University Spinoffs: A Stunning Track-Record of Success

 

This is part of my Series on University Entrepreneurship.

 Recently I met an entrepreneur at a function who, upon learning that I ran the Venture Lab at Columbia University asked me why he should pay any attention to the university space at all- telling me that he had never heard of any successful university spinoff companies. I responded by saying that I wasn’t surprised and that this view is actually a common misconception. I went on to point out that companies with household names such as Google, Lycos, Genentech, Gatorade, Hewlett Packard, Polaroid and others were all formed around university intellectual property. He was definitely shocked to hear this and we subsequently had a pleasant discussion about the Bayh-Dole Act, the spinoff process, and essentially the whole fascinating landscape of university entrepreneurship. 

I have conversations like this so often that I thought I’d share a few statistics about university spinoffs to which I can refer entrepreneurs and investors in the future. 

• Over 400 university startups are created each year based on federally funded R&D.
• Google, Netscape, Genentech, Hewlett Packard, Polaroid, Lycos, Sun Microsystems, Silicon Graphics, Chiron, Amgen, Regeneron and Cisco Systems are all examples of university startups.
• 68% of university startups created between 1980 to 2000 remained in business in 2001, while non-university based startups experienced a 90% failure rate during that same time period
• 1/3 of SBIRs reported involvement with a university including scenarios where either the founder was a former academic, university faculty were consultants, universities were subcontractors, or graduate students were employed
• 8 percent of all university startups go public, in comparison to a "going public rate" of only 0.07 percent for other U.S. enterprises - a 114x difference
• By way of example, as of FY 2009, Columbia University has spun-off over 100 companies historically, over twenty of which have either been acquired or gone public, over 30 of which have been venture-backed at some point in their life-cycle, leading to the creation of in excess of 1500 new jobs.

(Sources: NCET2 and Columbia Technology Ventures)

For Part Twelve in this Series, click here

Comments

[Daniel Behr]

Does anyone know what "counts" as a startup? In other words, of the 6,000+ university startups since 1980, how many are just the PI starting something to provide services or consulting on the side vs. a "real" startup based on some technology licensed from the university?

[Dave Lerner]

Dan- AUTM defines an institution's start-ups or spin-offs as new companies that were dependent on licensing the institution’s technology for their formation.

Scott Shane, (author of Academic Entrepreneurship), defines a university spinoff as "a new company founded to exploit a piece of intellectual property created in an academic institution".

(So the key concept I see in both is that the entity was formed to commercialize the institutions's IP)