Goal: Accelerate the introduction and growth of new technologies and products derived from research in Virginia.
Commercialization is the process of taking intellectual property resulting from research and development to market and generating financial value through licensing and sales. Products and services based on new technology are introduced to the market to determine if they meet a market demand or otherwise add value to the company. Commercialization here refers specifically to licensing, startup, industry collaboration, and consulting connected to university research and development.
The number of licenses issued by Virginia’s universities edged upwards in 2014 and the number of active licenses and licensing income also increased. The number of startup businesses based on university intellectual property remained steady, while the cumulative number of startups surpassed last year’s high. These numbers do not include other university startup activity, including faculty and student business startups that are not based on the institution’s intellectual property. Virginia universities support commercialization through other avenues as well, including research sponsored by business, financial support for seed and proof-of-concept funds, and incentives for faculty to engage in entrepreneurship and commercialization activities.
Why is commercialization important?
Colleges and universities are increasingly being called upon to commercialize their discoveries in order to boost economic development. One method is through nurturing university startups, which account for a relatively small but growing number of high-growth, entrepreneurial ventures. Technology transfer from universities also boosts the growth of firms in the state through new commercial products and innovative business production processes based on licensed technologies. Commercialization provides revenue that helps support university research and development activities and incentivizes faculty production of translational research. Universities also forge closer links with business and industry that establish mechanisms for sharing knowledge, foster future research collaboration, and create internship and career opportunities for students and graduates.
How has Virginia performed over the last five years?
The number of licenses has increased each year since 2011 when 97 university licenses were issued. In 2013, 112 licenses were issued. The cumulative number of active licenses issued by Virginia’s universities jumped to 747 in 2013 from 545 the year before, in part as a result of Virginia Tech reporting this number for the first time. In 2014, total active licenses increased further to a level of 787.
Licensing revenue often results from licenses executed several years earlier. Total licensing revenue reported by Virginia’s research universities declined from a peak of $11 million in 2010 to $6.2 million in 2013 before rebounding to $8.2 million in 2014. On a per capita basis, Virginia raised an average of $1.0 of licensing revenue per capita in 2014, compared to a national average of $7 per capita, ranking it 35th among U.S. states. This per capita revenue was lower than all benchmark states. The nation’s leader was Illinois at $31 per capita.
The number of university startups that begin operations based on licensed technology each year increased from 11 startups in 2010, to 17 startups in 2013. In 2014, 17 university startups resulted once again. Of this total, 14 startups established operations within the Commonwealth of Virginia. The cumulative total number of active startups from current and previously issued licenses increased from 74 in 2011 to 104 in 2014. Virginia universities produced 2.04 startups per one million residents in 2014. This is lower than the national average of 2.72 per million; Virginia ranked 27th among states. It was also lower than all benchmark states. The nation’s leader was Utah at 6.80 startups per million residents.
Many university commercialization and technology transfer activities are unrelated to licensed technology. Virginia institutions reported that there were at least 19 such companies established in FY2015 and an additional 89 startups by students; only some of the latter were based on university-licensed technology.
Virginia’s higher education institutions have increased institutional support for innovation and commercialization. Most public research universities have tenure policies that recognize faculty accomplishments in entrepreneurship and commercialization. In addition, five institutions (Eastern Virginia Medical School, George Mason University, Old Dominion University, the University of Virginia, and Virginia Tech) reported establishing seed and/or proof-of-concept funds. For example, the University of Virginia reported offering more than $3 million for translational research projects in FY2014 resulting in 124 funded projects to date and 16 startup companies.
Virginia’s colleges and universities also further their interactions with industry through sponsored research and clinical trials; industry partners are based in and outside of Virginia. Virginia institutions had sponsored research relationships with an estimated 1,395 companies in FY2014. Additionally, faculty have consulting agreements with businesses located in and outside of the Commonwealth, and some universities offer “makerspace”, a workspace that facilitates creativity and collaboration and in some cases includes 3D printers.
What are the implications?
Virginia’s universities are an important resource for sustaining an innovation-based economy. The number of business startups increased from 2011 to 2013 but the startup rate lagged behind most benchmark states and the nation. While the lagging indicator of licensing revenue declined and was lower than the nation and benchmark states, the number of university licenses increased in 2013. Virginia’s universities increasingly demonstrate support for increased commercialization through seed and proof-of-concept funds, numerous sponsored research relationships, and additional entrepreneurial activities of faculty, staff, and students.
Data Sources and Definitions:
Each IEMS indicator reports data available as of June 27, 2016 and provides a description of trends for five years of historical data when available.
University Licenses and Startups: Data from the Association of University Technology Managers (AUTM) Statistics Access for Tech Transfer (STATT) Database: http://www.autm.net/source/STATT/index.cfm?section=STATT. Released in September. Virginia public university data for 2014 was supplemented with information from individual institutions, including those who did not report to AUTM for the year. A license is a contract that allows the purchaser of the licensed technology to share the rights to use of the technology. Licensed income includes “license issue fees, payments under options, annual minimums, running royalties, termination payments, the amount of equity received when cashed-in, and software and biological material end-user license fees equal to $1,000 or more.” University startups are companies that depended on the institution’s licensed technology to begin operations.
Licensing and startup data reflects information available through the AUTM STATT download feature. This feature aggregated data reported confidentially by institutions into one national level category. Since it is not known what type of institution generated the confidential data, “Confidentials” are not included in the above discussion. However, confidential information is available at the download level. Including confidentially reported data, Virginia reported 89 licensing deals in 2013, 747 active licenses, and total licensing revenue of $6.2 million. Virginia also reported 17 startups in 2013, and 87 cumulative active startups from current and previously issued licenses.
Population: U.S. Census Bureau, Population Estimates (legacy estimates): https://www.census.gov/popest/index.html. Released in December.
University Environment: Center for Innovative Technology (CIT) spring 2015 University Survey. Based on responses from the College of William and Mary, Eastern Virginia Medical School, George Mason University, James Madison University, Old Dominion University, the University of Virginia, Virginia Commonwealth University, and Virginia Tech.