 spin-off companies, which have raised a combined $250 million in capital. These programs can provide a constellation of support, such as helping define appropriate business models, connecting with mentors and senior management, providing small amounts of "proof-of-concept" grants and finding investment partners.
The federal government already spends $50 billion of taxpayer money to fund university research; it would be smart and sensible to spend an additional few million dollars to see that the public can benefit more fully from the research they paid for.
Some parts of the country have developed a culture in which the free market works especially well -- where innovators doing groundbreaking research have efficient access to capital, so they can transform their ideas into new ventures and jobs. Sometimes, whole industries get created. Silicon Valley and the university-rich Boston area are two of the world's best examples of zones where concepts and capital connect efficiently, to the benefit of those immediate regions and the world.
However, it's a fallacy to say that these innovation ecosystems erupted purely spontaneously. As Josh Lerner outlines in his book, Boulevard of Broken Dreams, research contracts from the Department of Defense and government intervention in the venture capital industry played critical roles in establishing the seeds of these powerful ecosystems in the mid 1900s. Once critical mass is established, new venture creation flourishes. As Lerner says, "It is far easier to found a start-up if there are 10 other entrepreneurs nearby." Although these ecosystems have taken decades to establish, it doesn't mean we can't deliberately accelerate the process elsewhere.
University innovation programs can make a profound difference. For example, the USC Stevens Institute for Innovation team is assisting Dr. Thomas Chen, a University of Southern California cancer researcher who is developing a method of treating deadly glioma brain tumors (the disease that struck down Sen. Ted Kennedy) with chemotherapy delivered via inhalation. The USC Stevens Institute has helped Dr. Chen establish the USC start-up, Neonc Technologies, first with a strategy for patenting and licensing the technology, and then for accelerating to drug trials, drug formulation and eventually delivery into the clinic, where it might ultimately save lives.
What we're talking about isn't government meddling in the free market, but creating broader opportunities for the free market to act. In reality, the venture capital industry struggles to find good companies in which to invest -- by one recent account, it is twice as large as it should be, given the opportunities. Yet meanwhile, many life-saving inventions and groundbreaking ideas remain in university laboratories, hidden from the business-savvy champions and investors who might carry them forward.
As the U.S. climbs up and out of recession, job creation is the single statistic that hits most Americans where they live. But unless newly created jobs employ -- and expand -- an educated work force, we run the risk of watching our standard of living decline. That's why it's so critical that the 2011 federal budget include the NSF Innovation Ecosystems pilot program.
Academics and university researchers spend decades learning about their fields of specialty. It's not realistic to expect them to be equally conversant with business. For our government to fund university researchers, but then fail to help them advance their ideas so they can attract private investment and grow real businesses is penny-wise and job-foolish.
This column originally appeared on Forbes.com
Follow Krisztina Holly on Twitter: www.twitter.com/krisztinaholly
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