Cornell Seeks to Spawn More Life Science Startups with Wet Lab, Alumni VC Programs

Cornell University’s tech-transfer and economic development arm is establishing a pair of initiatives aimed at increasing the success of startup companies based on research conducted at the school, Cornell’s tech-transfer head said this week.

 

The initiatives, which are still in the development stage, include dedicated wet-lab space on Cornell’s main campus in Ithaca, NY, for life science spinout companies to conduct proof-of-concept work; and a network of potential angel investors culled from the university’s alumni to offset the relative dearth of early-stage venture capital opportunities in the school’s isolated upstate New York home.

 

Spearheading the efforts within the school’s Center for Technology Enterprise and Commercialization is Alan Paau, executive director of CTEC and vice provost for technology transfer and economic development.

 

Paau, who had previously served as assistant vice chancellor for technology transfer and intellectual property services at the University of California, San Diego, was appointed by Cornell early last year to lead the university’s tech-commercialization efforts.

 

During a presentation at the Licensing Executives Society Spring Meeting and International Conference, held last week in Chicago, Paau outlined some of the major differences between establishing university startup companies in the San Diego region and in Ithaca.

To address some of the limitations Cornell faces in stimulating startup activity, particularly in the life sciences, the school is experimenting with a pair of initiatives, Paau said. The first, called the Innovation Development and Economic Application, or IDEA Center, was actually planned as early as 2005.

 

Originally envisioned as a traditional life-sciences incubator in the middle of the school’s $140 million, 250,000-square-foot Life Sciences Technology Building, which opened last year, Cornell’s administration quickly realized that the IDEA model had a geographic weakness.

 

“Basically, we found out that companies don’t really want to be in the middle of the campus,” Paau told BTW in an interview following his presentation at the LES meeting. “The company wants to be in … a real business environment, not in the middle of an academic research environment.”

 

The main reason for this, he said, is that even simple things like parking make business transactions difficult for a young company set in the middle of an approximately 750-acre university campus.

 

Now, the idea behind IDEA is to rent out dedicated wet-lab space in the Life Sciences Technology Building to recently launched companies to conduct the key proof-of-concept experiments needed to attract outside investment – but to house the companies in the off-campus Cornell Business and Technology Park.

 

“We want to turn the IDEA center into something very similar to core facilities we have in other disciplines, but rather than just let them use high-priced instrumentation, we actually allow them to rent lab space for a short period of time to do the experiments that they need to do,” Paau said.

 

Besides offsetting the cost of retrofitting the business park offices to accommodate wet-lab equipment, the advantage of the on-campus space to startups is that they can leverage existing university permits and procurement systems to purchase and dispose of hazardous chemicals, experimental animals, and the like.

 

“These experiments tend to be in the initial phase, when companies want to prove a concept,” Paau said. “They want to have data to show a potential investor. They’re not going to do the same thing time and time again. This allows them some flexibility rather than spending the money to invest in capital improvement of their own environment.”

 

Paau did not disclose the cost of renting lab space in the IDEA center, stressing that the initiative was still under development. He also declined to provide an exact timeline for when IDEA might open for business, adding that funding for the center from university administration had yet to be determined.

 

 

The second initiative CTEC is attempting to establish is a network of potential angel investors culled from Cornell’s extensive alumni network. The program, dubbed the Cornell Angels Network, would seek to connect with alumni via the Internet to establish a private investment community for Cornell life science startups.

 

“We have a lot of alumni who are willing to help with what Cornell is trying to do,” Paau said. “We want to work with entrepreneurial alumni who have the resources to invest. One of the most challenging things about Cornell has been that, although Ithaca is a nice place, we are by all measures a little bit isolated. A lot of Cornell alumni may have spare money to invest, but they don’t know enough about the available opportunities.”

 

The University of Michigan technology transfer office is experimenting with a similar program called the Catalyst Resource Network, a database comprising more than 1,000 experts worldwide — many of whom are UM alumni — in areas such as business development, market assessment, and technology assessment. The program is designed to provide much-needed resources beyond investment capital to early-stage UM startup companies (see BTW, 9/24/2007).

 

One of the main differences between UM’s initiative and Cornell’s CAN is that the latter will comprise only Cornell alumni who are seeking to invest.

 

“We are actually trademarking the term ‘CAN,’ and our slogan will be ‘Do good, and do well,’” Paau said. “They do good by helping their alma mater; but it is an investment, so there is the potential for them to do well.”

 

Cornell has recently focused its attention on creating more startups, particularly in the life sciences, because it is an area that Paau said the university has “not been the most vibrant in” because of its location.

 

According to annual licensing survey data from the Association of University Technology Managers, Cornell launched six startup companies in fiscal year 2006 and five startups in FY 2005 — “not enough,” according to Paau, who noted that the majority of the school’s startups have been in the physical sciences.

 

Furthermore, he said, many of Cornell’s startups have left the Ithaca region soon after their establishment. “Tech transfer is the overall umbrella, but one portion is that we’re really trying to leverage tech transfer for regional economic development,” Paau said. “It really doesn’t help us if all of our licensed technologies end up on the West coast or other cities on the East coast, or to some degree, in other countries. It doesn’t benefit the local community.”

 

Paau added that Cornell understands that businesses eventually are “going to move to where it makes business sense. But we want to retain them here longer and increase the value so when they move out, a lot of value is already left here in this region.”