Goal: Accelerate the introduction and growth of new technologies and products derived from research in Virginia.
Commercialization is the transition from investment in new product development to realization of returns through licensing and sales. Innovative products are tested in the market and front-end investors begin to see potential returns on their investment. Some indicators of this phase of product development are captured in the Business Dynamics indicators of the IEMS model; Commercialization here refers specifically to licensing and startup activity resulting from university research and development.
University licensing activity declined in 2012 in Virginia, while the cumulative number of active licenses was little changed. The number of startup businesses based on university intellectual property increased modestly, however, and the cumulative number of startups operational on December 31, 2012 jumped from a year earlier. Additional factors without historical data currently available suggest increasing interest in and support for commercialization, and they will be examined in updates to the IEMS as data become available.
Why is commercialization important?
Technology transfer from universities into industries promotes innovative economic growth at the regional and state levels. Furthermore, commercialization rewards the researchers and the investors that contribute to the consumer-driven new products, thus incentivizing consumer-focused innovation. In addition, closer collaborative ties between universities and industry are forged. Finally, licensing agreements generate income for further research.
How has Virginia performed over the last five years?
Over the past five years, the cumulative number of licenses issued by Virginia’s universities that remain active has declined from 584 in 2007 to 545 in 2012. During this same timeframe, the number of licenses issued in 2012 was little changed from 2007 (84 in 2012 compared to 83 in 2007), after peaking in 2010.
Total licensing revenue from Virginia’s public research universities has declined over the past five years. Revenue from university license agreements decreased 11%, from $10.9 million in 2007 to $9.8 million in 2012.
Startup activity has increased by 45% between 2007 and 2012. In 2012, 16 startup firms based on the licensing of Virginia universities’ technologies were created, compared with 11 in 2007. As of December 31, 2012, 86 startups were operational – a 62% increase from 2007.
Other commercialization factors include increased interest in entrepreneurship by faculty and increased support by university administrations for entrepreneurship and university spinouts. Additionally, new sources of funding were established, such as the federal government’s i6 and I-Corps programs, and Virginia’s Commonwealth Research Commercialization Fund (CRCF).
Executives at the Association of University Technology Managers (AUTM) and technology transfer and licensing offices at Virginia universities are considering new measures that may help describe an institution’s impact on the community and economy. IEMS updates will examine these new commercialization indicators as they become available.
What are the implications?
University-based research plays an important role in the innovation process in the Virginia economy. While licensing activity at universities in Virginia has declined over the past five years, an increase in the number of startups indicates that belief in commercialization potential of academic technologies remains strong.
Data Sources and Definitions:
Each IEMS indicator reflects the latest available data and includes a discussion of trends in up to five years of historical data, depending on availability.
Data from Association of University Technology Managers (AUTM) Statistics Access for Tech Transfer (STATT) Database.
License Agreements: According to the World Intellectual Property Organization (WIPO), “a licensing agreement is a partnership between an intellectual property rights owner (licensor) and another who is authorized to use such rights (licensee) in exchange for an agreed payment (fee or royalty).” http://www.wipo.int/sme/en/ip_business/licensing/licensing.htm. Universities use a license agreement to transfer intellectual property rights to entrepreneurs and companies that intend to commercialize the technology. A license agreement specifies the terms of the transfer including royalties to be paid for use of the licensed technology.
CIT acknowledges the important contribution of Chmura Economics & Analytics in preparing the IEMS.